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Localism Bill

Volume 729: debated on Tuesday 5 July 2011

Committee (5th Day)

Relevant documents: 15th and 16th Reports from the Delegated Powers Committee.

Schedule 5 : New Chapter 4ZA of Part 1 of the Local Government Finance Act 1992

Amendment 129LZZZA

Moved by

129LZZZA: Schedule 5, page 263, leave out lines 9 to 29

My Lords, I hope that I will be able to deal with these amendments quite shortly. Last Thursday my noble friend Lord Shipley made an admirable speech on the clause stand part debate before the amendments came up, and advanced all the arguments that I would have made in support of this group. The main difference between my noble friend and me was that he expounded his objectives—eloquently and adequately, I thought—and I have tabled the amendments that would give effect to them.

I do not intend to take the House through each of these several amendments. However, I can say that the amendments have four main purposes in relation to the possibility of a referendum on the council tax in an area where it is thought that the council tax increase has been—to use the word in the Bill—excessive. It should not be for the Government to lay down what is excessive. There has been a lot of talk about this being a new form of rate-capping. I know something about that, having dealt with that in an earlier part of my political life. This is intended to be a protection for council tax payers against an increase in council tax which goes beyond what they feel to be fair.

The first point that I would like to make is that it should be for local people to determine whether they find a suggested council tax increase excessive. Therefore, my amendments in a sense come under four groups. First, there are amendments which would delete the Secretary of State’s powers to determine what constitutes an excessive rate of council tax—this is likely to be very different in different circumstances in different areas around the country. Secondly, it should therefore also be for the local authority to decide when a referendum should be held. That should not be determined by central government. If localism means anything, this is exactly what it is supposed to mean. Thirdly, it should be the councils, rather than the Secretary of State, which should decide how the referendum is going to be conducted. Finally, there are amendments which would delete powers for the Secretary of State to make a whole raft of regulations, on, among other things, setting out the question to be asked in a referendum, the allowable publicity accompanying a referendum, and how votes ought to be counted.

I have dwelt on this issue before. The rhetoric of Ministers in this Government has been that this is a brand new start, a real decentralisation of power from Whitehall to town hall and county hall, and that it is going to be a rejuvenation of local authorities. Yet one only needs to look at the size of the Bill to realise that, while that may be the objective, it is certainly not being produced in this Bill. The Bill is full of detailed directions, and powers to make regulations to give further detailed directions, as to how local authorities are to use what is supposed to be their new freedom.

I am not going to say more than that, or go through all the details. I hope that Ministers—who are going to have an unusually long gap between this Committee stage and the Report stage, which will come after the Recess—will have a good, hard look at this Bill, to see whether some of this centralisation and central direction, and this business of telling local authorities how to have their freedom and how to behave themselves, can be removed from the Bill. I can assure my noble friends on the Front Bench that it will be extremely popular among the local authorities, which have had their hopes raised that they are at last going to have freedom from central direction, and then find that this Bill does nothing of the sort. I beg to move.

I have to inform the Committee that if this amendment is agreed to I cannot call Amendments 129LZZA to 129LZZF by reason of pre-emption.

My Lords, I have added my name to amendments in this group and I agree with everything that the noble Lord, Lord Jenkin, has said.

I am sure that most Members of this Committee, never mind the whole House, will not spend a lot of time reading the details of Schedule 5 to the Bill and all the ways in which the Secretary of State will be able to lay down very detailed powers and instructions for local authorities on how to carry out council tax referendums. However, these measures are extraordinary, and typical of a huge amount in the Bill. If the Bill constitutes localism, it is extremely detailed top-down localism.

I have seven amendments in this group, six of which are effectively the same. They seek to remove the description of high council tax increases as “excessive”. The Bill says that if a council wants to impose a council tax increase which is higher than the Secretary of State thinks is appropriate, as agreed by the House of Commons, it will be described as excessive. This is bad legislation. The word is prejudicial rather than neutral and is almost a slogan. One of the things that the Secretary of State will be able to do is to determine the question in any referendum that takes place. I can imagine a question such as, “Do you agree with your council that they should impose an excessive rise in the council tax this year?”. That is the effect of “excessive”. Legislation should be neutral and should not use such words. My amendments seek to delete “excessive” and replace it with,

“higher than the level recommended by the Secretary of State under the provisions of this Chapter”.

That is what the legislation should say. It should be value neutral and simply set out what the position is. Of course, if the noble Lord’s amendments were all passed, mine would be pre-empted and would fall. I would be delighted if that were the case as I would rather not have these detailed prescriptions there in the first place. However, if we are going to have them, we should use proper language and not political slogans.

My Amendment 129LABA concerns the date of the referendum. It probes the Secretary of State’s ability to lay down detailed instructions on this and seeks to ascertain why councils cannot be left to deal with this themselves. However, this is in effect already covered by the rather more sweeping amendments of the noble Lord, Lord Jenkin, and therefore I do not need to speak to it further.

My Lords, first, I wish to speak to the amendments spoken to by the noble Lord, Lord Greaves, with which we sympathise. It is not just a case of semantics and of substituting one form of words for another. For the reason that he has outlined, we agree with him that if “excessive” is used in the legislation it will inevitably end up in the question that is put to the voters in a referendum, as it would be the technical term. We are denying local authorities the right to campaign for the council tax increase that they want. If we want to approach this matter in a neutral way, the very least we can do is to remove prejudicial legislation, as the noble Lord termed it.

The Minister may well say that “excessive” is not a new term and that it is embodied in the current capping legislation. However, there is a difference between that position and what may happen in the future because the current arrangements for capping will not be put to a popular vote. Therefore, that term is effectively an internal term rather than one that would inevitably feature in the referendum question on some basis or other. For that reason, I believe that we need to recast the term that is in the legislation.

I agree with the noble Lord, Lord Jenkin. It is a central point of our concern with this legislation that it is stuffed with detailed powers and that the Secretary of State has to draw back from the nominal rights that it is seeking to give to local authorities. I doubt whether the gap between finishing Committee in July—if we do—and Report in September is long enough to unpick some of the stuff that has come from our discussions today, but at least there is perhaps a longer gap than usual. Our attitude to the amendments of the noble Lord, Lord Jenkin, depends on precisely where the Government are on this. When last Thursday we had our first canter around the issue of capping powers, it was said that all Governments of all persuasions had held to themselves a reserve power. If in fact it is the Government’s position that they are eschewing that power, we do not feel obligated to hold to the position that I think I outlined—that it is difficult for us to deny the current Government those powers if we took them in past years. If that is not one of the criteria of the Government, that point falls away. When he responds, perhaps the Minister can tell us whether the Government see the arrangements currently included in the Bill as capping powers, whether they believe that they should have the right to hold those powers, or whether they are, by one formulation or other, happy to let local electors decide on what the appropriate level of council tax should be. If his response is, “Well, we think there should be reserve capping powers and this is what the Bill is about”, that is one thing, but if the argument is that the Bill is about making sure that electors are the final arbiters in this, that helps us in our position on the matter.

I say to the noble Lord, Lord Jenkin, that there is a question about his formulation. Under the Government’s proposition, a level of council tax, if deemed excessive, requires the authority to produce a substitute calculation. As I understand it, a substitute calculation is one that is not excessive. I suppose that most authorities in this position would compute a substitute council tax that was just a smidgen short of what the excessive level would be. I am not quite sure, on the noble Lord’s formulation, what that substitute calculation would be and what would happen in circumstances where there was a referendum, 5 per cent of the electors called for it, and they did not support the level of council tax that was proposed. What are the consequences of that? If the noble Lord could help us with that point, it would be appreciated. It is clear under the Government’s propositions what the consequences would be, but I am not quite sure what the consequences would be under the noble Lord’s formulation.

I think that this has been a very helpful debate. It is incumbent on the Minister to say whether the Government see the powers as capping powers and believe that they need them, or whether that is not their position and this is basically about letting electors decide what the appropriate or inappropriate level of council tax would be.

My Lords, I suppose I can rise to speak on behalf of the only party in this House that is unencumbered by a history of support for capping, but I will try to resist too much temptation there. My name is obviously with my noble friend Lord Greaves on his amendments. I think he is right and I hope that the Government will consider very carefully that fairly simple change to wording which, as others have said, is actually very important. If these provisions are to be in Bill—like my noble friend Lord Greaves, I would rather that they were not—it is important that we have a neutral wording and not a prejudicial wording, which “excessive” must be, especially if that wording is likely to be used either as part of a referendum question or at least in support of any such referendum.

My particular reason for wanting to say a few words now is to support the noble Lord, Lord Jenkin, both in his general and particular plea. The general plea relates to much less regulation and dictation from the Government, a message repeated throughout the Bill. It is salutary to remember that when Ministers first announced the Bill, it was greeted with a pretty widespread welcome right across local government. The aim and intention as enunciated by Ministers was, broadly speaking, welcomed. We knew that there would be some things in here that we would be less happy about, but we thought that most things we would be fairly happy about. Then we came to see the detail of the Bill and the extent to which, as others have said, if it is localism at all, it is localism top-down. It is also prescribed by ministerial regulation and it is potentially constrained by Secretary of State powers. I join the noble Lord, Lord Jenkin, in urging Ministers, during what will be a longer than usual gap between Committee and Report, to take courage and look seriously at whether we need to be so risk averse that we hedge everything with regulations, Secretary of State powers, and so on. I said at Second Reading that if we mean localism, we have to trust local government. Some may occasionally get it wrong, but is that a reason to legislate for the vast majority that are to be trusted and should be trusted?

I turn now to the particular of this, which is about council tax capping. I do not have to be quite as measured as the noble Lord, Lord McKenzie. I do not have to carry that history and I understand that. It is council tax capping, as others have said. In reality, it is probably the most effective capping that a Government have ever had, because I suspect that very few, if any, local authorities will take the risk of setting what is prescribed as an excessive tax. It will be a huge risk: not just the risk of whether they can or cannot win a referendum but the cost and administrative upheaval of having to rebill later.

That seems to me to fly in the face of a fairly basic principle of localism. I have always believed that it was a fundamental democratic principle that local councillors are elected—personally, I wish that they were elected under a fairer system, but, nevertheless, they are elected —to determine the needs of their local community and to balance those needs with the level of tax that has to be raised to meet them. That is a tricky balance. Then they are accountable for their decisions to the people who elect them, the local people. We come back to the fact that if there is to be a referendum on council tax levels, it should be the local people who determine the need for a referendum, not the Secretary of State. To me, that is what localism is about, and that is why I support both the general statements of the noble Lord, Lord Jenkin, and his particular in the amendment.

My Lords, this is a large group. I shall speak first to Amendments 129LZZZA, 129LZZG, 129LZZH, 129LZZJ, 129LZAA, 129LZAB, 129LZC, 129LZE, 129LZF, 129LABZA, 129LABZB and 129LBA.

These amendments from my noble friend Lord Jenkin would require a referendum to be held only in response to a local petition signed by local electors. I understand what my noble friend seeks to achieve. That may indeed be purer localism than the Government's approach, but there would be grave practical difficulties in going down that road. My noble friend seeks to allow the timing to be determined locally, but time will be very short for such a petition to be organised, as council tax must be set in early March. If democratic control is to be effective, and not just cause financial confusion, the electorate's endorsement or otherwise of the authority's decision should follow very soon after. Given the binding nature of the referendum, it would be necessary to establish that each signatory of the petition was a local government elector in the area. That would be a difficult, time-consuming, contentious and potentially expensive precursor to the main event, the referendum itself.

The amendments leave in place the notion of substitute calculations, but do not resolve with any certainty the basis on which those calculations should be made. In effect, the authority will be saying, “If you do not like this level of council tax, we will adopt that one”. Who is to say that the electorate will not feel the substitute to be excessive as well?

The amendments leave in place the Secretary of State’s power to direct that the process should not apply. This is sensible in principle but will leave the authority in difficulty. As the Bill stands, the test he will use is: will this authority be unable to discharge its functions or meet its financial obligations if it is not allowed to set an excessive council tax? The approach proposed in the amendments is much less clear cut. They would leave unclear the arrangements that would lead to a referendum challenging a major precepting authority’s council tax. Apparently the process is to be triggered by a petition to a billing authority. What happens if a precepting authority covers several billing authority areas but only in one of them is a qualifying petition raised? Is there to be a referendum across the precepting authority’s area, or not? A further concern is that several petitions could be launched without central organisation.

Our approach, while preserving a principal role for central government in these local matters, is more practical, much more coherent and less likely to cause undue delay and confusion. We think it is right that authorities themselves should determine whether they have set an excessive council tax—one that has breached the principles set down for the financial year by the Secretary of State and approved by the House of Commons. We also think it is right that if an authority has set an excessive council tax it should arrange a referendum to give its electorate the final say on whether the decision should stand.

Will the Minister indicate a preparedness to discuss between Committee and Report the implications of the amendment moved by the noble Lord, Lord Jenkin of Roding? Having had discussions with the noble Lord when he was Secretary of State and I represented local authorities, I think the Government would find helpful such discussions on the practicalities of the issues, which appear to be the issues that the noble Earl, Lord Attlee, is relying on. The noble Lord, Lord Jenkin of Roding, is very knowledgeable about the history and the implications and he would be extremely helpful if the Government were minded to move to quell the fears of the noble Earl, Lord Attlee.

My Lords, I am extremely grateful to the noble Baroness because I passed by my handwritten notes and did not read them out. My noble friend Lord Jenkin set some homework for Ministers during the Recess. We will carefully consider the Committee’s deliberations, and we are grateful for all noble Lords’ counsel, even if we do not agree with all of it.

The amendments in the name of my noble friend Lord Greaves would change the wording of new Section 52ZB so that an authority is no longer required to determine whether it has set an “excessive” increase in council tax. Instead it is required to determine whether the increase is,

“higher than the level recommended by the Secretary of State”.

We consider that it would not be appropriate to change the wording of the new section in that way. The question of whether an authority’s relevant basic amount of council tax for a financial year is excessive will be decided in accordance with a set of principles determined by the Secretary of State and approved by the House of Commons. If an increase in council tax is then set locally that exceeds the level anticipated by those principles, it is perfectly reasonable to call it excessive. The increase might be justified, but the authority will have to persuade the electorate of that. It would be excessive because it exceeded the norm adopted by most authorities. The Government’s policy on this must be set against the background that average council tax increases have been high over the years, and in many years higher than inflation. This Government have taken steps of their own to help move away from this position, notably by funding a council tax freeze for this year. Ultimately, however, the best way to control excessive local expenditure is to make sure the local electorate can put a stop to it.

The Minister said that it will be up to the local authority to persuade the local electorate of the case that it is putting forward. Is it not the case that local authorities will not be allowed to spend money on campaigning in such referendums?

My Lords, I am not certain of the details, and I hope we will come to a suitable amendment to debate that.

The noble Lord, Lord McKenzie, asked that specific question last Thursday, and my noble friend gave this very specific answer:

“The noble Lord, Lord McKenzie, asked whether authorities can campaign for the proposed increase in council tax. No, it is intended that they cannot. They must put the facts to the electorate and leave them to decide but individual councillors will be free to campaign”.—[Official Report, 30/06/11; col. 1971.]

Is he saying that that stands, or is that not right now?

I am extremely grateful to my noble friend for refreshing my memory. He is absolutely right; that is the current situation.

The Minister seems disinclined to accept the amendment, which would remove the word “excessive” from the legislation. Will he give an undertaking that the word “excessive”, as applied to the proposed council tax of any local authority, will not have to feature in any referendum question?

My Lords, I hope to give the noble Lord some comfort on that. Within the context of that policy, the Government think they are right to refer excessive increases and to require that such increases be approved via a referendum. There is enough flexibility in these provisions to enable sensible principles to be defined. The Secretary of State has the power to set different principles for different categories of authority; and, in exceptional circumstances, if an authority is unable to discharge its functions in an effective manner or unable to meet its financial obligations, he can disapply the referendum provisions altogether.

What sort of categories might the Secretary of State have in mind? Is the noble Earl referring to types of authority, or are there some other criteria that the Secretary of State is likely to adopt?

My Lords, my understanding is that they are the different types of precepting authorities, but I will clarify that in writing to the noble Lord. No doubt there will be other matters that we will need to write on in due course.

Many noble Lords have asked me questions. The noble Lords, Lord Greaves, Lord Tope and Lord McKenzie, suggested that the word “excessive” in a referendum question might prejudice the result. Noble Lords made me think hard about this point but inspiration arrived. It might be possible to ensure that referendum questions do not prejudice the matter, and we will consider this point over the Summer Recess.

The noble Lord, Lord McKenzie, asked whether these measures are capping powers and whether the Government would be happy to see voters support a higher and excessive level. If voters make an informed decision to support higher council tax, the Government will be perfectly happy. That is the principle behind the legislation. In view of what I have said, I hope noble Lords will feel able to withdraw their amendments.

Before the noble Lord decides what to do with his amendment, will the Minister undertake during this gap to look at some dictionaries for definitions of “excessive”? I have taken advantage of the new rules of the House and googled the word. The definitions all say that it describes a quantity or amount exceeding that which is justifiable, tolerable or desirable—for example, excessive drinking. So will the noble Lord accept that “excessive” is a term that has connotations, whatever its original and absolute meaning might be? I agree with my noble friend Lord Greaves that it does not have a place in legislation.

