House of Commons Hansard Debates for 2 Dec 1988

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tragedies, bankruptcy or severe financial pressure in their families which have forced the realisation of capital assets, are now having to try to sell their homes.

It is grossly unfair, completely unreasonable and inequitable that any individual should be made to suffer the loss of half, two thirds or virtually 100 per cent. of the value of what is in most cases his only major asset, simply because of the publication of these proposals by a public sector body. I make it clear to my hon. Friend the Minister of State that this is the responsibility not only of British Rail, but of the Government. The proposals published by British Rail can only have been published with the approval of the Secretary of State for Transport. He must have approved publication, because he initiated these studies. The Government must have known that, by sanctioning the act of publication, they would confer instantaneous and severe planning blight from one end of Kent to the other. Therefore, a real responsibility lies with the Government, as well as with British Rail, to clear up the severe difficulties created.

Within a matter of days of the publication of these proposals, as my hon. Friend the Minister of State will know, I asked our right hon. Friend the Secretary of State for Transport to initiate an ex gratia compensation scheme. I am grateful to him and our right hon. Friend that that call was heeded, and that British Rail has come forward with at least an ex gratia compensation scheme of some sort. As my hon. Friend the Member for Maidstone has so cogently and eloquently stated, the scope of the scheme is entirely inadequate in the present circumstances. Frankly, it is a lottery as to whether a property falls within or outside the scope of the scheme. It depends largely on whether the property is adjudged to be one which will be compulsorily acquired by British Rail. The fact is that few properties are judged by British Rail to fall within the scope of the compulsory purchase powers. However, because they are a few yards away from the boundaries of the embankments to the line, does not mean that the value of these properties will not be drastically affected. At present there could be two homes side by side, one falling within the scope of the ex gratia scheme and the other--though virtually equally affected--falling outside. That is an inequity and an anomaly that is not tolerable. I ask my hon. Friend to reach the position as fast as possible where the basic principles of the Land Compensation Act are applied, as they apply to similar projects for which his Department has responsibility, notably road schemes. The basic principle that must be immediately established, is that those who suffer a significant loss in the value of their homes--because of the publication of proposals for new major works by a nationalised undertaking- -must be given compensation equal to the full difference between the open market value of their properties before publication of the proposals and after. If my hon. Friend cannot announce acceptance of that proposal today, I hope that he will rapidly work with his right hon. Friend to do so as soon as possible.

1.58 pm

Mr. Tony Banks (Newham, North-West) : I am grateful to the hon. Member for Maidstone (Miss Widdecombe) for raising this matter. It gives me an opportunity, in a brief intervention, to mention the second rail terminal.

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Clearly, whichever route is chosen, it will end up in London. The London borough of Newham wants the second terminal to be in Stratford rather than at King's Cross. With the Minister at the Dispatch Box, it is a golden opportunity to ask him a couple of questions. It will at least save me the postage and the letter that I was going to write to him.

The Minister will be aware that about 42 second terminal sites in London were identified. We now seem effectively to be down to two. Out of the four that were left, White City has gone and St. Pancras seems to be highly unlikely, so it is either King's Cross or Stratford. It is clear that British Rail wants the second terminal to be at King's Cross. Frankly, we do not consider that the way in which British Rail is going about the matter--using the private Bill procedure--is a satisfactory way of resolving something that many hon. Members think is of great strategic importance to Greater London and to the south-east generally. The private Bill procedure is wholly inadequate for something of this enormity.

I shall not refer to the report of the Joint Committee on Private Bill Procedure, but this is a clear example of the way in which the private Bill procedure should not be used. That is why, at this late stage, I ask the Minister, when he replies to the real fears expressed by the hon. Member for Maidstone and the right hon. Member for Tonbridge and Malling (Sir J. Stanley), to state what consideration he has given to intervening more directly in the decision-making process on the siting of the second terminal. Of course there are divisions across the House, just as there is unity. The hon. Member for Hampstead and Highgate (Sir G. Finsberg) has written to the London borough of Camden. He has allowed me to quote from his letter. He wrote :

"I thought I would let you know that I do not believe the proposed terminal should be at King's Cross because it seems far more logical that it should go to Stratford."