My Lords, I cannot agree with my noble friend's point that it does not have a place in legislation, but I undertake to consider whether the word “excessive” is appropriate in the referendum question.

I am grateful for that; it is a step forward. If the Government are to do that over the Recess, will they consult the Electoral Commission about that matter, as it is a referendum question?

My Lords, I think it would be extremely unlikely that we did not take advice from the Electoral Commission.

My Lords, we have spent more than half an hour on this amendment, following the speech of the noble Lord, Lord Shipley, on Thursday. I think the Government have got the message. I am extremely grateful to my noble friend Lord Attlee for undertaking to cogitate on these matters between now and Report. I understand some of the difficulties that his officials have put before him, but I was very encouraged to hear him say that he read from his own handwritten notes in response to the noble Baroness opposite when he said he would look at all these matters again. In the light of that assurance, I hope the noble Lord, Lord McKenzie, will forgive me if I do not go into detail about what the results of this might be. I do not regard these amendments as an infallible way of achieving the overall purpose of less top-down government control and more control by devolved local authorities. They are accountable to their electors and I suspect that my noble friend Lord Attlee really will look at this, as he said he would. I shall be happy to help him, and I shall perhaps bring along some of those who have been advising me on these matters. I beg leave to withdraw the amendment.

Amendment 129LZZZA withdrawn.

Amendments 129LZZA to 129LZZJ not moved.

Amendment 129LZA

Moved by

129LZA: Schedule 5, page 264, line 27, at end insert “, and must be accompanied by the reasons for determining why there should be different categories of authority for the year under consideration”

My Lords, this is a straightforward matter and I hope it will not detain us for long. In determining the principles by which a level of council tax is considered to be excessive—or whatever replacement word we may have—the Secretary of State can adopt different principles for different categories of authority, a point just raised by my noble friend, but such principles must apply to all authorities in the same category. There is nothing new in that and similar arrangements operate under existing capping rules. In determining categories of authority, the Secretary of State must take into account any information which he thinks is relevant. In the interests of transparency, this amendment simply requires those reasons to be set out in the report on the principles, which must be laid before the House of Commons.

This is especially important because, in government terms, these matters are to be determined by the public. I do not know whether the Minister can expand a little on what type of principles are likely to be identified in the circumstances which would help members of the public, if they were to vote, and how and what information would be conveyed to them.

My Lords, this amendment appears to assume that the Secretary of State will inevitably determine different categories of authority in a set of principles. That is not necessarily the case. The proposed new Section 52ZC allows the Secretary of State to determine different categories of authority, but he may also decide to apply the principles equally to all authorities. Without pre-judging the Secretary of State's decisions, he may, for example, determine as a category districts, councils, counties, metropolitan boroughs, police or fire authorities, which I think fully answers the question that arose in the previous group of amendments. That would be a matter for the Secretary of State to decide on a yearly basis. The Secretary of State is already required to set out his principles in a report to the other place. It is inevitable that the reasons for the principles will be debated there before the other place gives its final approval. Therefore, the proposed new clause is unnecessary and I urge the noble Lord to withdraw the amendment.

My Lords, I thank the Minister for his reply. The amendment would have operated not only in circumstances where there was differentiation between different sorts of authorities but where there was no differentiation, because presumably, in making the judgment, the Secretary of State would have had to take into account a certain amount and range of information. I was simply seeking a situation where, when it came to the information to be taken into account in making the determination, either everyone will be in the same category or there will be different categories, but either way this should be transparent and included in the report that goes to the House of Commons. If the Minister says that that would inevitably be the case and it would be covered in the report, I am happy that that is on the record and I beg leave to withdraw the amendment.

Amendment 129LZA withdrawn.

Amendments 129LZAA and 129LZAB not moved.

Amendment 129LZB

Moved by

129LZB: Schedule 5, page 265, line 43, after “rates,” insert “non-domestic rates,”

My Lords, I shall speak also to the other amendments in the group. I hope that noble Lords will forgive me if my speech is not so brief. Amendments 129LZB and 129LAB seek an identical wording. The first relates to the substitute calculations of a billing authority, the second to substitute calculations of a precepting authority. Each calls for the inclusion in accruals of non-domestic rates in addition to the redistribution of non-domestic rates. This does no more than make provision for the localisation of the business rate in due course. In the absence of such an adjustment, by what mechanism will these calculations take account of localised business rates, should that be where we end up? Prior to this happening, perhaps the Minister will confirm the position of redistributive non-domestic rates. Will he confirm that currently, taking one year with another, amounts collected are fully redistributed? Will he also confirm that there are no plans or discussions concerning the possibility of charging amounts against the national pool before redistribution?

Amendment 129LAC concerns the recovery of the costs of a referendum. New Section 52ZN(7) allows a billing authority to recover from a precepting authority the cost of holding a referendum. However, new Section 52ZN(8) gives the Secretary of State powers to deny or modify the right of a billing authority to recover such costs. The impact assessment estimates that the cost of a referendum, depending on the size of the local authority and whether other elections are held at the same time, could be between £85,000 and £300,000. Therefore, not inconsiderable sums are at stake. In what circumstances is it envisaged that recovery of referendum expenses would be denied to a billing authority? Does the Minister consider that the term,

“incurred by the billing authority in connection with the referendum”,

will cover the costs of rebilling in the event of a referendum not supporting the level of council tax calculations—in other words, the costs associated not only with the referendum but with its consequences? If the term is not meant to cover that, how is this otherwise catered for?

Amendment 129LE deletes a range of regulation-making powers that the Secretary of State has in connection with a referendum. In this respect, it is more focused and less ambitious than that of the noble Lord, Lord Greaves. The powers extend to the question to be asked; publicity; the limits on expenditure; the conduct of the authority, its members and its officers; when, where and how voting is to take place; how the votes are to be counted; and the disregarding of alterations in a register of electors. Frankly, it is outrageous that these matters cannot be left to an individual local authority. Amendments 129LF and 129LG deal with another matter.

As the legislation currently stands, the Secretary of State has power to determine that the referendum provisions are not to apply, notwithstanding that a council’s tax calculations are, in his view, “excessive”. The Secretary of State can do this if he considers that, without that level of increase, the authority would be,

“unable to discharge its functions … or … to meet its financial obligations”.

Our amendment is an opportunity to probe the meaning of this, but also to argue for an opportunity for a local authority to request an independent assessment of whether the criteria are met. There was limited debate in Committee in the other place on this issue. The line that the Minister was taking was that this safeguard was really only about a crisis or a catastrophe; for example, the collapse of BCCI, where the Western Isles had invested heavily. Clearly there are extreme examples, but where principles are applied to a local authority as part of a category of authorities, they do not sufficiently take account of its specific circumstances.

The Minister discussed the application of this safeguard where it was an issue about the level of services and how they were provided. In the House of Commons Bill Committee of 8 February, col. 440, he argued that local authorities had to set a budget that was lawful and would enable them to fulfil their statutory functions. However, if such a lawful budget was deemed excessive, it would only stand if supported in a referendum; if not, it could logically be the position that the authority would therefore be unable to fulfil its functions. The fact that the Ministers may be satisfied in aggregate that local authorities have been provided with sufficient resources—and we might argue about that—does not mean that each and every one in the same category will be. It may be that a particular authority has encountered issues of provider failure, litigation and redundancy costs, possibly because it is in transition to a delivery model that the Secretary of State might find more acceptable. It may be that some of the issues, for example, relating to contract litigation, where it might be genuinely difficult to provide sufficient information for a realistic assessment in a referendum at a particular point in time, could be in point; indeed, it could be prejudicial to a local authority’s case for it to do so. Sometimes it would difficult to condense quite sophisticated legal issues into information that would accompany a referendum question. So we have two fundamental points that these particular amendments are seeking to probe.

What does the Minister see as the boundaries of the use of these provisions? Discussion at the other end suggested that they were only to be applied in extreme, catastrophic circumstances. We postulated other circumstances—but not routine—where a local authority should not be forced through a referendum with all the costs and uncertainties that this entails. Our amendment, as well as being a probe, also sets out an alternative route for a local authority to benefit from this provision, whatever its boundaries. There should surely be a right to some independent assessment of whether these provisions apply. I would not commit it to the precise mechanism that we have set down; I simply raise the issue of the principle. I beg to move.

My Lords, I have a later amendment, Amendment 129LEA, which is on its own. I would have included it in this group if I had quite understood what the latter part of the amendment tabled by the noble Lord, Lord McKenzie, was about. The new Section 52ZR, which the Bill would insert into the Local Government Finance Act 1992, provides for the Secretary of State to give a direction,

“that the referendum provisions do not apply”,


“the authority will be unable to discharge its functions in an effective manner or … the authority will be unable to meet its financial obligations”.

When speaking in the stand part debate introduced by my noble friend Lord Shipley last week, the Minister referred to this briefly when he said that these provisions would be used only in very extreme circumstances, such as,

“where the High Court has exercised its powers to appoint a receiver where an authority has failed to service its debt”.—[Official Report, 30/6/11; col. 1971.]

I do not know how often that happens, but I do not think it has happened, certainly in England, in my lifetime. It seems very rare, so I tabled Amendment 129LEA for the purpose that the noble Lord, Lord McKenzie, tabled his amendment: to probe the Government on exactly what kind of circumstances this provision might be used in. In view of that, I will listen carefully to the answer in this grouping, and I will not move my amendment when we get to it.

My Lords, Amendments 129ZB and 129LAB would add the words “non-domestic rates” to new Section 52ZF(3)(a) and new Section 52ZJ(4)(a). There is no need to do this. The wording “redistributed non-domestic rates” covers the sums that would have to be taken into account in respect of non-domestic rates when an authority carried out its original council tax calculations.

The noble Lord, Lord McKenzie, asked whether amounts of non-domestic rates are fully redistributed. The answer is yes, by virtue of Schedule 8 to the Local Government Finance Act 1988. When making substitute calculations to determine an amount of council tax that is not excessive by reference to the principles under the new Sections 52ZF and 52ZJ, an authority must use the amount determined in its previous calculations for redistributed non-domestic rates. This is because an authority should not be able to change its estimate of the amount it will accrue in the year in respect of redistributed non-domestic rates to calculate an amount of council tax which complies with the excessiveness principles.

Perhaps I can help the Minister. The purpose of these amendments is much more straightforward than that. It is simply to try to cater for the situation where we no longer have redistributed non-domestic rates but have directly billed non-domestic rates. That is the sole purpose.

My Lords, these are complex matters, and I am advised that I should read it all out.

Subsection (8) of new Section 52ZN provides the Secretary of State with the power to modify or disapply a billing authority’s entitlement to recover costs in connection with a council tax referendum from a precepting authority. Amendment 129LAC would remove this provision. This power is needed so that the Secretary of State may make different provision for the recovery of costs in a situation in which a number of billing authorities are required to hold a referendum on a major precepting authority’s increase in council tax but one billing authority fails to do so. In this situation, it would not be appropriate for those billing authorities to recover their costs from the major precepting authority. Provision may instead be made for the billing authorities to recover their costs from the defaulting billing authority. We are aware that the Delegated Powers and Regulatory Reform Committee’s report on this part of the Bill recommended that this power should be subject to the affirmative procedure. We will consider that recommendation carefully and will return to the matter in due course, if required.

Amendment 129LE seeks to limit the matters the Secretary of State may make provision for in regulations regarding the conduct of council tax referendums. The regulations would include setting out what is acceptable in terms of publicity, expenditure, the conduct of authorities, their members and officials, and the counting of votes, so these are significant issues. We consider that it is important that these matters be prescribed in regulations, as an authority will be bound by the result of the council tax referendum, in contrast to a local referendum. It is intended that the regulations made under these powers will be modelled on the Local Authorities (Conduct of Referendums) (England) Regulations 2007, which make provision in relation to the conduct of referendums on local government executive arrangements. I can assure the noble Lord that the regulations will be subject to consultation with the Electoral Commission.

Amendment 129LABA removes the requirement for a billing authority to hold a referendum on a precepting authority’s excessive council tax increase. We consider that billing authorities are the appropriate bodies to arrange council tax referendums, as they are responsible for administering the council tax system. They also have experience of organising local elections, whereas there are some precepting authorities, such as police and fire and rescue authorities, that do not have any experience of this. Billing authorities will also be best placed to co-ordinate referendums where more than one authority covering the same area sets an excessive increase in council tax. Where a major precepting authority sets an excessive increase in council tax, it follows that all billing authorities to which it issues a precept, will need to organise a referendum. In these circumstances, to ensure the referendum is held on the same day by billing authorities across the major precepting authority’s area, billing authorities are required to hold the referendum on the ordinary day of local elections. Provision is made so that billing authorities may recover the expenses they incur in connection with the referendum.

Amendments 129LF and 129LG relate to new Section 52ZR, which is a reserve power for the Secretary of State to disapply the council tax referendum provisions and would only be used in exceptional circumstances. It may, for instance, be used in a situation where the High Court has exercised its powers to appoint a receiver because an authority has failed to service its debt. The amendment would mean that an authority which sets an excessive council tax can seek an independent assessment, and the Secretary of State would be compelled to give a direction to disapply a council tax referendum if that assessment comes to a particular conclusion. It is inappropriate for an unelected and unaccountable person to make the decision, since it will involve factors beyond a simple financial assessment of the authority’s position. It will, for example, involve a judgment about whether local taxpayers should be entirely unprotected from excessive increases for a financial year. Depending upon the precise timing, one outcome could be for the Secretary of State to refuse to issue a direction but to treat the authority as a separate category when setting excessiveness principles. For these reasons, the Secretary of State expects the power of direction will genuinely be used only in exceptional circumstances.

These are very complex but important matters, and if I may I will write if there are any points which I have not covered. In the mean time, I hope noble Lords will feel able to withdraw the amendments at the appropriate point.

The Minister said that the billing authority—I am thinking in terms of a two-tier area with counties and districts—may be able to recover its costs. Should that not be automatic if the referendum is in relation to the level of council tax set by the county council, for example?

My Lords, I thank the Minister for his very full response to these amendments. We will need to read the record to see what we wish to take forward from this, but I just want to follow up the point about the reserve powers that the Secretary of State is to have.

I can see that such powers would be necessary in a range of circumstances—including in catastrophic circumstances, at one end of the spectrum—and we are not arguing that, at the other end of the spectrum, there should be an automatic right to go to an unelected body to try to get off the consequences of this legislation. However, there could well be circumstances in-between. It may be that the solution would be—and perhaps this is what the Minister was suggesting—that you would separately designate a particular authority as a special category, but in general these regulations will be applied to groups of authorities, if not all of them together. Although the Government may well take the view that in aggregate they have enough to fulfil their functions, there could be circumstances of individual authorities where that is simply not the case. To be able to convince an electorate in a referendum that that is the case may not always be easy. There could be circumstances around litigation or sensitive commercial discussions where simply to spell out the upside and downside of that information provided in a referendum could be detrimental and prejudicial to the local authority. Therefore, has there not got to be some other safety valve in those sorts of circumstances, which are not the authority defaulting on its debt but the authority potentially getting into quite severe difficulty because of the potential downside of a court case, for example? It would be left not able to raise the level of tax that it thought that it should be able to deal with.

That is the point we are probing, which we have coupled with a right for an independent assessment in those circumstances. I ask the Minister to consider that point seriously. Whatever the supposed evils of capping at the moment, one of the benefits was that at least it was looked at on an authority-by-authority basis. If you had an authority which was in a sense in a particular circumstance, that could be taken account of within the principles that had been set. That seems to be not available under this formulation, which is a real issue.

My Lords, while not agreeing to take the matter away, I will unpack the issue with my officials and, if necessary, write to the noble Lord.

Amendment 129LZB withdrawn.

Amendments 129LZC to 129LZF not moved.

Amendment 129LA

Moved by

129LA: Schedule 5, page 266, line 45, leave out from “Acts” to end of line 2 on page 267

My Lords, government Amendments 129LA and 129LB ensure that only residents and not business voters are entitled to vote in any council tax referendum in the City of London. This addresses an anomaly which has become apparent since the clauses were originally drafted. Without the amendment, business voters in the City would be able to vote in a council tax referendum even though they are not resident in the area. The amendments therefore provide that it is only the residents of the City of London who can vote, which will bring the City in line with the position in the rest of England regarding council tax referendums. I beg to move.

Amendment 129LA agreed.

Amendment 129LAA

Moved by

129LAA: Schedule 5, page 267, line 17, at end insert—

“( ) On application by a relevant authority, the Secretary of State may direct that the substitute calculations referred to in subsection (5) may be increased by an amount determined by the Secretary of State.”

My Lords, Amendment 129LAA seeks another safety valve for limited, possibly exceptional, circumstances. Where an authority’s council tax is deemed to be excessive, it will be required to hold a referendum. If the referendum does not approve the basic amount of council tax, the council tax is set by reference to a substitute calculation. A substitute calculation is an amount predetermined by the authority, which would not be excessive under the rules. One might suppose that in most cases the substitute calculation would be just below what the Secretary of State would deem to be excessive. Our amendment would offer a route to an authority to seek to have the substitute calculation increased by an amount to be determined by the Secretary of State. So we are not suggesting that this should be a reference to independent assessment.

We do not advance this proposition as a general route to overturn the results of the referendum—it would be necessary to develop specific criteria. However, there may be circumstances where a local authority should not be bound by the substitute calculation—for example, picking up a theme in relation to the previous amendment, events may arise between the commencement of a referendum and its conclusion which, if reflected in the information provided, might influence the result. It could be a contractual matter with adverse consequences; it could be announced closures of major commercial undertakings, particularly if they were localised NNDR, which could have a significant impact on the council’s revenue base.

What would happen if there was a genuine challenge to the result of a referendum? If this challenge were sustained, what is the position? Would the local authority have to apply the substitute calculation, notwithstanding that an adverse result in the referendum was found to be unsound? How would that all work?

My Lords, this amendment seeks to allow an authority another bite at the cherry if it loses a council tax referendum. It also is surprising to note, given the previous debate, that the amendment would give the Secretary of State a new power of direction. A council tax referendum will present a clear option to voters: to vote for either the authority’s preferred increase or for an increase that does not breach the excessiveness principles. This amendment would allow the authority to apply to the Secretary of State to set an excessive increase in council tax when the local electorate have voted against this, thus allowing him to override the referendum result.

The noble Lord suggested that an extraordinary situation could arise locally. However, the electorate would be aware of that when they chose whether to vote for an excessive increase or not. The principle of this provision is that the local electorate should take the decision and not the Secretary of State. The Secretary of State has a power to direct that the referendum provisions are not to apply. However, he may use this power only where the authority is unable to discharge its functions in an effective manner or is unable to meet its financial obligations. The expectation is that this power would only be used in exceptional circumstances, such as where the High Court has appointed a receiver where an authority has failed to service its debt. It would not be appropriate for the Secretary of State to be able to direct that an authority may set an excessive increase in council tax and take the power of veto away from local electors as a matter of routine. I therefore urge the noble Lord to withdraw his amendment.

Will the noble Lord consider a scenario in which a local authority is required to increase substantially its council tax because it has to pay one of the EU fines being introduced by the Government in an earlier part of the Bill?

My Lords, I am grateful to the noble Lord for his response but I do not think he really dealt with the question about an EU fine. It is provided for in this Bill and if the provision is removed we would all be delighted. A fine could be visited on a local authority at the last minute potentially after it has set its budget and its referendum detail is public.

I want to return to what happens if there is a challenge to the referendum—the Bill allows for that—and that challenge is sustained. If a local authority is deemed to have an excessive council tax increase—we must stop using that term otherwise it is going to be inculcated in our own speech as well as the text of the Bill—it has to hold a referendum. If that referendum does not support the council tax increase but is subsequently determined to be flawed, what are the consequences? It seems to me there are no provisions for the Secretary of State or anyone else to bring redress to the local authority which has been on the receiving end of malpractice in respect of the referendum.

My Lords, I imagine that the local authority will have to adhere to its reduced budget but, if I have anything to add on that point, I will write to the noble Lord.

Amendment 129LAA withdrawn.

Amendments 129LAB to 129LAC not moved.

Amendment 129LB

Moved by

129LB: Schedule 5, page 271, line 33, leave out from “Acts” to end of line 37

Amendment 129LB agreed.

Amendment 129LBA not moved.

Amendments 129LC and 129LD had been withdrawn from the Marshalled List.

Amendments 129LE to 129LG not moved.

Amendment 129M

Moved by

129M: Schedule 5, page 280, line 29, at end insert—

“(ba) the amount of any levies and special levies—(i) issued to it for the year, or(ii) anticipated by it in pursuance of regulations under section 74 or 75 of the 1988 Act, or(c) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of, or including, the whole of its area.”

My Lords, I shall speak also to government Amendments 129N to 129U. This group of amendments addresses two specific issues concerning the calculation of whether an authority’s council tax is excessive. First, the amendments ensure that a referendum on a council tax rise is not triggered solely because of planned expenditure which has already been explicitly supported in a local referendum. The amendments apply where a qualifying local referendum is held across the whole of the billing authority area, the county council or the GLA. In such circumstances, an authority may be able to disregard qualifying expenditure that it estimates it will incur in taking steps to give effect to the result of that referendum when calculating whether an increase in council tax is excessive. This means an authority will not have to take this expenditure into account when determining whether it must hold a council tax referendum.

The conditions for qualifying expenditure and qualifying local referendums will be prescribed by the Secretary of State in regulations. The regulations will include matters such as the information that must be available in advance of the local referendum, the time period within which the local referendum must have been held and restrictions on the expenditure that may be disregarded. For the avoidance of doubt, we are making changes only to the calculation which determines whether a council tax is excessive. We are not changing the calculation of council tax itself.

Secondly, the amendments ensure that increasing levies, which have to be treated as part of the billing authorities and certain major precepting authorities’ expenditure for council tax purposes but are outside their control, do not tip the balance in requiring an authority to hold a council tax referendum. These amounts will therefore also not be taken into account when an authority calculates whether its council tax is excessive. I beg to move.

My Lords, I think that I am grateful to the noble Earl for his explanation but I would like to read the record. These seem not unreasonable amendments.

Amendment 129M agreed.

Amendments 129N to 129U

Moved by

129N: Schedule 5, page 280, line 30, after “than” insert “a county council or”

129P: Schedule 5, page 280, line 34, at end insert—

“(2A) In the case of a major precepting authority that is a county council, any reference in this Chapter to the authority’s relevant basic amount of council tax for a financial year is a reference to the amount that would be calculated by it in relation to the year under section 42B(1) above if section 42A above did not require or permit it to take into account—

(a) the amount of any levies—(i) issued to it for the year, or(ii) anticipated by it in pursuance of regulations under section 74 of the 1988 Act, or(b) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of its area.”

129Q: Schedule 5, page 280, line 38, leave out from “amount” to “(referred” in line 39

129R: Schedule 5, page 280, line 41, after “year)” insert “that would be calculated by it under section 88(2) of the Greater London Authority Act 1999 if sections 85 and 86 of that Act did not require or permit it—

(i) to take into account the amount of any levies issued to a constituent body for the year,(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London”

129S: Schedule 5, page 280, line 42, leave out from “amount” to “(referred” in line 43

129T: Schedule 5, page 280, line 45, at end insert “that would be calculated by it under section 89(3) of the Greater London Authority Act 1999 if sections 85 and 86 of that Act did not require or permit it—

(i) to take into account the amount of any levies issued to a constituent body for the year,(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London”

129U: Schedule 5, page 281, line 29, at end insert—

“(9) In this section—

“local referendum” has the meaning given by section 42(1) of the Localism Act 2011;

“qualifying expenditure” means expenditure in relation to which the prescribed conditions are met;

“qualifying local referendum” means a local referendum in relation to which the prescribed conditions are met.”

Amendments 129N to 129U agreed.

Schedule 5, as amended, agreed.

Schedule 6 agreed.

Clauses 60 to 66 agreed.

Schedule 7 agreed.

Clause 67 agreed.

Clause 68 : Duty to consider expression of interest

Amendment 129V

Moved by

129V: Clause 68, page 57, line 26, leave out from “with” to end of line 28 and insert “this Chapter”

My Lords, we now move on to Chapter 3 of Part 4 of the Bill, excitingly titled “Community Right To Challenge”. I have seven more amendments in this group, along with my noble friend Lord Tope, and there are a couple from the Labour Party. These are the first of a series of amendments on this community right to challenge part of the Bill which I am moving on behalf of the Liberal Democrats on the basis of the criterion which the noble Baroness, Lady Andrews, put forward at Second Reading—workability. This is a completely new idea and a completely new set of provisions. It is extremely important that, when they leave this House, they leave in a workable condition. They may already be in a workable condition, or they may not. Our job is to make sure they are, whether or not they require changes.

The basic principle—in rather obscure language, I have to say—is that,

“a relevant authority must consider an expression of interest”

if submitted by a relevant body that is interested in,

“providing or assisting in providing a relevant service”.

I have to say that back in Colne this is not the language people use and, no doubt, when the community right to challenge gets down to the grass roots, people will have a plainer English explanation of what it is all about. The relevant authority is, as set out, a principal local authority in England, or a body set out in Clause 68(2)(d), which reads,

“such other person or body carrying on functions of a public nature as the Secretary of State may specify by regulations”.

Here we have more mysterious regulations specifying mysterious people. Before the Bill leaves this House we need to know who these people are, at the very least.

A “relevant body” is defined as,

“a voluntary or community body … a body of persons or a trust which is established for charitable purposes only … a parish council … two or more employees of that authority”—

in other words, two or more employees of the council whose services are being challenged—

“or … such other person or body as may be specified by the Secretary of State by regulations”.

It is not a surprise to find that there, since it is what we find everywhere in the Bill, but, again, we need to know what it means.

A “relevant service” which is being challenged on the relevant authority by the relevant body is,

“a service provided by or on behalf of that authority in the exercise of any of its functions, other than” …

and “other than” is, effectively, a service that the Secretary of State makes regulations saying shall not be subject to the challenge. Yet again, we have a power to the Secretary of State that we need to understand.

This, in many ways, is the nub of the problem. This is framework legislation, skeletal legislation, and there is a huge amount down to regulations. It might seem boring to keep saying this, but in every part of the Bill this seems to be the fundamental problem. What we have here is a new idea—what I would describe as a spiffing wheeze—that has been dreamt up by the Government. It has actually been dreamt up by the Conservative part of the Government and I do not complain about that; a coalition is a coalition of two parties and each party has a right to bring its own spiffing wheezes to the table. We have to find out how this is to be done as I do not think that we are being told that at the moment. I would like all these specific powers for the Secretary of State to be removed, or at least a lot of them.

Is there any hope that we are going to see draft copies of the regulations before the Bill leaves this House? We do not have them for Committee stage. Will we have them by Report? If we do not have them by then, I can see that there might be a certain amount of bother in the House.

That is all I that I really want to say about this. I have some more notes but they just repeat what I have said, so I will not say it again. The noble Baroness, Lady Farrington, is going to express shock and surprise that I have not said it three times.

Most certainly not. The noble Lord, Lord Greaves, ceased to surprise me about 20 years ago. My point is that it is very helpful for other parts of your Lordships’ House to know when we are dealing with a government view or whether it is a jolly wheeze thought up by one party—on this occasion, according to the noble Lord, by the Conservative Party. I hope that members of the Conservative Party in your Lordships’ House will tell us when a jolly wheeze has their support but not that of the Liberal Democrats. It is a new form of coalition Government, and I am enjoying it.

The noble Baroness is, unusually, wrong. It is not a new form of coalition Government; it is how most coalitions work. Different parties bring different proposals to the table, compromises and trade-offs are reached and, one hopes, the best ideas from each of the parties come through. All I am saying is that it is no secret that the community right to challenge, as it is now called, and indeed the community assets that we will move on to discuss after this, came from the Conservative Party. I am not criticising that party for that or saying that I do not support it.

When I opened my remarks I said clearly that what we have to do with a new, untried, untested idea is ensure that it is going to work. If it does not, one of two things will happen. A lot of difficulties will be caused on the ground because the idea has not been thought through properly or, alternatively, it will be realised that it has not been thought through properly before these myriad regulations are produced and it will never happen, the regulations will never happen and perhaps the chapter will never be commenced. What I and the Liberal Democrats are trying to do is to be satisfied that the proposals are workable before they leave us so that they are actually a great success when they go out there.

My Lords, the amendments in my name start with Amendment 130ZBA. In estate agents’ parlance, the key to property is always described as “location, location, location”. When it comes to this legislation and the work of the Civil Service in advising Ministers, the phrase seems to be “regulation, regulation, regulation”, and it is to that that this amendment is addressed. The purpose of Amendment 130ZBA is to require the Secretary of State, before making regulations prescribing which services may be tendered and which not after an expression of interest, to consult with the Local Government Association or any public bodies to which the relevant section would apply. That echoes pleas that fell on unsurprisingly deaf ears last night in this Chamber on the police reform Bill where similar requirements were sought that the Home Secretary would require that police commissioners consulted with local authorities in respect of various matters. That did not appeal to Ministers but I rather hope that on this occasion Ministers will acknowledge that it would be sensible and right for the Secretary of State, before making regulations around this issue and indeed others in the Bill, to consult with a representative body for local government.

The second amendment would simply take out Clause 68(9). It is similarly designed to reduce the regulatory function to which other noble Lords—the noble Lords, Lord Jenkin and Lord Greaves—have referred. I hope the Government will acknowledge that no harm will be done to them, and indeed the general tenor of the legislation will be improved, if they were to accept these amendments.

My Lords, I am sure that they use plain English in Colne. I imagine that it is very direct language, and I very much doubt that they use the term “spiffing wheeze” or “jolly wheeze”. My noble friend may have forgotten that the department has actually issued a plain English guide to the Bill.

But do they read the plain English guide to the Localism Bill? That says, on the community right to challenge, that many local authorities,

“recognise the potential of social enterprises”.

I hope that my noble friend Lord Shutt of Greetland, who I think will respond to the debate, will be able to say a word about whether in the Government’s mind social enterprises are something different from community groups. Many social enterprises are in fact businesses. That is not a criticism, but they are very different from community groups. The application of these provisions to social enterprises is interesting. The guide refers to them providing,

“high-quality services at good value”,

and delivering services “with”—that is, with local authorities—“and through them”. I was interested in the “with”, which, in the legislation, finds its manifestation in,

“assisting in providing a relevant service”.

I do not know whether my noble friend is able at this stage—we may need to wait for the regulations, which I, like the noble Lord, Lord Greaves, hope to see before too long—to explain what that assistance might look like.

My Lords, I thank those who have contributed to this series of amendments. We have a fresh start here, in that the community right to challenge will hand the initiative to voluntary and community bodies with good ideas about how services can be run better, and more cost-effectively, ensuring these ideas get a fair hearing, and will give them the time to organise themselves to bid to run these services.

In making my preparations for the day, I spotted the word “regulation” more than once. I thought the best thing to do is to take this head on. Much of the detail of how the community right to challenge will work is to be included in regulations. In response to amendments from noble Lords which touch on this detail, I will often have to explain that we are currently carefully considering issues that have been raised in our recent consultation. It is important that we get the details right. I would like to reassure noble Lords that, on various issues on which we have consulted, we propose to set out the way forward prior to the Report stage of the Bill. I am not promising, but if we can, we will see if we can get some draft regulations. That may not be possible in all cases but we will endeavour to do so.

I understand what my noble friend Lord Greaves said. I had not thought of “jolly wheeze” as featuring in his vocabulary. However, community organisations are part of the Liberal Democrats’ vocabulary. Therefore, this measure may have been suggested by one part of the coalition but I readily embrace it as a means of giving communities an opportunity to come forward with better ways of delivering local services. However, we need to see what is in the regulations, on which consultation is still taking place.

Will the noble Lord confirm that the Government accept the recommendations of the Delegated Powers Committee regarding regulations under this part of the Bill being subject to the affirmative procedure?

My Lords, the Government are considering those recommendations. I will not make any promises on that but I believe that they are very likely to take serious account of the committee’s views. It would be very unusual if they did not.

Amendment 129V would remove the Secretary of State’s powers to specify requirements for expressions of interest in regulations. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right but this power would prevent a recalcitrant authority requiring an unnecessarily burdensome amount of information that would stymie a relevant body wishing to use the right.

Amendment 130ZB would remove the Secretary of State’s power to exempt services from challenge. Taken with Amendment 133ZK, which would remove the power for the Secretary of State to specify the grounds for rejecting an expression of interest, which we will consider later, this amendment would give relevant authorities discretion to reject a challenge to any of their services. As I have already explained, we have taken these powers to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right, but this power would prevent a recalcitrant authority rejecting expressions of interest out of hand.

Amendments 130ZA, 131ZA, 131G, 131H, 131E, 131F and 131DA would remove the Secretary of State’s powers to make changes to the right in regulations. Amendments 130ZA and 131ZA would remove the power to add relevant authorities and bodies. Amendments 131E and 131F concern the power to amend the definition of a relevant body and voluntary and community bodies. Amendments 131G and 131H concern the power to make any amendments to this chapter of the Bill that are necessary as a consequence of adding relevant bodies and authorities, including making changes to regulation-making powers. Amendment 131DA would remove Clause 68(9), which contains many of these powers.

We have taken these powers to enable us to keep pace with change and appetite for extension of the right. For example, the powers to add, amend and repeal relevant bodies and amend the definitions of voluntary and community bodies enable us to ensure that these definitions continue to reflect the types of organisation representing communities.

Amendment 130ZBA would require the Secretary of State to consult representatives of relevant authorities and other public bodies affected by an extension of the right. We have recently concluded a consultation on our proposals to use the various powers with all those with an interest in the right and we will consider the need for consultation on future changes. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded from the challenge.

I should respond to the noble Baroness, Lady Hamwee, who mentioned one type of social enterprise. I have certainly seen in my life numerous names representing organisations that are not a sole trader or public limited company but which have some social, community, environmental or other involvement. It seems that it does not stop. I think that the important thing is that other forms of enterprise might appear but that we are yet to hear from. The way that the script is written covers anything that might happen in the future. In those circumstances, I trust that the amendments will not be pressed.