On this occasion, I am delighted to be able to quote the hon. Member for Hampstead and Highgate in support of my argument. Will the Minister be prepared to see a delegation from the London borough of Newham--which has made it quite clear that it is ready to receive the terminal at Stratford-- consisting of myself, the leader of the council, Fred Jones, and the chairman of planning, councillor Timms? We are not asking the Minister to decide in favour of Stratford. All we are asking for is an opportunity for an objective evaluation to be made of King's Cross and Stratford. We believe that if there is an objective and impartial study, based on the needs of the travelling public, the needs of London and the strategic significance of the project itself, we shall be quite satisfied with the result. We consider that it will inevitably lead to Stratford being selected.

According to our latest advice, it appears that British Rail officers are advising that the board is likely to make a decision on terminal location in February or March 1989. We have little time at our disposal. It will make nonsense of the private Bill procedure, as I have mentioned.

I am grateful to the hon. Member for Maidstone for allowing me the opportunity to speak in the debate. Will the Minister now reply and give me for once, some good news to take from the House of Commons to the people of Newham?

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2.4 pm

The Minister for Public Transport (Mr. Michael Portillo) : I warmly congratulate my hon. Friend the Member for Maidstone (Miss Widdecombe) on securing this Adjournment debate. The congratulations that I offer her are more than ritualistic on this occasion. She has given the House the first opportunity to discuss the issues arising from the proposal for a new railway line from Folkestone to London for Channel tunnel traffic. I thank her most warmly for that and for the opportunity that it provides for me also to set out the Government's position, to record some remarks about the way forward and, I hope, to deal with certain misapprehensions that may have arisen.

I thank my hon. Friend also for the great courtesy that she has shown towards me in the run-up to the debate. She and I have already had several meetings about the subject, both formal and informal, and she has taken those opportunities forcefully to impress upon me her constituents' case. As she said today, she spoke even more widely for other people in Kent. She has expressed her deep concern to me and to my right hon. Friend the Secretary if State about the anxiety, hardship and difficulty caused in her constituency and elsewhere in Kent by the proposal to build this railway line. She has done so with the commitment and sincerity which characterise her every intervention on behalf of her constituents. On their behalf she has spoken in an impressive and effective manner and I have every sympathy with her and with her constituents. I have no delusions about the great importance of this matter, its impact on people and the anxiety that it produces.

I congratulate my right hon. and hon. Friends who represent constituencies in Kent, and hon. Members who represent London constituencies that are affected, on their patience and good humour at a time of great difficulty for them and their constituents. I do not mistake their patience for any lack of concern, and frequent visits to Kent have reinforced my understanding of the gravity of this matter.

The House will be aware of the background. There is concern about the capacity of the railway lines and terminals in south-east England as traffic through the Channel tunnel and on to the railways grows following the opening of the tunnel in 1993. There are various estimates of the growth of that traffic, and the British Rail estimates are at the lower end of the range. Other estimates are appreciably higher and those ranges are clearly set out in the British Rail study on long-term route and terminal capacity which was published in July and about which my hon. Friend the Member for Maidstone and my right hon. Friend for Tonbridge and Malling (Sir J. Stanley) spoke. That study leads to the conclusion that, sooner or later, new capacity will be needed in the form of a new railway line. That still leaves open the question of when it will be needed. British Rail does not see the need for a new line arising for some years, and I do not think that it would see a commercial case for building that line immediately. Others may see a commercial case for immediate building based on existing higher traffic forecasts. Therefore, it is right that British Rail should invite the private sector to show its interest and it has asked that those who wish to pre-qualify should come forward by the end of January 1989. Given British Rail's view that the line will be needed sooner or

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later, it is right that it should try to establish the route now, so as to provide certainty for the people of Kent and London. Without intending any discourtesy to my hon. Friend the Member for Maidstone I should like to reply to the intervention by the hon. Member for Newham, North-West (Mr. Banks) who raised some points about the private Bill procedure. I am acutely aware of the Committee report that he mentioned in passing. For the moment, the House has no way to proceed on the building of railway lines other than by private Bill and there is every precedent for this. In case there is any confusion about the matter, the Bill dealing with King's Cross which has been laid before the House in no way prejudges the decision on terminals. It simply safeguards the site.

I would not go as far as the hon. Member for Newham, North-West in that, as I understand it, there are still three possible sites--White City, Stratford and King's Cross. The considerations will be commercial, which means that the attractiveness to travellers of each site will be taken into account and, in a sense, site costs will be different. There will also be strategic considerations--the connections which exist or could be provided to other parts of London and to the regions. There will be practical difficulties about the route through London and in end the routes may determine the choice of terminal.