Before my noble friend responds, I wonder if I may just say a word about that last point on social enterprises. A community body is defined in Clause 68(8) as a body carrying on activities,

“primarily for the benefit of the community”.

No one would quarrel with that, but the distinction between a community and a voluntary body as defined, is a reference—or, in the case of a community body, lack of reference—to profit, to it not being carried on for profit, or to what happens to the profit. Reading the words,

“primarily for the benefit of the community”,

I wondered whether that was to be read as including how profit is dealt with, whether it is to be ploughed back for the benefit of the community. Perhaps this is another matter for regulations. However, the distinction might be relevant in giving us a flavour of how the Government expect this new arrangement to work. Maybe it is a question of letting 1,000 flowers bloom, and so on.

Letting many flowers bloom is the position. Clause 68(5) refers to a “voluntary or community body”, and the noble Baroness has mentioned the differences there; to a body “established for charitable purposes”; to the parish council; and then to “two or more employees”, and “more” could be considerably more. How that “more” then establishes itself is another way forward. There are clearly two features here: the elements of “voluntary”, “community” or “charitable”; and the way in which employees choose to organise themselves. They are lumped together, but in many minds—in my mind at any rate—they are two distinct ways forward.

The noble Lord may recall that I have an amendment dealing with precisely that matter, which we will discuss later.

My noble friends Lady Hamwee and the Minister are straying on to matters covered by future amendments. I remind my noble friend that she might have suggested some of those amendments. As for the idea that this is all about letting 1,000 flowers bloom, I invite my noble friend the Minister to come on over the tops and have a look at Colne at the moment. It is in an absolutely beautiful condition thanks to Colne in Bloom. There is a massive display of flowers; far more than 1,000. On the other hand, letting 1,000 flowers bloom did not do much good for Mao Tse-Tung. It has different connotations.

The Minister referred to recent consultations. Can he give us an assurance that the Government will publish a pretty full account of the results of those consultations and the evidence that they got? Will it be possible to access them?

I do not have it to hand, but I am pretty certain that they are to be published on 2 August. I think that that is the statutory date when the results of the consultation must be published so that people know what people have had to say, so that will be done.

That formal consultation has now finished, but I am pretty certain that, bearing in mind that this is still going through your Lordships' House, other views will still be taken into account—but not in the formal consultation.

Will what is published be a pretty good summary of what people said in the consultation, as well as of the Government's views? I think that the Minister is saying yes to that. That is good news, as was the fact that the Minister said that the department will endeavour to prepare draft regulations. People may have to work hard over the summer; some of us will be watching from the south of France.

The Minister referred to unnecessary, burdensome information required by a recalcitrant authority. That is the same way of thinking: that councils cannot be trusted to do things right, that some of them will be recalcitrant and that therefore everybody, even the great majority who will do it right anyway, must be lumbered with the alternative unnecessary, burdensome information, which is all the rules and regulations which come from central government to councils.

We are aware that the Department for Communities and Local Government is losing a lot of its staff. Who and where are the staff who will be employed to produce all that vast range of new rules and regulations—which, in our view, are unnecessary? We are not saying under any circumstances that there is no need for regulations, Secretary of State orders or secondary legislation. We are saying that the scale and amount of it is out of hand and will be more so as a result of the Bill.

The Minister rightly said that we are in favour of pushing power down into communities, and that expressions of interest should not be rejected out of hand. We all agree with that, but many later amendments in this part are about safeguards to ensure that the process will not be dangerous or cause difficulties and problems. We will come to those.

The Minister said that councils need to keep up to date and, for example, reflect the types of organisation representative of their communities. I am sure that that can be done without taking all those extra powers. The problem is that if the power for regulations is there, regulations will be produced, in some cases at great length. Far from keeping councils in order, in many cases they will simply prevent councils doing things in the best way for their local circumstances.

My final point, to which, again, we will come, is that the Minister said that some powers are to make it possible for the Secretary of State to exclude additional services from the challenge. The problem is that we do not know which services will be included and which will not. Again, we will come to amendments that will probe that.

It has been a useful introduction. I say thank you to noble Lords who have taken part and to the Minister for his attempt to be helpful. I beg leave to withdraw the amendment.

Amendment 129V withdrawn.

Amendment 129W

Moved by

129W: Clause 68, page 57, line 28, at end insert—

“( ) the expression of interest includes evidence that a substantial number of the service users affected by the service support the expression of interest.”

My Lords, as has already been explained, Clause 68 concerns the duty placed on relevant authorities to consider an expression of interest. It is a very important clause, as it provides the foundation for the community right to challenge process. The duty sets out the definitions of relevant authorities and bodies, definitions that we have already discussed and that we shall debate further in two or three later amendments. It also sets out the terms by which an authority must consider an expression of interest. That is the part that the amendment would strengthen.

Think for a moment about the meaning of this chapter, and indeed the thrust of the Bill: it is about the central role and importance of local communities in determining the ways in which services are provided. When we talk about communities, whether we use the terms, “community organisation”, “body” or “group”, we must be very careful about what we mean. There is always a risk that we assume that a particular community group, voluntary body or even a local authority understands all the communities that use services or represents them. Clearly, we cannot have a situation in which any individual or group can challenge the provision of a particular service and have a right for their expression of interest to be considered. We must also guard against the interest being too narrow. When considering services it is only right that the views of those who use the services should also be considered in any challenge. It is, after all, the service users who will be most affected by changes made as a result of the challenge.

I have worked for many years with a great number of service users from the full range of health and social care environments, including those with mental health problems, alcohol and drug addictions, those involved in the criminal justice system, and with people of all ages, including the very young and older people. My experience consistently is that service users are not only very willing and keen but very capable of saying what they think about services and how they would like to see them improved. I would like to think that among the reasons a local authority would accept a community right to challenge and go through a procurement process for the service is because they want to see improvements. I cannot think of a better way of doing this than by ensuring that service users are involved in the process.

Of course, we have then to consider how many service users should be involved. What is the optimum number? What might the minimum number be? I have no easy answers, but I am sure that other noble Lords will want to express a view on this. It seems to me that the number should be substantial, given the profound impact that any change in provider could have on those using the service. This approach gives credence to service users as a body of people whose views must be considered. It also places a duty on those wishing to lay an expression of interest to make sure that they have adequately consulted the service users, or are at least in a position to do so. I would argue that there is also protection in taking that approach. By ensuring that the views of those most affected by any proposed change are taken into account, we can avoid the situation in which potential bodies seeking to challenge the current provision are not doing so solely in their own interests.

I hope that the Minister will be willing to consider this amendment and that he can give me some strong reassurance on what steps will be taken to ensure that the views of those using services are taken fully into account. I beg to move.

Lord True: My Lords, I have some sympathy, of course, for the direction that the noble Lord is coming from, but he himself touched on important questions of practicality. There are a lot of questions of practicality in these clauses. Many local authorities are in the process of seeking to set up charitable trusts, social enterprises, and other organisations such as those that were referred to in Clause 5. I am not quite sure how the views of the service users would be established by those wishing to make a challenge or put forward an expression of interest. If there were a small social enterprise to be formed from among a group of local authority workers out of their interest in sustaining high-quality services, it would be proposed that they have focus groups, referendums or other means to establish the reaction of service users. Although well intentioned, the amendment might actually put obstacles in the way of local authority workers establishing social enterprises or bodies.

I am a little nervous about the direction in which the amendment would take us. Clause 70 contains rules for local authorities and how they should consider expressions of interest; there are duties laid upon local authorities to take into account how any expression of interest would promote the well-being of people in the local authority area. So although I understand where the noble Lord is coming from, this may add an extra complication to an already complicated piece of legislation, and I could not support the amendment.

My Lords, this is the other side of the coin in terms of whether one is being too prescriptive. This amendment would require a relevant body to demonstrate that a substantial number of service users support its proposal when submitting an expression of interest. This puts an unnecessary burden on relevant bodies, and the relevant authority if it must verify the information. Where more than one relevant body submits an expression of interest, service users could be approached several times, which may be frustrating and confusing. This will be magnified by the fact that local people will use many different services. We agree that expressions of interest should reflect the needs of service users. Relevant bodies will often have excellent insight into these needs. The Bill enables relevant authorities to specify periods for the submission of expressions of interest in particular services. They could, for example, set periods that would enable relevant bodies to take into account the results of any consultation with service users, undertaken as part of the commissioning cycle. We are considering how service-user needs might be reflected in the requirements for an expression of interest. I hope, under these circumstances, that the Minister will feel it appropriate not to press the amendment.

The Minister said that more than one relevant body might submit an expression of interest in a particular service at any given time. I am trying to think of an example. Two community groups might be interested in taking over a particular park. They might be at daggers drawn and they will not want to put in a joint bid. How does the authority decide between those two community groups? I am trying to avoid using words like “relevant bodies”. Anybody out there listening to this discussion will not have the slightest clue what we mean by “relevant authorities”, “relevant bodies” and “relevant services”. But if two community groups want to run the same park—for example, because it is on the border of two quite different areas—how does the council decide which one to deal with?

My Lords, the council concerned will have its own procedures for dealing with these things, but the chances are that one submission will be better than the other. If they are bang on equal, it might come down to price, but councils have their own decision-making ways. If the submissions are almost identical, councils will just have to look at them with great care. But it would be strange if they were identical. One could look at what lies behind the application, the strength of the body, whether it looks sustainable and whether the committee of the organisation looks as if it is there for the long haul. I am quite certain that these are all things the authority will be looking at.

Can the Minister indicate that on this topic, at least, there will not be regulations from the Government?

The noble Lord is asking, in effect, to put a regulation into the Bill. The government line is that we do not need it in the Bill and therefore this is regulation-free.

To go back to the question I asked, the answer my noble friend gave is probably OK if the two applications come in at the same time or within the same council cycle so that they can be discussed by whatever procedures a particular council has to deal with these matters. But does the Bill not say that once an application has been accepted and is being considered, no more applications for the same thing can be made and accepted? Therefore, if one came in today and the other came in a couple of months later, perhaps in response to the knowledge that the first one had gone in, it could not be accepted. How would that be dealt with?

I shall have to come back to the noble Lord on that. There two ways in which these expressions can be made: one is that once we have an Act of Parliament, people can, as it were, just pitch; and the other is by authorities saying, “We are looking at various things and this is the starting date and this is the finishing date, when we look forward to people making expressions of interest”. If it were the latter, it would be quite clear when expressions of interest could be made. If people were just making a pitch, an authority might look at that and be surprised that something else turned up later.

The Minister said that the best that he could offer was to put this into regulations. That is obviously welcome. However, I am disappointed. The noble Lord clarified the problem of practicality for me. I have worked in health and social care for about 20 years and every service that is delivered will never say that it will never engage with service users. Everyone is very happy to say, “Yes, we will engage with service users”, but they do not do it, simply because they think that practically they cannot manage it, that they will not get any benefit from it, and that they will talk to too many service users and confuse them. Using the words of the noble Lord, Lord Greaves, this is utter nonsense.

You can engage with service users, and there was huge appetite for that. I can give noble Lords example after example of people with mental health problems having impacted on social policy and on the policy of the organisation and teaching professionals how they should inspect services. What matters is how we do that and the value that we give it. Perhaps I can give one example. Over the past 18 months, I have chaired a review group on the effectiveness of drug treatment in prison. We looked at the huge amount of money that we spend on drug treatment in prison, which is a very difficult environment. We brought together 20 experts: governors, a chief probation officer, experts in the drugs area and academics. Everyone came round the table to explore a strategy for commissioning and producing outcomes. We spent 18 months meeting, arguing and fighting.

One thing on which I insisted was talking to service users, offenders, people currently in prison, ex-offenders and their families. We were not given a budget for it because they said, “It is not practical. No offender or ex-drug user will engage with the process, but have a go”. On a shoestring budget and in the space of six weeks, we engaged user groups across the country and asked them to talk to offenders, users, carers and families. We anticipated that at most 50 people would respond, but in those six weeks 550 current and ex-offenders and drug users responded.

Ultimately, the views of those drug users affected the way in which the final report—the Patel report—was written. They underpinned everything that happened. This effected the best evidence base ever gathered on drug treatment in prisons. They mirrored what that evidence base said and highlighted what drug users want and how they want it. With their evidence and their views, we produced an outcomes model. That would not have happened unless we had engaged with the so-called most difficult, hard to reach groups. People have a huge appetite to be involved. It does not matter whether two or three groups want to consult with service users; they should, because while they are consulting them and asking them what they want, they might learn something about what they should be doing and how they should be delivering their service.

It is crucial that this provision—that you cannot deliver a service without engaging service users—is in the Bill. I am sure that in his heart of hearts the Minister believes that. It is an important thing to do. My anxiety about not putting that into the Bill is that services will not do it; it will be an excuse not to do it. You have to force them to do it because it delivers goods. I will go away and think about this, and I would appreciate it if the Minister thought more about it and talked to his officials to see whether there is any way in which we could strengthen the provisions of the Bill that push those heading the new services to talk to service users. It might not have to be a substantial number, or whatever the legal phrase is, but this should happen because it is fundamental to the issue of the community’s right to challenge. The Minister himself said that this was about handing power to the community. Service users are a key aspect of the community, so we have to push this.

My Lords, I am holding the line with the Bill. Anyone who thinks about challenging must put together all sorts of things to prove the viability of their outfit and the people involved. If they have any wit, they will say that they believe that they can do it and will have done some work in order to prove that they are up to the job. If the noble Lord were a consultant to people wanting to put forward a proposal, that is the sort of thing that he would urge them and everyone else to do.

Absolutely—if I was a consultant, it would be done. Unfortunately, however, there are not many folk like me about. We can discuss rates later. I take on board what the Minister said. I will think about it further and I would appreciate it if the Minister, too, would think further about whether we can strengthen this. I am sure that the issue will come back when we consider further aspects of the Bill. In the mean time, I beg leave to withdraw the amendment.

Amendment 129W withdrawn.

Amendment 130

Moved by

130: Clause 68, page 57, line 31, leave out paragraphs (a) to (d) and insert “any public body, including, but not limited to, local authorities, government departments, government agencies and non-departmental public bodies”

My Lords, I shall speak also to Amendments 131 and 132. No doubt other noble Lords will speak to Amendment 130ZC. We have discussed the question of challenges to local authorities by local communities and other bodies that wish to run their services. I am looking for a more ambitious community right to challenge. I support what is in the Bill. It is a very useful expression of bringing forward one aspect of the big society so that local people can become involved not just in yapping at the heels of those who provide a service but in putting forward suggestions for how they could do it better. I like that—but why does it stop at local government services?

My right honourable friend Greg Clark, the Minister of State for Decentralisation and Planning Policy, recently gave a lecture on the subject to the Local Government Association. He was on the right lines when he stated that Ministers are considering inviting councils and their partners to bid to manage a range of public services using devolved budgets. This recognises that government services or services provided by non-departmental bodies at national level may be run better and with more sensitivity to local needs and circumstances if they are run at local level. They do not all have to be run nationally. That is the point of the amendment. I am trying to provide a way in which my right honourable friend’s aspirations could be put into practice across the public sector.

If we are going to get this whole process going—I admired the eloquence of the noble Lord, Lord Patel, when he spoke of what was necessary—we need to generate enthusiasm for, and understanding of, what is being offered. This should be across the board and not limited to local government services. Therefore, my amendment extends the right to challenge across all public services, not just those guided by local government. Local authorities should be able to express an interest in running devolved national public services on behalf of their communities, which should be able to offer to run the services. They may need help, which local authorities are best placed to deliver.

Looking at it again with rather greater reluctance, I have to say that the suggestion that local authorities should provide a list of the services that they might be interested in devolving smacks of bureaucracy and I am not particularly enthusiastic about it. I ought to withdraw the amendment; I speak to it with no enthusiasm at all and I am grateful to see that that view is shared.

I will concentrate on the other amendments in this group, which propose extending the measure to services provided nationally by central government and by non-departmental public bodies and so on, and giving local authorities the right to bid and the duty to help local communities to do this. If you take London as an example—I declare my interest as one of the joint presidents of London Councils—the figures show that in 2009-10 central government spent over £47 billion in London. Local authorities actually spent much less than that—about £29 billion—so only 40 per cent of the total is spent by local authorities. By extending this measure, you are opening up a substantially larger pool from which one could get services provided locally. Of course, not all services can be delivered locally but a great many are. I shall give some examples in a moment.

Extending the community right to challenge and to apply it to a wider public sector would effectively address a lot of the problems that are inevitably caused by national bureaucracy. That often stands in the way of operational efficiency and, in particular, local sensitivity. A council could say, “If we did it for you, we would have to do it for everybody”. How often has one heard that excuse? What we are looking for in this Bill is a greater opportunity for public services to be run locally, where they can be responsive to local needs and circumstances. I will give some examples in a moment.

One possibility is to have cross-departmental services that could be run effectively from a local level. Another is to empower local authorities to support local aspirations. Research commissioned by London Councils last year identified over 150 non-departmental public bodies that spend more than £100,000 a year that have an influence in London. If one takes account of even the Government’s recent efforts to try to reduce the number of these bodies, as in the Public Bodies Bill, London Councils estimates that at least 120 of these organisations remain active in the capital. Many of them are responsible for the delivery of public services for which local communities have no statutory ability to hold anyone to account. This is the target one is aiming at, the substantial number of bodies that deliver services locally but are not in any way locally accountable. Therefore local authorities should be able to help them.

The third point is that, if you are going to have a community right to challenge, for that to be a genuine one, it should be open to all regardless of the local community’s expertise or experience. It will need help and the local authorities are best able to give that. If you can achieve that, you will be achieving a degree of local accountability for the services that are there for local people. Not only communities but the local authorities themselves should have the ability to challenge national services on behalf of their communities and alongside other agencies, and to run services delivered by national public bodies within their area. This would ensure that communities have some local control and that there would be some local accountability.

Before I sit down, I shall mention a few examples of where I believe this could be made to work. Noble Lords will be aware of the European Social Fund, which is run by the Department for Work and Pensions. The DWP has recently proposed to spend its European Social Fund money on providing employment support for families with multiple problems. That is a very worthy aim, but does it have to be provided nationally? Surely if you have different communities with different circumstances and families with very different needs and abilities, you need to have services that reflect those differences. Therefore, it seems to me that it should be open to a local authority, or even to a local community, to say, “Yes, we are used to working with families with multiple problems, and we could run this service more effectively. We would like the right to challenge it”. I think the DWP might find that greatly improves its ability to deliver the service—well, it would not be the DWP, it would be the others. The important point is that this would then become a local service and reflect local needs and local circumstances. That is one example.

Another example may surprise noble Lords. It is Jobcentre Plus. It is again a national service run, ostensibly, on national criteria and to national standards right across the country, but anyone will tell you that in areas of high unemployment—some of them are in some of the London boroughs—there are quite different needs from those in areas where there is relatively little unemployment because services are growing and business is providing the opportunity. Surely here it should be possible for a local authority to say, “Look. We could run this better in our area. We would like to challenge the Department for Work and Pensions and offer to run the Jobcentre Plus in our area. We could do it better, and probably less expensively”.

Youth justice and services such as youth offending teams, which are currently funded through the nationally sponsored Youth Justice Board, might be more effectively delivered if they were tailored to local circumstances in line with the new financial incentives model for crime reduction. Youth crime, as we all know—indeed, I suspect that no one knows better than the noble Lord, Lord Patel, who eloquently spoke about similar problems a moment ago—is a complex and multifaceted issue which would arguably benefit from an area-based approach.

There is the whole question of business regulation. Businesses are not uniform and do not form a uniform pattern across the country. It is another area that could be run by local authorities or local councils. There are other examples, but I hope I have said enough to suggest that this is a realistic extension of the right to challenge, and it should include national services, not just local authority services. I beg to move.

My Lords, I must advise your Lordships that if this amendment is agreed to I will not be able to call Amendment 130ZA because of pre-emption.

My Lords, I have Amendment 130ZC in this group, which I will speak to in a minute. Before I do, I want to say that I think we agree with a very great deal, if not everything, of what the noble Lord, Lord Jenkin, has just said. We certainly agree with the broad thrust of his amendments. It seems illogical that if there is to be a system in which local people can, in the terminology here, challenge the existing providers of a service and suggest that they might do it better, that should be only for services that are provided by local government, not by other public bodies, because when it comes down to it services provided by local government, as opposed to other public bodies, are fairly arbitrary. There are good reasons for a lot of them, but for some of them it is not very clear why local government does them and someone else does not. It is certainly not clear why someone else does a lot of things and local government does not in this country. The division is arbitrary and it seems to me that the relevant criteria should be whether it is a local service and then whether it is desirable that this should apply to it.

We agree very substantially with the noble Lord’s Amendment 130, and with his Amendment 131, which would allow a local authority on behalf of its community to take over in appropriate places. Of course, there is a great question mark over how funding is going to be arranged. You immediately get into all sorts of questions about whether there would be ring-fenced funding for a particular service or whether it would be rolled up in the general local government grant, the existing formula funding or whatever is going to replace it, and how that would be organised. Nevertheless, those are not insuperable problems. Initially, one assumes that there would be ring-fenced funding for particular services that were transferred, but the basic principle is something that we would certainly support.

The noble Lord is not enthusiastic about his Amendment 132 requiring local authorities to produce a list of challengeable services. He suggested that it is bureaucratic. However, there is certainly another side of that coin because the Government are going to lay down a list of services that are not challengeable and that are excluded. Indeed, they are going to give themselves power in regulations to change that list from time to time, as we have already discussed. If people know what they cannot challenge, presumably they can work out what they can challenge, so it is not really a problem and the noble Lord’s amendment is probably unnecessary, whether or not it elicits enthusiasm.

My Amendment 130ZC would allow a district council in a two-tier area to challenge the county council and to suggest in certain circumstances that it could take over county services. There is an ongoing argument in some areas between districts and counties about what counties do and what districts do. In my own county of Lancashire, there was a great deal of devolution from the county to the districts in 1974. It simply followed existing practice with the old municipal boroughs and even some of the larger urban districts in the county. In recent years, the county council has been pulling services back and taking them to the centre, even though it is a large, far-flung council. I do not know exactly how far it is from north to south, but it cannot be far off 80 or 100 miles, and it is 60 or 70 miles from east to west, so it is a huge county. It is also an area with strong districts, some of which used to be county boroughs and are still resentful of having been downgraded, and some of which have always been strong municipal boroughs and are now the basis of strong districts.

District councils across the country vary hugely. Some are, frankly, quite feeble and weak affairs, and others try to behave as if they were unitary authorities but do not quite get away with it. Nevertheless, there are a lot of services that it can be argued would be better run at a local level and which in many cases have been. An example is local highway functions that cover not the main roads but local streets. In Lancashire, they were run by most of the districts until three or four years ago when the county decided to take most highway powers back to itself. Demonstrably, the system has not improved since then. Some would say that it has not got worse, but others might disagree with that. It is an area that could be challenged.

The whole area of leisure and recreation has a very local base to it in many cases. One example is country parks. Having a network of country parks across a wide council might be the best way to do it, or country parks might best be run at a local level and involving local people.

I am grateful to my noble friend for raising that. Very briefly, a classic example of this are the national sport centres, which initially were set up to focus on excellence in sport and did so for many decades but which increasingly have come to serve the local community through community use and Sport for All. These are surely very good examples of where you can be far more aligned to local authorities—if they are run by local authorities—working with local clubs and with local governing bodies while protecting high-performance sport.

I am grateful to my noble friend for that intervention. Libraries are an example of this. In some parts of the country they are very controversial at the moment because they are being closed down on quite a large scale, while in other places they are not. So long as the existing funding for a library may be transferred to districts, there is no reason at all why districts cannot take libraries over. Indeed, the municipal boroughs before 1974 were the library authorities, and many of the fairly new libraries that now exist were built by the boroughs and not by the county council. If the county council is seriously looking at reorganising its library service, one of the ways in which it could perhaps increase the efficiency of libraries and local involvement in them is by transferring at least some of them to the districts. I am not saying that that is an ideal solution everywhere, but it is something that ought to be challengeable. There are a number of things like that.

As for national services, the ward I represent on the council had a recent problem of raw sewage flowing down from an inefficient septic tank system on a caravan site on a hillside and causing real problems to residents in the lane below. Noble Lords can imagine what their back gardens were like—not very pleasant at all. The Environment Agency became involved in this. It came and went and came and went, and the district council, which has no direct responsibility for it, became involved, and in the end it was the district council that actually organised the system, spent the money and connected the caravan site to the main sewage system. It then recharged the people who lived on the site and the people who own it. It was the district council that actually sorted it out on the ground, even though, as far as I could work out, the statutory responsibility lay with the Environment Agency. That is a classic example of the kind of service that, if transferred at a local level to a competent local council, might well be run better.

As for the river system, the Environment Agency is responsible for main rivers, but certainly in our part of the world some of the things that are classified as main rivers are tiny little streams. There is no reason at all why they should not be the responsibility of the district council. The district council has no statutory responsibility for rivers and it is not funded by government for it, but some district councils employ drainage officers because they are the sensible people on the ground who sort out flooding and drainage problems when they occur. How much better if they were actually statutorily responsible for it? I therefore support the noble Lord’s amendment with some enthusiasm, and put mine forward with enthusiasm as well.

My Lords, I put my name to the first of the two amendments tabled by the noble Lord, Lord Jenkin, and I endorse all that he said. I can imagine my noble friends the Ministers saying that it is not possible to graft this on to the Bill at this stage, but the principle is a very good one, as my noble friends Lord Greaves and Lord Moynihan have also said. If the Ministers cannot accede to these amendments now, I hope that they might be prepared between now and Report to talk to local authorities and local government associations about ways in which local authorities might be given opportunities to suggest ways of localising more services.

I must apologise—and this may be a relief to some—that I have to attend a full council meeting later this evening, and if I am not in my place at 7 pm, with the less-than-coalitionist ardour that there is on opposition benches in Richmond I might find that a division is called. I could not support my noble friend on the list of challengeable services because—and he has made this point—it would cause bureaucratic problems for local authorities. I did not put down amendments to Clause 74, which comes later, because it would have been discourteous, anticipating that I was not going to be here. However, I must say that the other form of list that your Lordships will discuss later this evening might, in my estimation, need at least two officers to compile these kinds of lists. Therefore, while encouraging my noble friends the Ministers to resist my noble friend’s amendment, I also hope—in anticipation, as it were—that they will think more carefully later about the other lists that are imposed on local authorities in this Bill.

Finally, I support the suggestion about counties and districts, and of course I also support the principle relating to the Greater London Authority and London boroughs. Self-evidently, there are many things—in an earlier debate I gave the example of running high streets —that London boroughs could do far more effectively than a regional authority. I hope again that my noble friends the Ministers will consider that too.

My Lords, perhaps I may ask a question. I have a great deal of sympathy for the noble Lords’ amendments. I am not sure what my Front Bench is going to say, but this sounds like a very useful discussion to have about how to extend local rights. My question, because I am a champion of social enterprises and the voluntary sector, is whether they, too, will be able to challenge for those national services that might appropriately be delivered at a local level. That would seem appropriate.

Immediately, exactly the same bodies and people, including local charities and voluntary bodies, should be able to challenge these national services, in the same way as the Bill provides for them to challenge local services.

My Lords, I shall be very brief. I have listened carefully to what the noble Lord, Lord Jenkin of Roding, said, and I have read his amendment carefully. The basic principle of the proposal is exciting and warrants further investigation and explanation, although I agree that a list would be completely bureaucratic. As for the idea that we could take this a step further, I am excited by the community right to challenge aspect but would want to be assured that the amendments would not in any way, shape or form dilute the local community right to challenge.

My Lords, I thank the noble Lords who have introduced these amendments. I wonder if I may deal first, out of sequence, with Amendment 132. This amendment would require local authorities to publish and maintain charitable services provided by all relevant authorities in their area. The Government are already asking local authorities to publish important information about services, and the Bill already enables relevant authorities to specify periods during which expressions of interest can be submitted for particular services, and requires them to publish details of these. This amendment would put additional administrative requirements on local authorities and falls into the trap of over-engineering the right, something which the Local Government Association has warned against.

Amendment 130 would change the definition of a relevant authority to extend community right to challenge to any public body. Amendments 131 and 130ZC propose changes to the definition of “relevant body” that would enable local authorities to challenge other relevant authorities, specifically government departments, agencies and non-departmental public bodies, under Amendment 131, and county councils, where the relevant body is a district council in a two-tier area, under Amendment 130ZC. The Bill already enables the Secretary of State to extend the right to other public bodies in regulations—back to our friend. Our recent consultation sought views on which other public bodies the right should be extended to. Many respondents said they felt that it should be extended to all public bodies. It was also suggested that local authorities should be able to challenge other types of relevant authority. Given this appetite, the Government are keen to explore the idea of extending the right to other public bodies. However, many of those respondents also felt that we should not rush into extending the right before evaluating its impact in its current form. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded.

My noble friend Lord Jenkin usefully gave us various examples. I would just say that the examples are such that other Ministers and departments would have to get thoroughly involved and, by jingo, there would have to be some joined-up government in all this. I warm to the theme that it is exciting. I am just wondering whether it is too exciting for this Bill at the present time.

My Lords, I have been hugely encouraged by the amount of support all around the House for the fact that we should pursue this more ambitious right to challenge. I am very grateful in particular to the noble Baroness, Lady Thornton, for what she said, and for the enthusiasm and excitement of the noble Lord, Lord Patel. Turning to my noble friend, I have already indicated that I am not interested in the lists, and perhaps I should have withdrawn that amendment. However, it was encouraging to hear him say that the Government are keen to explore and that he would have to involve Ministers in other departments. If the localism ambitions are to be achieved then every department will need to be involved in this, not just the DCLG.

From what my noble friend Lord Attlee said in relation, for instance, to the discussions we had earlier about EU fines, I am aware that he now has to discuss this with all the other departments concerned, which is a good thing. If our amendments achieve that and nothing else, that would be worth while. My noble friend Lord Shutt has offered grounds for hope. A few weeks ago, when I discussed this with the Secretary of State, his reply was fairly brief. He said, “Really, we have got to be able to walk before we can run”. My noble friend used the phrase “before evaluating”.

I should like to feel that this is part of the Government’s ambition, something which we can look forward to as an extension of the right to challenge, and something which can be seen to be very much part of the coalition’s policy. Recognising that it might be difficult to put this provision into the Bill at this stage—it was not considered, I think, in the other place—we have to recognise that there are problems. However, I hope that my noble friends on the Front Bench will start consulting now with the other departments that will be involved. With that, I beg leave to withdraw the amendment.

Amendment 130 withdrawn.

Amendments 130ZA to 130ZE not moved.

I am standing up to give the noble Lord, Lord Greaves, time to move his amendment, which comes before mine in this group.

Moved by

130A: Clause 68, page 58, line 7, after “authority” insert “who have formed an organisation for charitable purposes or a community interest company or industrial and provident society”

In that case, I will speak to my amendments and give the noble Lord, Lord Greaves, a chance to catch up on his amendments in this group. Before I do so, I declare an interest as an ambassador for Sporta, the trade group of social enterprises which deals with local sports and leisure services, and as the founding chair of the Social Enterprise Coalition. I shall speak to Amendments 130A and 131A, and comment on some other amendments in this group, although I may leave that until they have been spoken to. My noble friend Lord Patel is right to say that Clause 68 is important. I have always believed that socially owned businesses, founded and run in this case by local people, have an important and valuable role to play in the provision of public services.

Amendment 130A seeks to put beyond doubt the kind of enterprise which can challenge and be considered appropriate to contract for the services under consideration. I seek clarification from the Minister about this because, as it stands, it seems that the expression of interest could be used by local authority employees setting up a private company. I believe that that might be a loophole that would need to be closed. Amendment 130A states that,

“after ‘authority’ insert ‘who have formed an organisation for charitable purposes or a community interest company or industrial and provident society’”.

That covers basically all the organisations that are not private enterprises.

Amendment 131A again seeks to make completely clear an issue which is, in a way, about the size of the organisation. I believe that there should be a requirement that the expression of interest can be initiated by a local organisation or in collaboration with a local organisation. Many national charities already provide and contract for services at a local level—for example, Barnardo’s and Action for Children, which I know about through a long association with them. I believe that those national charities, along with any national social enterprise—indeed, there are those that are contracting which are building social businesses providing social care—would want to contract for those services at a local level. But they have to prove that they are working collaboratively with local agencies to provide locally integrated solutions.

This would still allow national organisations, which have great skills and experience in delivering these services, to bid but would ensure that the Bill meets its main objective of devolving power and giving a voice to local communities. The involvement of a national social enterprise or a national charity may be the difference between a local body being able to challenge and contract for local services and it not having the capacity to do so. It is important that large and small, and local and national, collaborative working is part of this Bill and is put beyond doubt. That is what these two amendments are about. I beg to move.

My Lords, I apologise for falling asleep; it is these Zs all over the place which are doing it. I am not speaking to Amendment 130ZD, which I missed. However, Amendment 133ZN has exactly the same meaning. I was going to apologise for putting down the same amendment twice in the group but it seems that that was providential. I certainly have a great deal of sympathy and support for what the noble Baroness, Lady Thornton, has just said.

We put down amendments to take out the reference to employees not because we do not think that in appropriate circumstances it is a good idea for employees to take over running the services for which they are employed, but because we are not at all convinced that this Bill is the best place to legislate for employee buy-outs, employee buy-ins, employee takeovers or whatever. They do not quite fit with the concept of the community—however the community or somebody in the community is defined—making a challenge and saying, “We can run this service. Can we have a go please?”. Employees are very different in that sense as they represent the producer side of the service rather than the consumer side and, clearly, if consumers or citizens or residents take over a service, they become producers as well. Equally, employees can make the same journey in the other direction.

However, it is different and some of the amendments put forward from over the way have shown that if you are going to do it properly you may need different sorts of structures and organisations and to some extent a different legal framework. Things such as worker co-operatives are very different from an organisation in the community taking over running a park or something more ambitious.