I am always delighted to see the hon. Member for Newham, North-West and to discuss such issues. However, the friends that he said he would like to bring to see me would be better advised at this stage to talk to British Rail because they can explain to British Rail the attractions of Stratford. I have no doubt that Stratford will be an important strategic site. It is on the North London line, on the Docklands light railway, connected to the Central line and on the Network Southeast services in the Essex corridor. It stands in the centre of a vast site in British Rail ownership and I am sure that it will play an important part in Britain's transport needs. I revert to the issues raised by my hon. Friend the Member for Maidstone and my right hon. Friend the Member for Tonbridge and Malling. It is inevitable that the publication of the British Rail report to which I have referred would cause concern in many parts of Kent, but I think that British Rail was right to publish a report containing options. Had it developed plans in secret and presented the world with a fait accompli, it would justifiably have been criticised for excessive secrecy and lack of consultation. As it is, it chose to publish a number of options and to consult widely with local authorities and others affected before making a final choice. That has not been a pleasant process for those who may be affected by one of the corridors identified but I feel sure that it was the right way in which to proceed. It was the best way to ensure that when British Rail comes to make a firm proposal, it is made in the light of observations about the relative merits of the three possible routes and, especially, their impact upon the environment. It is unfortunate that what should have been a debate about the relative merits of three broad corridors has turned into a discussion about detailed route alignments. It was never intended that at this stage there should be discussion on specific alignments or the effect on particular properties. Paragraph 10.9 of the study states : "The routes shown on the map should not be taken as representing a specific alignment, but only a general indication of the areas through which they might pass. The

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choice of which route should be adopted and its precise alignment cannot be determined without further detailed design work and wider public discussion."

I agree entirely with that. Any more specific discussion at this stage would be premature and inappropriate. We are some way off deciding on which line might be proposed by British Rail. Even when one line is firmly proposed, there will still be the opportunity for further discussion on precise alignment.

It is extremely regrettable that so many people in Kent have been caused so much anxiety. The anxiety of very many will prove to have been caused unnecessarily in that only one line will be proposed. Currently, worry is spread along three routes. I am determined that the present uncertainty which is affecting certain parts of Kent should not be allowed to last any longer than is strictly necessary. The sooner that British Rail is able to identify the preferred corridor, the better.

I have been in frequent contact with Kent county council and British Rail to establish the time that each needs to carry out its necessary procedures. Kent county council has retained consultants to comment. Council members will doubtless wish to receive views from their officers. I understand that the county council expects to have preliminary views by January. Following that important input, British Rail hopes to be able to indentify the preferred corridor soon after that. I took the opportunity of spelling out this likely timetable to the joint consultative committee on the Channel tunnel, which I chaired on Wednesday in Folkestone. Among others, it was attended by Kent county council and the Shepway, Ashford, Dover, Canterbury, Swale and Thanet district councils and the Kent Association of Parish Councils. I recognise that there are other bodies which have an interest.

I have impressed upon British Rail--this it accepts--that its announcement at the beginning of next year should not be confined to the choice of corridor. It recognises the need to spell out also the benefits to Kent. I believe that they derive from the freeing of existing lines and, therefore, less congestion. Unreduced congestion might threaten to block commuter services. There will be the benefit of the freeing of paths for freight along existing lines, which means that there will be less risk of freight drifting back on to the roads of Kent where it is not wanted. There will be the scope that the new line may offer directly to benefit Kent travellers through the provision of new services, such as express commuter services, in a county which is currently poorly served.

I believe that British Rail will wish to spell out also its general approach to environmental protection when it announces its proposal for a line. It will wish to bring forward information on noise. I suspect that that should be prepared independently or verified independently. It will want also to spell out arrangements for compensation for those who are affected by the chosen route. That is an issue to which I shall revert.

I want to make it clear to my hon. Friend the Member for Maidstone and to my right hon. Friend the Member for Tonbridge and Malling that it will not be a bargain basement line. British Rail will need authorisation from Parliament for the construction of the new line. The traditional method of statutory authorisation for new railway works is the private Bill procedure, which confers

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compulsory purchase powers on the promoter and confers the power to operate the railway. Objectors have the opportunity to petition Parliament and their objections can be fully considered by Select Committees in both Houses.