There is also the question of how an expression of interest from employees will be measured by the council when it comes to procurement against alternative expressions of interest from the community or wherever. What is the basis for competition? Is it possible to set up competition on a fair basis when you have people so entrenched in the organisation and already running it? On the other hand, are they put at a disadvantage by being set against, perhaps, commercial organisations which may want to come in and take advantage of the procurement process? Perhaps it might be better if it were done on a separate and clearly understood basis run independently from the community process. It would be interesting to hear the Government’s views on that.

Amendment 131ZB to Clause 68(5) refers to the definition of a relevant body. It is just a small question of definition. It says that the Secretary of State may specify in regulations, inevitably,

“such other person or body”.

The amendment suggests it should read “category of bodies”; perhaps “category and classes of persons and bodies” might have been better. It reads at the moment as if it is referring to a particular person or body, which I do not think it means. Surely it should refer to categories or classes of people and bodies.

Amendment 131B probes the question of whether and how a voluntary body can make a surplus. It relates to Clause 68(7) and the text at the moment reads:

“The fact that a body’s activities generate a surplus does not prevent it from being a voluntary body for the purposes of subsection (5) so long as that surplus is used for the purposes of those activities or invested in the community”.

We are not quite sure what,

“the purposes of those activities”,

really means here and we suggest that a phrase such as,

“for the benefit of the community”,

might be better since we are talking about voluntary bodies—I think and hope—which operate in a particular area. That leads on to Amendment 131C to Clause 68(8) and the definition of a community body. It says that a community body means,

“a body that carries on activities primarily for the benefit of the community”.

Our amendment would add,

“wholly or partly in the area in which the relevant service is provided”.

Again, this is a question for the Government. If a community body wants to challenge for a particular service in a particular area, whether it is the whole or part of a local authority area or quite a small neighbourhood, surely its existence as a community body should depend on the fact that it is active in that area and not somewhere else. That means that you would not get people in Liverpool challenging to run services in Leeds or people in Preston challenging to run services in Pendle, or is that what is intended? Is it intended that the community should be the community in which the service is provided and in which it is intended that the challenge should be made?

My Lords, I want to build with a couple of questions on what my noble friend Lord Greaves and the noble Baroness have said. Definition seems to me to be quite an issue on my scanning of this clause. The question that has just been asked about what community you have to be in, so to speak, is at least worth asking and it will be interesting to see the answer.

The other question is that I understand that there are definitions of charitable bodies and of industrial and provident societies. Is there a definition of community bodies? Where does the type of body known as a social enterprise come in all this? If you ask the Library for information on social enterprises, as I did once a few months ago, you discover that there are about six different definitions from different quarters. Is social enterprise embraced in all this? Is it defined in all this? Is it intended to be dealt with in the wrap-up clause about the Secretary of State having the right to define other bodies? A lot of definition problems are raised but not answered by this clause.

My Lords, I want to assist, in a sense, the noble Lord, Lord Newton, by clarifying the description of one particular—

I apologise to the noble Lord, Lord Beecham, but for those of us who rely on the loop, the microphone is rather important.

I shall be very brief. My Amendment 131AA looks at the definition that the noble Lord, Lord Greaves, referred to in Clause 68(7). It seeks to tighten the reference to the surplus by saying that the fact that a body’s activities generate a surplus does not prevent it from being a voluntary body for the purposes of the section. The original clause says:

“so long as that surplus is used for the purposes of those activities”.

With my amendment, it would say:

“so long as that surplus is required to be and is used”.

In other words, it is not a casual use; it is a prescribed use of the surplus in the way that you would find in a charitable organisation. I hope the amendment is not unhelpful and that it just emphasises the nature of the organisation and that the surplus is required to be used—as well as, in practice, that it may be used—for the purposes outlined. I hope the noble Lord will think about that and perhaps take the amendment back or accept that it strengthens the intention of the clause.

My Lords, I shall be brief. I am specifically speaking to support Amendments 130A and 131A, both of which are concerned with the nature and type of relevant bodies that may submit an expression of interest under the community right to challenge.

As we have heard from my noble friend Lady Thornton, the purpose of Amendment 130A is to bring greater clarity to the definition of a relevant body—something the noble Lord, Lord Newton, raised—particularly to make it plain that this is intended to include not only charitable organisations but community interest companies and industrial or provident societies.

As the Bill stands now, the question as to what constitutes a voluntary or community body is unclear, as the noble Lord, Lord Greaves, has said. A voluntary body is defined in the Bill by virtue of not being a public or local authority and,

“the activities of which are not carried on for profit”,

while a community body is simply one that carries out activities for the benefit of the community. There is potential confusion here. For example, does the Minister intend that a public or local authority is also a community body, and what of community interest companies which are allowed to make a surplus? Does this mean that they are not voluntary bodies for the purpose of this? The amendment that my noble friend Lord Beecham has suggested may be helpful in this case.

I am a firm believer in the potential for local community and voluntary groups to deliver services, provided they are given the right support. I am concerned that without the additional clarification provided by Amendment 130A some important groups, including industrial and provident societies—which, as we are all aware, have a proud and significant history of representing local people—will be excluded from the community right to challenge. I hope the Minister will support the intention of this amendment.

Amendment 131A is closely related to these issues and similar in intent to one tabled by the noble Lords, Lord Greaves and Lord Tope. This concerns the question of whether those relevant bodies that may wish to use the right to challenge to become themselves providers of services are in fact from or primarily working within the local area. My concern is that once a challenge is made under the community right to challenge, it might not be local community groups that enjoy the transfer of services but big business or non-local providers. Therefore, it seems essential that in determining who can make an expression of interest to run a service, priority should be given to those local community groups first.

If localism is to mean anything in practice, it should be local groups who benefit and, as people who live and work in the area, they should be the preferred option. I accept that there will be some cases where it is desirable for a regional or national provider—such as Barnardo’s or National Children’s Home, as my noble friend Lady Thornton said—to initiate the process. They will have a strong specialist offer to give but even in these cases there will be real benefits in encouraging local involvement and local partnership. The risk is that this becomes an open invitation for non-local bodies to seek entry into an area. Again, I hope the Minister will agree that this would be undesirable and look to support the amendment.

My Lords, there is rather a lot here and I thank noble Lords who have taken part. Before I come to my notes, Clause 68(5) refers to voluntary and committee bodies and they can be defined. It might not be absolute but they can be defined in some way or another. When the subsection says,

“a body of persons or a trust which is established for charitable purposes”,

it does not say there about the community. That can be national. It then says, “a parish council”, which is clearly local, and,

“in relation to a relevant authority, two or more employees”,

which might just be a partnership if it is two. If it is more, it can be any form of enterprise that was thought of. I am aware of the theology that exists in the different forms of co-operatives and so forth. There can be all sorts and then there is the catch-all in our friend, “regulations”.

Let us see how we can cope with the notes that have been made on specific amendments. Amendment 131A and 131C would require the voluntary and committee bodies to have some local connection, whether operating primarily in or for the benefit of the community in the relevant authority area, or working with a body that does. We are keen to encourage local and national bodies to work together to submit expressions of interest and bid for any subsequent procurement exercises, but many national organisations do excellent work locally in their own right—particularly for communities of interest, which may not always be well supported by a local group. We would not, for example, want to prevent the Alzheimer’s Society expressing an interest in running a relevant authority service. It is difficult to argue that it would not represent the interests of vulnerable, elderly people in a local area. These amendments could also prevent voluntary and community bodies that are successfully implementing innovations in service delivery from replicating their approach elsewhere.

Amendments 131AA and 131B propose different requirements around a voluntary body’s surplus. Amendment 131B would require that surpluses should be used for the “benefit of”, as opposed to being for the “purposes of those activities”,

“or invested in the community”.

Amendment 131AA would require that any surplus was,

“required to be and used”,

as opposed to simply being “used”,

“for the purposes of those activities or invested in the community”.

Amendment 131ZB would enable the Secretary of State to add “category of bodies” as a relevant body rather than “person or body”. I am not clear what material difference these amendments may make.

Perhaps I may help the Minister with this because the point about my noble friend’s Amendment 131AA is that where a voluntary body generates a surplus, it can be legitimately used for several purposes. It can be used to undertake further activities consistent with the social aims, as set out in its governing document, which could include but not be restricted to local community benefits. It could be used to invest in strengthening the organisation itself, so that it becomes more resilient and can expand its work, and it can be used to repay loans and other investment. It might, for example, include a payment of dividends to shareholders following a community share issue within the limits established by the incorporation of the community interest company or the IPS. Those are safeguards against excessive private gain. I do not think this is the right amendment but the point is that it seeks to clarify whether points two and three are permitted within the Bill. We might need to discuss this further.

I am even more confused but I will endeavour to look at that in due course. As I was saying, the Bill already states that a voluntary body’s activities should not be carried on for profit. The purpose of a voluntary body’s activities should surely be to benefit the particular community it represents. As for what the noble Baroness has said, we are in Committee and we can clearly look at this again, but I saw this in simple terms. I cannot get it out of my head, quite frankly, that you may get a community association bidding which, in its building, has a kitchen where it will do its meals on wheels. It might make a bit of a profit from the meals on wheels service in that community. It seems to me that if it makes a small profit from that exercise, it can use that for the benefit of the rest of the association that it is carrying on in that building. That is as I see it in simple terms.

Amendment 130A would require employees of a relevant authority to set up a charity, community interest company or industrial and provident society in order to submit an expression of interest. Requiring employees to form a specified organisation in order to submit an expression of interest and get a fair hearing for their idea would create an unnecessary and bureaucratic burden. It risks putting employees off exercising the right altogether. The Government are committed to giving public sector workers the right to bid to take over services that they deliver, and the community right to challenge implements this commitment for relevant authority employees.

I am sorry for interrupting the Minister again but this is a very important point. I can cite two examples. Sunderland Home Care was set up by home care workers as a co-operative and, quite rightly, the employees of that local authority in Sunderland provided much better terms and conditions to contract with Sunderland Council. Greenwich Leisure started the whole movement of leisure trusts because Greenwich Council was going to close down its swimming pools— this was 10 or 12 years ago—due to something called rate-capping, which some of your Lordships may remember, and it was the employees who initiated the move to contract with the local authority to take over all the leisure services.

Those examples both make a surplus—and quite right too—because that is how they reinvest back into their local communities, so that the charges in Greenwich for leisure services are now much lower proportionately than they were. They are also both able to support contracting in other areas, so that Sunderland Home Care now provides training for home care workers across the north-east. The point about this amendment is that by defining the legal form that community groups, or any group of employees, use to do the challenging, we actually safeguard the social purpose against private profit being made which then does not get put back into the community.

My Lords, I understand what the noble Baroness is saying, but there is a concern about being overprescriptive. It is important that we do not do anything to put employees off. We can return to this; there is no reason why not; but we know what the intention is. It is to free up the opportunity for employees to take part in a right to challenge. I am far from certain that we should be prescribing that there are these various routes and it is outside the theology if they take the fifth route and not routes one to four. We need to be a bit careful about that.

If there are not to be clear structures which are recognised as appropriate, how do you prevent the situation in which two employees make a right to challenge when they have absolutely no support from the rest of the employees, but because they have made the right to challenge, the process has to take place?

Before the noble Lord replies, may I point out that I have an amendment dealing with precisely that matter as well?

I am quite clear that, if there are two employees, we are back to the whole business about looking at who is backing this and whether the people who will ultimately benefit from this service think that it is a good idea. It is unlikely that the local authority would say, “Off you go; you look a great pair”. It is very doubtful that that would be the case. That is the route to putting a stop to that. It may well be that our friend, regulations, will come into this as to the power of stoppage that there would be in these circumstances.

Amendment 133ZN would prevent the Secretary of State providing advice and assistance in using the right to a body that is formed of, or includes, any employees or ex-employees. That would introduce a disparity. It would mean that advice and assistance could not be provided to a voluntary and community body formed of employees and ex-employees, but could be provided to other voluntary and community bodies that did not contain such individuals. No decisions have been made on the form of any advice and assistance in using the right, but we expect to focus on those that need it most. This is likely to mean smaller, newer voluntary bodies, but it is sensible that we have the powers to provide assistance to any relevant body that might need it. I understand that an impact assessment has been done on this and the suggestion is that, across the country, £20 million will be required. It is not yet in any budget, but that is the suggestion in the impact assessment.

Clause 73(4) ensures that this includes employees who have formed a body to take on the delivery of a service, including where they have left the employment of the authority. This supports the Government’s commitment to give public sector workers the right to bid to take over the running of the service that they deliver. I trust that these comments will mean that these amendments are not pressed at the present time.

I rather expected that the noble Lord, Lord Greaves, would be doing the heavy lifting at this point in the debate. I thank the Minister. We need to have further discussions about this to make sure that we are safeguarding things. I say to the noble Lord, Lord Newton, that definitions are not a problem here, because we are seeking to create a variety of different ways for local organisations and groups to set up social businesses which will be able to contract for services. The way that they will define themselves is by choosing a legal framework which fulfils the purpose as outlined in the Bill. There are only a few things that they could choose: a company with charitable purposes; a community interest company or an IPS, a co-operative of a different sort. There is a limited number. They define themselves, in a way. It looks complex, because there are lots of different ways of doing this and, in fact, the Government’s role in providing information support at local level will be very important. With that, I beg leave to withdraw the amendment.

Amendment 130A withdrawn.

Amendments 131 to 131C not moved.

Amendment 131D

Moved by

131D: Clause 68, page 58, line 17, at end insert—

“( ) This section does not apply to any company or other body or person the activities of which are carried out for profit.”

My Lords, I was very carefully not saying “Not moved” to any of those previous amendments.

I rise to move Amendment 131D, which is grouped with Amendment 131ZP and with the question on whether Clause 73 should stand part, which is to be moved by the noble Lord, Lord Patel, which should lead to another interesting debate. Amendment 131D is a probing amendment to stimulate a discussion which follows on from the discussion we have just been having about the nature of the organisations which might end up running local services, whether they are very local services, such as looking after a pocket park, or much more substantial services, such as taking over refuse collection. In relation to “relevant bodies”—in other words, the bodies that are challenging to take over services—my amendment would add the words:

“This section does not apply to any company or person the activities of which are carried out for profit”.

It is clear that there is not an absolute distinction between profit-making and non-profit-making bodies. We have already discussed the way non-profit-making bodies might make a surplus, but for the purposes of discussion, that is fair enough. Amendment 133ZP is a belt-and-braces amendment, which would insert the same wording at the end of Clause 73.

The fear about the proposed community right to challenge—and there is a lot of fear about the proposal—is that it will lead to the fragmentation, privatisation and commercialisation of a lot of council services; that, in the name of the community making the challenge and as a result of local community organisations, parish councils and whatever putting in the first challenge, the big boys will then come galloping in. The noble Lord referred to the risk of non-local bodies moving into the area. Perhaps there is a risk of local commercial organisations of a slightly cowboy variety, or, more likely, large corporate companies, coming in and taking over, all in the name of the community.

The fragmentation argument is very important in relation to some services. It would be difficult in the area of refuse collection, for example, to fragment a service and have one parish council taking over its own little service; the whole question of economies of scale in refuse, recycling and so on might be lost if that happened. On the other hand, there might be circumstances in which that might work. However, there are clearly some services in which fragmentation is a problem. I am less concerned about fragmentation when it comes to truly local services; if they can be run at a local level, that is fine.

Some question whether this is a backdoor to privatisation and compulsory competitive tendering of the sort that we used to have, except at least that was done on an organised basis across services and authorities and the in-house services were able to compete with outside services—some did so very successfully. The fear is that this will result in a much more anarchic kind of competitive tendering—disorganised, disruptive or perhaps unorganised—and could result in a damaging, fragmented breakdown of services. I am saying not that that is the inevitable result of this legislation but that that is the widespread fear of what it might result in. We therefore have to probe carefully to see how likely it is and what the dangers are.

The Minister tells me that the figure of £156,000 is key. That is the level at which the annual cost of a service requires it to be put out to competitive tender under the procurement process under European rules. If the figure has changed since I last spoke to him then no doubt he will tell me. If a voluntary or community group challenges for a very local service and it costs less than that to run each year, does the council have a procurement process to negotiate simply with that community group for it to take over the running of the pocket park, the local playground or whatever?

On the other hand, if the figure is more than that, the service will have to be put out to competitive tender, in which case the whole world will be able to come in and tender. If that happens, although there is a clause in the Bill that refers to having to stick to contract rules and so on, to what extent can the council not take the lowest tender, or not even take what appears to be the best value-for-money tender, which may also be the lowest tender, and discriminate in favour of a local community group because of the additional advantages that that would have in terms of local people getting involved in running their own local services? To what extent is that allowed and to what extent is it not? To what extent is it inevitable that if large corporate bodies put in lowest tenders—we all know about economies of scale—they will take over?

What are the rules that will allow councils simply to say, “Actually, we don’t want this to happen, so we will stop the whole process”? In his reply to the previous debate, the Minister referred to the power of stoppage—the first time that I have heard the phrase—that will be set out in regulations. I am not sure that I see where the regulations will come from but no doubt it is in one of these dozens of regulations here.

This is quite a curious part of the Bill. Under the heading “Community right to challenge”, Chapter 3 of Part 4 starts off with “Duty to consider expression of interest”, but almost every other clause over 24 pages is about dealing with the expression of interest. There is little or nothing in this chapter about how the process of procurement will work. Before the Bill leaves this House, we need to understand what rules the councils are going to operate under when they carry out their procurement processes. Once they have started such a process, on what basis can they stop it? As I read the Bill, it is not clear what the basis is. If it is simply left to councils to start it and then stop it, one can see legal challenges happening further down the line.

All those fundamental questions lie beneath the amendments. I am certainly not against contracting out in a properly planned and controlled way, nor are we as a party. However, we have to remember that the council and elected councillors are legally responsible for providing a lot of these services, and we cannot just hand over not only the operation of them but the ultimate responsibility for them, which will come back to them if things go wrong.

I look forward to what the Minister has to say in response to this. These are fundamental questions, particularly about procurement. We have to get to the bottom of this before the Bill leaves this House.

My Lords, I shall speak to Clause 73 stand part. On the face of it, the heading of the clause, “Provision of advice and assistance”, appears to be very welcome. However, I am struggling with the direction of travel here. This is, after all, the Localism Bill whereby we are led to believe that the Secretary of State wishes to roll back the mighty arm of the state, yet here we find a clause that gives an astounding new array of powers for the Secretary of State to interfere, I suggest, in local decision-making.

I shall outline the extent of that interference. Clause 73 at least begins as it intends to go on. First, we are asked to endorse the following:

“The Secretary of State may do anything that the Secretary of State considers appropriate for the purpose of giving advice or assistance to a relevant body”.

Now, while I am certain that the Secretary of State has only the best intentions and that he means to provide helpful advice and assistance, I struggle to accept the idea that this may include anything that he considers appropriate. I am also somewhat concerned at the use of the word “assistance”. What do we make of this? Exactly what does the Secretary of State have in mind for such assistance? Clause 73 goes on to give us an idea, which I again find a little troubling. Assistance may come in the form of,

“the preparation of an expression of interest … participation in a procurement exercise”,

and, as if this were not enough assistance already, it may also involve,

“the provision of a relevant service”.

I am left to wonder what the point is of the previous clauses in the community right to challenge chapter, when the conclusion appears to be that the Secretary of State is going to do it all.

I am not a lawyer, so I will leave it to noble Lords who are to ponder the implications, but I am fairly certain that interference by the Secretary of State in local procurement exercises may well be against competition rules, not to mention the likely effect of this on local governance.

The Secretary of State has not yet finished—there is more in this clause. We go on to learn that the Secretary of State may also do anything that he considers appropriate in the operation of the whole community right to challenge chapter in respect of a body or person that is other than a previously defined relevant body. Once more I am forced to question why the previous sections of the chapter were written and why noble Lords have spent the last few hours discussing such things as what constitutes a relevant body. It seems clear to me that this clause intends the Secretary of State to have the powers to bring into the community right to challenge, at any time or place as he sees fit, any body that he wishes.

The clause goes yet further. The Secretary of State also intends to interfere with finances. If it is the intention of the Secretary of State to provide “financial assistance” to local groups seeking to take up the community right to challenge, why does he not make that assistance available to local authorities that have local knowledge so that they may decide on its use? That would be something practical, and something which I have previously said is lacking from the Bill. However, this does not seem to be his intention. The reason that I am suspicious is that the Secretary of State feels it necessary to include in the definition of bodies to which he can give financial assistance those that are not relevant bodies under the earlier clauses. Can the Minister explain who these bodies might be, and why the Secretary of State needs these new powers?

I say again that this is not localism. The aim of the community right to challenge is to enable local voluntary and community groups, social enterprises, parish councils and local authority employees delivering a service to challenge a local authority by making an expression of interest in running any service for which they are responsible. I do not recall this meaning that the Secretary of State shall attempt to supplant this very local process in any way he considers appropriate, including placing new bodies that are not defined under the Bill into the process. We have already debated the potential limitations and lack of clarity about the current definitions of a relevant body, and I am quite sure that it is the intention of this House that this should not include the private sector.

I would have thought that the Secretary of State might have learned something from the recent debate over the role of competition in the health service about the risk of inviting the private sector to take over large parts of public services. If not, I am sure that my noble friend Lady Thornton could give him a quick lesson in this area. I have a strong suspicion—maybe wrongly—that this clause may well be a backdoor attempt to bring in such privatisation. Indeed, I believe that this is the same point exercising the minds of the noble Lord, Lord Greaves, and the noble Baroness, Lady Hamwee, whose commendable amendment seeks to restrict these new powers of the Secretary of State so as explicitly to exclude the private sector. However, I do not feel that this clause is one that can be corrected by amendment. The entire clause raises so many questions, and appears to fly in the face of localism and the intentions of the Bill.

It is for this reason that I oppose the question that the clause stand part of the Bill. I hope the Minister will either reassure me tremendously, or support my argument.

My Lords, I wish to ask one question, which has occurred to me only while listening to the debate—otherwise, it would have been down as an amendment. Does clause 73 extend to the Secretary of State giving directions to a local authority to provide financial assistance in this connection? The Minister can take it as my view that it should not.

My Lords, Amendment 131D seeks to confirm that bodies which carry out activities for profit cannot be relevant bodies. Amendment 133ZP would prevent bodies which are carrying out profit-making activities from receiving advice and assistance in using the right to challenge.

The definitions of voluntary and community body have been designed to enable a range of civil society organisations to use the right. This supports the Government’s commitment to enable these groups to have greater involvement in running public services. This includes social enterprises and co-operatives, where not all profits may be reinvested in their activities or the community provided that their activities are for the benefit of the community. This requirement will ensure that any profits are indirectly focused on their activities. It will also ensure that large, multinational companies and big conglomerates cannot use the right to challenge. I am aware that that is a concern.

No decision has been made yet on the form that any assistance will take, but one would expect it to focus on those who need it most. This is most likely to mean smaller, newer voluntary and community bodies; but it is sensible that we have the powers to provide assistance to any relevant body that might need it. In answer the noble Lord, Lord Greaves, when I referred to the “power of stoppage”, that was my own phrase. I think that we have to look at regulations because it is not clear to me yet exactly how a local authority will cope when it encounters the whole business of people taking advantage of the right to challenge—whether it can just say “buzz off”, or whether, in the regulations, it cannot say “buzz off” unreasonably. I believe that this is something that has to be worked through in regulations. He referred to the figure of £156,000; that is the threshold figure in terms of the Public Contracts Regulations 2006. However, as well as the £156,000 threshold figure, there is a list of services in Part B of Schedule 3 to those regulations which is quite lengthy, to which that figure is not relevant. This includes education, health and so forth. There are a large number of things which would fall outside that.

It is important to understand that there is nothing in the Localism Bill which addresses procurement. Procurement is up to local authorities. Local authorities have worked out how they do that.

I do not understand, then, why Clause 73(1)(b) talks about,

“participation in a procurement exercise”.

That would be the exercise that is carried out by the local authority. It does not say how the authority should procure, it simply acknowledges that there will be a procurement exercise. I understand that these are wide-ranging powers, and I understand the noble Lord expressing his view on that. I think, however, that there are two quick responses—and the noble Baroness, Lady Thornton, will no doubt warm to this theme. It could well be that if employees are expressing an interest, under these clauses, provision could be made—and that may indeed be via a local authority rather than the Secretary of State—to give them help and assistance in forming a community interest company. That sort of advice and assistance, and seed-corn money, might enable such groups of employees to enter into expressions of interest. If they did not have that, they would be unable to.

The noble Lord invites me to comment on this. My comment is that it is not the Secretary of State’s job to provide this advice and assistance. It is the local authority’s job, or else that of some association which is under its control. It is the Government’s job to provide the resources for them to do it. This gives too much power to the Secretary of State.

The noble Baroness takes words out of my mouth. I did indeed say that that is exactly what could happen. I hope that, in the circumstances, these amendments will not be pressed, and that the clause will be able to stay. As I indicated right at the start, regulations are with us, and we will all need to see that we are happy with them. The noble Lord, Lord Greaves, said that he wanted convincing before the Bill leaves this House. It will be a while yet before it leaves.

All I can do is repeat what I said at the beginning. Before we return to this, we shall either have draft regulations, or we will have an indication of where we are going. I cannot do more than that. I suspect that there is some work to be done on this, although some work is being done as we are going on. We have only just got the response to the consultation. Every endeavour will be made, because obviously it will assist their Lordships if this information is available.

I think that the wording we are discussing is almost duplicated in Clause 88, which will be opposed by the noble Lords, Lord Greaves and Lord Tope, so it is worth taking a second look at the extent of these powers. I am not entirely convinced that we have cracked this nut as lots of issues have not been debated fully.

I hope that I may hop in before the noble Lord, Lord Greaves, sums up, because I have been left in a state of confusion—as, I suspect, has the opposition Front Bench. I understand the point that this provision is not intended to let in large, multinational companies. We probably would not want to do that and in any case it seems to me that the number of large, multinational companies that would want to bid for small, local contracts worth less than £150,000 would be rather small. However, I am not clear whether it is the intention to do what this amendment appears to do, which is to ban even a small profit-making organisation. If that is the case, I am not sure that it is justified. If we consider meals on wheels provision, small catering companies provide sandwiches for local businesses and possibly meals for local old people’s welfare clubs. I do not see why they should be barred simply because they are making a profit, if they can provide a better value service than the organisations we are talking about here. I should like to know what the answer is to that.

The quick response is that the community has the right to challenge. It is in the Bill—although I cannot turn to the relevant clause quickly—and was certainly in the consultation document, that there may well be circumstances where the community goes into partnership. Going back to meals on wheels, you could have the local community centre going into partnership with the local baker. Those sorts of things could happen, but the community has the right to challenge, not local businesses or conglomerates.

Can I be absolutely clear about that? I am sorry; I am becoming as talkative as the noble Baroness. I do not apologise for that as I think she is doing rather well. If a profit-making company were involved with a community body, would that be all right, even though it was making a profit?

My Lords, it is my understanding that the community body could have as a partner another body that happened to be a profit-making body.

My Lords, I am relieved to hear the Minister say that, as the noble Lord, Lord Newton, seemed to be referring to competitive tendering, which we have experienced in different forms over the years. I want to pick up on a point that my noble friend made earlier. This is an observation rather than a question. The Minister said that the assistance would be given to whichever organisations needed it. I hope that the regulations will be written with a view to benefiting the community rather than the provider of the service. Those two things may be the same in the long run, but the benefit to the community should be the lens, as it were, through which one looks at the arrangements.

My Lords, I understand the point that the noble Baroness is making. I will bear it in mind and take it back to the department.

My Lords, I thought that this group might lead to an interesting discussion. We have had an interesting discussion, which I do not think can end today. I have the sense that of all the groups we have discussed so far, this is the one on which my noble friend the Minister has batted on something of a sticky wicket. However, like a good Yorkshireman, he has rightly batted with a straight bat. There have been a few Bradfordians in the Committee today. The noble Baroness, Lady Eaton, has just gone but there are still a few of us left. The Minister does not quite qualify as a Bradfordian by a couple of miles, but he is still using a straight bat.

There are two fundamental issues in this group. One was raised by the noble Lord, Lord Patel of Bradford. The question of how this money is going to be handed out, to whom and what criteria will apply is very important. As we are all Bradfordians, I shall talk about Leeds. If there is an agreement between Leeds council and a big community-based group which would like to take over a lot of community-based services, and that happens, it seems to me very appropriate for government money to be used to assist that process. The process will proceed on the basis of co-operation and people agreeing that a particular group requires help and assistance to build up its capacity. However, if the money is handed out to large national organisations, whether they be charities or other bodies, in order to make speculative challenges or to come in after the challenge phase as part of the procurement for large-scale services such as children’s services or adult care services in large authorities, that would seem to me a less desirable use of the money. If it is to be used in relatively small or medium-sized amounts to bolster local community-based groups, that seems to me a good use of government money. However, I have problems with this provision being part and parcel of large national organisations taking over local services. That is the kind of thing that we shall have to probe further.

However, the fundamental issue in my amendments has not been confronted. My noble friend the Minister stated clearly that large commercial organisations, multinationals or others, will not be able to take part in the community right to challenge and will not be able to make expressions of interest. We all understand that but the problem arises at a later stage if it is a challenge for a service that costs £1 million a year to run and therefore has to be put out to a tendering process. As far as I can see, that would be very like the competitive tendering processes which used to be compulsory, and which some councils still carry out in order to get the best value because that is the way they want to do it. If that is to happen on a compulsory basis as a result of what was initially a community right to challenge, a problem will arise. Procurement does not appear in the Bill. I have been looking at where it might appear. Clause 72 is headed “Supplementary”. Clause 72(1) states:

“The Secretary of State may by regulations make further provision about the consideration by a relevant authority of an expression of interest submitted by a relevant body”.

That seems to allow the Secretary of State to make any regulations he wants about the whole procurement process. Clause 72(2) states that a relevant authority must,

“have regard to guidance issued by the Secretary of State”,

which, as we know, comprises instructions and does not even come to this place for us to nod it through. There are real issues here about the procurement process. If it is to be not in the Bill but in the regulations, the procurement regulations—if there are to be any—have to be among the regulations that the Minister manages to dredge out of the department before we get to Report. On that basis, I beg leave to withdraw the amendment.

Amendment 131D withdrawn.

Amendments 131DA to 131H not moved.

Amendment 131J

Moved by

131J: Clause 68, page 58, line 23, at end insert—

“regarding services provided on behalf of more than one authority jointly”

This amendment is the first in a group of four amendments. In moving it, I will also speak to the three others. It is a miscellaneous group of different things that I put together to avoid getting leant on by the Whips. I think I can deal with these fairly quickly.

Amendment 131J is about how to deal with services provided by more than one authority jointly. The two adjoining authorities might be a district and a county in a two-tier system. I have a number of examples of that; I do not think I need to read them all out, but they include leisure facilities. Amendment 131K is about how the Government are going to review what is going on. This is an all new, untried and untested system that, we assume, will be brought into operation across the whole country at the same time, and the amendment is about how the Government are going to have a continuous review of what is going on, and continuous consultation with local authorities on how it is happening.

Amendment 133ZK provides more regulations and restrictions. It is about the rejection of an expression of interest. It seems to me that there are two stages at which things can be rejected. One stage is where the expression of interest is made and the authority can simply say, “We are rejecting the expression of interest and are going no further”. At the moment, Clause 70(8) says:

“The relevant authority may reject the expression of interest only on one or more grounds specified by the Secretary of State by regulations.”

That is crucial. Again, it would help if we could know what those regulations are; they ought to be in the Bill. The second stage is procurement, which we have been talking about.

Amendment 133ZL is a provision by which the relevant authority, the council, can carry on as before with the exercise, even if the relevant body—the community body or the parish council—withdraws its expression of interest or refuses to agree to modify the expression of interest. It is an indication yet again that once the process has started, it will continue and be very difficult to stop. That is, I think, of concern to some of us. We can see a situation in which a community organisation as defined is persuaded to put in its expression of interest. It is not really interested at all, but it gets the process going and is in league with one of the big boys, a big commercial organisation, which, if the figure is over £156,000, will then come in and try to clean up. There are real concerns that there are loopholes here that need looking at before the system is unleashed. I beg to move.

Amendment 133ZK would remove the Secretary of State’s power to specify in regulations the grounds for rejecting an expression of interest. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will of course act within the spirit of the right, but the power to specify the grounds on which an expression of interest could be rejected prevents a recalcitrant authority from rejecting it out of hand and defeating the purpose of the right. I accept that, as my noble friend indicates, we are back to regulations.

Amendment 131J would give a Secretary of State a power to make provision in relation to services that are provided jointly by authorities in regulations. We would expect relevant authorities to take a common-sense approach to services that are provided jointly, and to agree together a period during which expressions of interest could be submitted and arrangements made for considering them and for carrying out any subsequent procurement exercise. However, provision in relation to jointly provided services can already be made if necessary under the powers in Clause 72.

Amendment 131K would require the Secretary of State to consult representatives of relevant authorities when making regulations of guidance, and to have regard to their views. We have recently concluded a consultation, with all those with an interest in the right, on our proposals to use the various powers that we have taken. We will consider the need for consultation on future changes.

Amendment 133ZL would remove the authority under this chapter for a relevant authority to undertake a procurement exercise when an expression of interest has been withdrawn or a relevant body does not agree to modifications to it proposed by a relevant authority, meaning that it has to be rejected rather than accepted. An authority might wish to carry out a procurement exercise in these situations if, for example, it is attractive to the type of service delivery set out in the expression of interest and if the authority wants to initiate a procurement exercise anyway, or if services are currently contracted out and the company needs to undertake a procurement exercise in order to maintain service continuity. Clause 71(7) provides clarity in stating that a relevant authority may determine whether to carry out a procurement exercise where an expression of interest has been withdrawn. I hope that that will persuade my noble friend to withdraw his amendment.

My lords, I will withdraw it in a minute. However, I will, as always, read carefully what my noble friend has said and decide whether any of the amendments in the group need further pursuit.

The more I hear this debate, the more I am concerned about the word “challenge”. I think “challenge” is wrong because it is an adversarial word. If any of these arrangements are going to work, there will have to be a willingness on both sides—that is to say, on the part of councils and the organisations that are making a bid to run services—to make them work. There has to be co-operation. If that is not there, frankly the arrangements are not going to work very successfully. What is needed more than anything else in many places is a culture change, which can best be created by people exhorting, explaining, being enthusiastic and persuading, rather than having hundreds of thousands of words telling people in detail what to do. If people do not like what they are doing, they will do it grumpily, and it will not work very well.