I do not wish to prejudge Parliament's views, but it seems likely that the more British Rail has been able to secure the approval in advance of local authorities, including Kent county council, and their endorsement that the line has been designed with due sensitivity to the environment, the smoother will be the passage of the Bill through Parliament. A line that violated the environment and caused fierce opposition from local authorities and hon. Members would face greater problems in Parliament. I am convinced that a private Bill is the right way to proceed and I see no reason to depart from well-precedented procedure.

Miss Widdecombe : I am grateful for what my hon. Friend has said. Although he has given the House an assurance that it will not be a bargain basement operation, he will appreciate that if British Rail builds in the full environmental protection that I and my right hon. Friend the Member for Tonbridge and Malling expect, the line will become a hugely costly enterprise. How does my hon. Friend square Parliament's insistence on a full environmental package with the Treasury's requirement for a proper internal rate of return?

Mr. Portillo : My hon. Friend has raised an interesting point, to which I shall be coming in a few minutes in the remarks that I intended to make.

I see no reason to depart from well-precedented procedures, nor do I consider that the matter will be affected if the line is constructed in the private sector, with British Rail entering into a toll agreement to run trains along it. The route would still be selected in the way that I have described and the Bill would still be promoted by British Rail.

I hope that what I have said demonstrates that British Rail will need to satisfy Parliament that it has dealt sympathetically with environmental concerns and has made all reasonable efforts to minimise the line's impact. There is no question of the cheapest line being built regardless of wider effects.

I shall now deal with the point raised by my hon. Friend the Member for Maidstone. I know that it also concerns my right hon. Friend the Member for Tonbridge and Malling because he asked me about it in a written question a week ago. British Rail must have regard to the cost of any environmental protection measures that are proposed. It will not receive any subsidy for the new line and will have to demonstrate a commercial case, so a balance must be struck between commercial and environmental considerations that will satisfy Parliament. I gave my right hon. Friend an assurance in my written answer that the cost of associated environmental works will form part of the capital cost of the project for the purpose of calculating the rate of return.

The commerciality of the line is essentially dependent on the journey times that it can help to achieve. Speed is an important element in British Rail's considerations because speed can bring three vital benefits. More customers will be attracted to the line and those customers will be prepared to pay more, so British Rail will receive a greater share of the joint revenues under the agreement

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with the Socie te Nationale des Chemins de Fer Francais--the French railway. Some people have seen something peculiar or sinister in that arrangement, but I have not. The agreement simply recognises that the railway which spends money to improve the service should reap the major part of any benefits from those improvements.

The optimum speed of the line is a matter for British Rail, which will have to justify its eventual decision. A balance will have to be struck between commercial and environmental considerations. I hope that I have made it clear that the decision on the preferred route will be British Rail's, not the Government's. Nor would it be fair to put the local authorities in the position of having to decide, although British Rail will wish to take account of what those authorities advise. Eventually, British Rail will have to justify its decision to Parliament.

In that connection, I make it clear that there is no truth in the suggestion that the Government prefer a particular route. The Government have no basis for expressing such a preference between route options. We expect British Rail to do that on the basis of widespread consultation. Nevertheless, if after reading the record of this debate any of the Kent district councils, Kent county council or the London authorities wish to ask me about the Government's position, I shall be happy to meet them. I explained that when I was in Kent on Wednesday.

The matter of principle concern to my hon. Friend the Member for Maidstone and to my right hon. Friend the Member for Tonbridge and Malling is compensation. Although it is many years since anyone built a completely new railway in the United Kingdom, the issues are no different from those raised by the construction of a new road. There has been a tendency for people to think that there is something special about the construction of a railway line. It is a different project, but many of the issues are the same.

The statutory framework for compensation to owners of properties affected will be laid down in the private Act which authorises the construction of the new line. It is normal for such Acts to apply the provisions of the Land Compensation Acts 1961 and 1973. For people whose property is compulsorily acquired, the 1961 Act sets out the basis of compensation, which is market value. Market value is calculated on the basis of the value of the property at the time it is acquired, ignoring the effect of the proposed development but taking into account any private development that might have been allowed had not the scheme for which compulsory powers are being exercised come along. The 1973 Act added to the entitlement a provision for home loss payments for home owners and compensation for expenses incurred in having to move, and compensation for farmers for the loss of livelihood brought about by compulsory purchase of all or part of their land.