The only question I will ask my noble friend the Minister concerns all this talk of recalcitrant authorities. What estimate have the Government made of the number of local authorities which they expect to be recalcitrant in relation to this particular part of the Bill?

I have no idea whether there is any estimate. When starting afresh with a new proposal, one of the things I think to myself is, “Could local government have done this anyway? Could it have said, ‘It could be that all sorts of bodies could do things rather better than us. Can we find ways in which we can give these opportunities?’”. I am doubtful that I have heard the answer. Therefore, because this has never been done, there might be a perception that this is the sort of thing that local government would not get up to on its own. The authorities could be recalcitrant in those circumstances, but in general I do not know, and I suspect that the calculation is not there because I do not see how you could get that calculation. However, it is worth looking at what has happened to date.

The Minister is tempting me to go into a whole new area, which I will resist, except simply to say that there is a culture in local government nowadays that is very different from what it was 30 or 40 years ago; you do not do anything at all, on anything and in any way, unless you have permission from the Government or the regional office, which has now been abolished, or someone else up there, to do it. People are scared to death of doing things because they have lawyers who tell them that not only can they not find the power in the legislation; they cannot find the instruction in the legislation and all the stuff that tells them exactly how to do it. That is the problem in local government now; it is in detailed bureaucratic thrall to central government, and we are about to pass a Bill that increases that.

Having made that counterpoint to what my noble friend said—which might have some justification but is, I think, part and parcel of the fact that people in Whitehall do not believe that local government can ever be trusted to do anything useful or sensible unless they are told how to do it as if they were in kindergarten—I beg leave to withdraw the amendment.

Amendment 131J withdrawn.

Amendment 131K not moved.

Clause 68 agreed.

Amendment 132 not moved.

Amendment 133

Moved by

133: After Clause 68, insert the following new Clause—

“Duty to consider requests

(1) A relevant authority must consider a request in accordance with this Chapter if—

(a) it is submitted to an authority by a parish or town council, and(b) it is made in writing and complies with such other requirements for requests as the Secretary of State may specify by regulations.(2) In this Chapter “request” means a request to a relevant authority that it should provide a service or perform a function (being a service or function that it already provides or performs, or is entitled to provide or perform) in a specified manner.

(3) A relevant authority in receipt of such a request shall accede to it unless doing so would—

(a) result in net additional expenditure or net reduced revenue, or(b) adversely affect that authority’s wider interests or policies.(4) In reaching a conclusion under subsection (3)(a), the relevant authority shall take into account all consequent changes in expenditure or income, including any amounts that the parish council is prepared to pay the authority, except that it may not take into account any net reduction in revenue resulting from the enforcement of civil penalties.”

My Lords, the amendment gives a town or parish council the power to put in a request to its superior council, whether that is the district, county or city council, to say, “We wish you to provide your services in a particular way”, or, “We wish you to exercise your functions in a particular way”, and for it to be imperative on the superior council that it accede to the request unless doing so would cost it money or interfere with its wider interests.

There are three principal themes behind the amendment, all of which we will come to in my later amendments. First, there is much to be said for producing something between the current status and some of the cathartic remedies offered in the Bill—in this case, the community right to challenge. It is a serious prospect to ask a small Hampshire town to take on rubbish collection, parking control or any other services that are provided on a large scale by the local authority, and probably belong at that scale, but it is quite reasonable for it to say to the local authority, “When the dustmen come round and spill a bag, we would like them to pick it up rather than leaving the contents on the ground, as your current contractor does”, or, “Please can you desist from parking control on Wednesdays, when we like to allow everyone free rein to get into the shops in the town centre”. To my mind, such requests should be acceded to, but we will never do it through the community right to challenge.

I propose this as a more gradual way, an in-between solution. We are giving such power and influence to town and parish councils that they will over the next decade or so grow much stronger than they are at the moment. There are many other things in which people have an interest locally—not just planning but the whole way in which their local services are provided—and it seems unreasonable that the only way they should have to influence those things is in trying to put together a consortium to take over from the superior council the whole provision of those services. If they can find a solid way to influence the services, if they can make a definite promise to their electorate that they will go to the superior council to ask for that to be done and to have every indication that it will, that will contribute to building strength at the bottom end of the council structure. That will produce a much more robust council when it comes to taking all the decisions that will be asked of it under neighbourhood planning. In strengthening communities and the basis for neighbourhood planning, the amendment has a role.

The third role concerns cities. In neighbourhood planning, we are producing a structure that will work very well in the suburbs and the countryside, where there is a great deal of value to be extracted from the planning process and where communities have a close interest in the way that development takes place. That is the case not only in the inner cities but in places such as in Battersea in London, where I lodge. There is really no interest in controlling development because it is a matter of minutiae and individual planning decisions. The place is built up, except for Clapham Common, and no one can touch that. There are no big decisions to be taken in our neighbourhood; there is no incentive to get together as a community under the provisions of the Bill. However, if the neighbourhood was to be granted any sort of control over the enforcement of parking, 50 per cent of households would come out to vote tomorrow.

I want the capabilities of neighbourhoods under the Bill extended to include the sort of things that people will care about in cities. In places such as Battersea, that is parking, music in pubs and licensing, and other such local authority functions. In the more impoverished parts of the inner city, it is likely to be education and provision for youth. Those are the sort of things that a community will care enough about to want to influence and that will provide the motivation for the creation of the sort of active neighbourhoods that the Bill is intended to achieve.

From all those points of view, the amendment is worth while. It is inevitable in the way in which I have structured it that the town or parish council, in putting forward its proposals, will have to produce savings for the superior council. Otherwise, the thing just will not work. It therefore builds in an element of saving and cost-cutting, which I hope will be an additional attraction to the Government. I beg to move.

Prompted again by what I have heard—I hope that this is not out of order, because it raises a point about the clause with which we have just finished—this is the first reference I have seen to town councils as distinct from parish councils. Town councils are not specified as relevant bodies in the previous clause; they are included in the new clause. What is the position of town councils under the Bill?

My Lords, legally, town councils are parish councils. I think that is the answer the Minister will give. It is true, anyway. The noble Earl, Lord Lytton, is poised to come in again. A town council is a parish council that has passed a resolution under about three lines of the Local Government Act 1972 to call itself a town council. It can have a town mayor if it wishes, but it does not have to. I think that is all there is to say about it, but the noble Earl might have other things to say.

I strongly support the amendment moved by the noble Lord, Lord Lucas. It is ridiculous if a parish council can put in a lot of time and effort to consider taking over local services, has to do it through the expression of interest procedure and can then be outbid by other people. There is no sense in that. The Minister might say that it is unnecessary because if the district, unitary, county or whatever council agrees to it, it can happen anyway. My experience is of a borough council that tries to offload things to the parishes such as public conveniences when the parishes do not want to take them on, but that is a different matter. Throughout local government, there is a culture of conservatism and fear of taking on and doing more things. Changing that culture is the most important thing that we have to do. The amendment would be a very useful addition to the Bill.

My Lords, there is nothing like the words “parish council” to get me out of my seat. Noble Lords will know of my interest in parish and town councils. To answer the first question, the noble Lord, Lord Greaves, is right: fundamentally, structurally, parish and town councils are effectively synonymous. The differences are in the way in which they operate, but structurally in their clerks, membership and rules of engagement with which they have to comply, you can more or less say that the term is synonymous one with the other, except that one happens to apply to a town. It is an area where we have great difficulty with what we might call the family of parish and town councils, because town councils such as Weston-super-Mare have huge budgets and are on a principal authority scale, whereas many tiny rural parishes, although they may have quality parish council status, are extremely small. That lack of consistency makes it very difficult to deal with parishes as a cohesive whole.

I say straight away that I have not conferred with the noble Lord, Lord Lucas. I am very pleased that he has moved this amendment. There are some extremely good examples of where principal authorities have felt that they had the confidence to pass on to a parish or town council a function that they knew could be dealt with readily, cost-effectively and which was well within the capacity of the town or parish council concerned. But I am bound to say that nationally, the track record of passing things down to the lower tier has been fairly poor, taking things as a whole. That is one of the issues that lies behind localism. We need to get that straight.

What the noble Lord, Lord Lucas, suggested was a sort of localism-light in the sense of trying to avoid a bureaucratic and procedurally-driven process. On the whole I would welcome that as well. At Second Reading, I said that these things have to be rendered down to a localism scale—a community scale, not based on the sort of procedures and checks and balances that perhaps apply to the much more senior aspects that must be rightly dealt with by principal authorities.

I give one example. In my own parish council in Shipley in West Sussex, which is one of the largest geographically but has one of the smallest populations in the whole of West Sussex, a parish councillor commented some time ago on the problem the parish council was having with verges. People were encroaching on road-side verges by extending their gardens, filling-in road-side ditches, and doing all sorts of things that might include impairing forward visibility along the road. They were planting things, and so on and so forth. The verges, in so far as they were part of the highway, would have been vested in the highway authority, which in that instance is the county council. We know that all county councils are subject to cost constraints, and certainly West Sussex where I live is no stranger to that and has introduced some commendable measures to try to square the circle, so to speak. But it cannot be in all places at all times and it cannot police those verges. Such things should be preserved in the generality of the public interest—they are assets of community value in many cases but they are often orphan pieces of land. They may historically have been part of an enclosure plan or something like that which attached them to a particular estate or riparian owner, but over time, and with the process of land registration, that link has been lost. The boundary may have been drawn to an ordnance survey boundary that was set back from the hard edge of the road, so you end up with orphan strips.

Parish and town councils in some instances—I am not saying in every instance as they may not have the facility to do it—would like to get hold of those to manage them properly and make sure, in particular, that they are not filched by neighbouring householders or have things dumped on them where nobody seems to be responsible. They may get driven over because it happens to be a convenient place to pull off for dog walking, as happens in my part of the parish. That is just one example of something that could be of benefit.

In general, I support the amendment but there is a caveat. The words,

“net additional expenditure or net reduced revenue”

is a proviso that the noble Lord wants to insert under subsection (3)(a). There is a problem with activities, services and things being passed to parish councils shorn of any resource to deal with it. That is the classic thing that we refer to in parish and town council circles as double taxation. The parish then has to raise by precept a means of funding that expenditure because the principal authority has said, “Yes, you can have this but there is no funding to go with it”. I therefore enter a caveat on that. On subsection (4), I would flag up that it might be extremely difficult to verify, knowing what little I know about local government finance, to deal with the matters that the noble Lord is trying to cover there. I well understand his reasons for putting them in, but I do not know how you would prove it. However, in general I support the direction of travel of the amendment.

My Lords, I knew it was a mistake to mix with these experts. I had better apologise for not understanding the point about parish and town councils and indeed for stirring up the noble Earl, Lord Lytton, with his well-informed speech.

I want to make two observations, one of which builds on that. Town councils, in terms of their size and perception of themselves, can be, as in his example of Weston-super-Mare, completely different animals from most of the parish councils that I know. My constituency contained two main towns—the towns have not changed but the constituencies have—one of which was the main town, Braintree, and the other was Witham, which was almost the same size, with 30,000 people in those days and possibly more now, which had a town council. If I had tried telling them that it was just a jumped-up parish council, I would have expected to lose the odd vote at the following election. The Government appear to be saying that all these bodies, which are not insignificant, are just jumped-up parish councils. I do not think that that is very sensible. Whatever parliamentary draftsmen may say, it might be sensible to incorporate town councils in the wording of the Bill. I leave that thought with my noble friends.

Beyond that, there was one other thing that I wanted to say. I agree with the noble Lord, Lord Greaves, that district and borough councils are not always great at wanting to devolve downwards. Presumably one of the objects here is that they might be encouraged to do that in appropriate circumstances. The only thing I ask, having endlessly declared that my wife is a district councillor, is that nobody tells her what I have said.

I wonder whether the noble Lord can help me on a point which is prompted by this proposition. If you are switching expenditure from one authority to another and precepting increasing on the one hand and reducing on the other, how does that play as far as the calculations for council tax referenda are concerned?

My Lords, I need real notice of that last point as it is a bit technical. I have not heard of parish council tax capping. I have never heard of it and have a feeling that it is not there. That is the simple response to that.

It may be that having a little amendment putting parish or town in the Bill could be helpful so that nobody is in any doubt that parish means parish and town. I understand and accept that. Of course, there is no symmetry in the sense of the sizes of parishes or towns. For example, I was in the former Elland urban district council area, which never got parish council status, yet Todmorden, which is a borough council, did. There is no symmetry, but nevertheless this House has a wealth of experience of people involved in parish and town councils, so it is not surprising that such an amendment creates interest.

Through the legislation as a whole, we are enhancing the role of parish councils. They will be able to exercise the general power of competence when they meet certain conditions. They will be able to nominate assets of community value and we propose that they can express their intention to bid for an asset, triggering the full moratorium or window of opportunity. They will be able to initiate the preparation of neighbourhood plans and we will also be carefully considering the arrangements for parish polls as part of our proposals for local referendums.

However, we believe that Amendment 133 is a step too far and, in addition, is unnecessary and risks cutting across the intentions of the community right to challenge. We already expect local authorities to engage with their communities on services, including with parish councils, as part of the commissioning and engagement process. Where there are representations, we would expect these to be considered and taken seriously. If representations are made and concern over service delivery remains, parish councils are already named as relevant bodies under the community right to challenge. They would be able to issue a challenge to deliver the service if they believed they could do so differently or better. Relevant authorities will have carefully to consider these challenges.

Will my noble friend confirm that it will still be possible for district councils or any principal council to come to an arrangement voluntarily with their parish councils to transfer service delivery to the parish council outside the provisions of the community right to challenge?

My Lords, I believe that is the case. I do not see that that should be disturbed by anything that the Bill is doing. The noble Lord talked about it the other way round, saying that sometimes district councils try to offload and the parish says, “No, we would sooner you kept doing this”. I do not see that there is any reason why that cannot be done under present arrangements. The right to challenge is a different principle. There is a risk that this amendment could catch relevant authorities in an endless and burdensome cycle of considering requests and counter-requests from different parish councils in their area that have different ideas and preferences as to how services should be run.

Finally, the amendment would risk cutting across the community right to challenge as a whole. Requests from parish councils to provide services differently, which might include the service being provided by the parish council or by another organisation, would potentially override expressions of interest from other relevant bodies. I hope that in the circumstances the noble Lord will feel able to withdraw his amendment.

I thank my noble friend for that reply but not for the content of it. We will come to these matters again. I understand what he is saying, but I think that the Government are falling short of the ambitions that they should have in his saying that. We are taking a step towards making parish councils serious bodies for which serious people in the community stand and expect to do serious things. To put them in a position where the only thing that they can promise their electorate is to take a particular attitude on planning is seriously missing a trick. There are many other things that good people in a community should have an influence over. They should feel that they can go to their electorate and say, “I will do this for you”, and not just, “I will go cap in hand to the district council” but “I will make a request that the district council has to consider”, or some equivalent. We ought to be looking at ways of empowering parish councils and particularly town councils in relation to the districts and the counties that sit above them. I am sorry that the Government feel that they have gone far enough in this legislation. I hope that when we get experience of parish councils and town councils being what they can be under this legislation, we will take a step forward.

It is not so much the problems of the noble Earl, Lord Lytton, that I am thinking about. His sort of parish under this Bill will become rich in opportunities to raise funds as a result of development, which will enable it to do whatever it wants with its verges. It really will not be a problem for them, but the Bill is a serious problem for city parishes, first of all because there are no parishes. If you look at my bit of Battersea, there are no lines drawn other than the ward boundaries, and they change every time the Electoral Commission has hiccups. There is no community on the ground, and Battersea is a relatively homogenous corner of London.

There are bits of London where you have an enormous mix of different communities with strong ties within them and very few ties between them and to the locality. To build a community there which can take advantage of the facilities in this Bill to influence planning requires that the organisations we create can have influence beyond mere planning. Most of the lives of people in the community are dictated by the ways in which the local authority chooses to spend money on them, to police them and to require things of them. If they want to do something as simple as having a real influence over the provision made for their children, particularly in terms of early years, youth clubs, youth provision and help into work, all of which are substantial programmes going through Government and through local authorities, they have no right to do so. No one can promise that under this Bill the neighbourhood will have a real influence on those sorts of things. Unless we offer communities that ability, we will never create the communities to take advantage of this Bill. This will be a Bill that does not happen in the cities because no one ever gets going because no one can create the consensus because there are no powers on offer that are relevant to the local communities.

I think that is a serious problem with the Bill and one that I hope the Government will think about. I hope that the Opposition will think about it, too, because I associate the Opposition with having some interest in cities from time to time. I was particularly disappointed by the noble Lord’s lack of interest in this amendment. I hope I manage to interest him in some of my later ones. It seems sad to me that the Opposition are just interested in the rural vote and have no care left for cities. Perhaps that is being left to the Liberal Democrats, for whose support I am grateful. I beg leave to withdraw the amendment for now.

Amendment 133 withdrawn.

House resumed. Committee to begin again not before 8.36 pm.