For people whose property does not need to be compulsorily purchased, but who are adversely affected by the operation of a new facility, the 1973 Act provides for compensation for depreciation in the value of their property as a result of the use of a new road or railway. It is also normal practice for British Rail to make arrangements for the noise insulation of properties affected when it seeks statutory powers for new works. I understand that the board's proposals for dealing with noise and other environmental issues are being prepared.

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The method employed will be independently assessed by outside experts before finalising any compensation arrangements.

I refer briefly to my hon. Friend's suggestion that we should institute what she described as the French system of compensating above the value of the property. Traditionally, we have taken the view that it is wrong to use taxpayers' money to give a windfall gain on the value of people's properties, but that is a much broader question.

Miss Widdecombe : Will my hon. Friend draw an analogy with the law of damages? It is not enough merely to buy the property. Damages must be awarded for the worry that has been caused, for the hassle of acquiring a new property and for the financial penalties that the person may have to endure if his property is being bought without account being taken of the injurious effect of the development that has caused his property to be bought. Is there not a series of problems from which a person could suffer and on which, in a civil case, he could sue for damages?

Mr. Portillo : I do not wish to be drawn by my hon. Friend further than to say that the issues that she is putting forward are much the same as those that occur year after year or even day after day in the case of highway developments. Therefore, she is considerably broadening the subject. I do not blame her for that, but I ask her to recognise what she is doing. No doubt she will take heart from the fact that my hon. Friend the Parliamentary Under-Secretary for the Environment is on the Front Bench to hear her remarks and doubtless he will want to take account of her case.

My hon. Friend the Member for Maidstone also raised the possibility of compensation for people affected by intensification of use of existing railway lines. I find it difficult to accept that it would be right for British Rail to change its long-standing policy in that way. Its policy has always been that people who live near railway lines must expect trains to use them and must take the risk that the traffic might increase. There is also the possibility that it will decrease. That is no different from the position of those living near main roads, who are not entitled to compensation if traffic increases. Many thousands of people up and down the country must feel that they have been affected by roads on which traffic has increased in a way that they did not expect. Similarly, many people may be affected by intensification of the use of railways. Traffic can increase or decrease for a variety of reasons. My hon. Friend's proposal would have enormous consequences over a wide area. The issue goes very much wider than this particular railway line.

My hon. Friend also expressed concern at the restrictive nature of the existing definition of injurious affection and at the basis on which market value, particularly of agricultural land, is calculated under the statutory compensation code. Again I ask my hon. Friend to recognise, without in any way questioning the validity of her argument, that the ramifications of those questions are much wider than the area of transport. I undertake to draw those points to the attention of my right hon. and hon. Friends at the Department of the Environment.

Provisions already exist to compensate property owners affected by the adverse effects of traffic on new railway lines. I appreciate that problems have been caused by the

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fact that statutory compensation provisions do not come into force until British Rail has acquired statutory powers for the construction of the new line. My hon. Friend was right to make that point. Problems of blight arise particularly where property owners wish to sell properties now and cannot wait until the statutory procedures have been completed to take advantage of the statutory compensation provisions. Like my hon. Friend, I recognise that there is no predicting how long those procedures might take.

British Rail has shown that it is conscious of the problem and it intends to tackle it in two ways. First, it announced on 10 November that it would take action in cases of genuine hardship where individuals are unable to complete the sale of their property. In such cases, British Rail has said that it will buy property situated within any of the three route corridors identified in the report provided that the property is likely to be subject to compulsory purchase if that route is selected as the preferred route. I was pleased that my hon. Friend the Member for Maidstone and my right hon. Friend the Member for Tonbridge and Malling recognised the value of that statement.

Applicants must demonstrate the need to sell their property for reasons other than the rail link proposal. they must also show that reasonable efforts to sell the property have been made and that it could be sold only at a price substantially lower than it might reasonably have been expected to realise. Any dispute about the valuation can be referred to an expert appointed by the president of the Royal Institution of Chartered Surveyors. That is a welcome step by the board to relieve the problems of hardship caused by its proposals.

Secondly, British Rail is actively considering the appropriate approach to compensation for implementation when the preferred route is announced. The details are still being considered, but I am sure that my hon. Friend the Member for Maidstone, my right hon. Friend the Member for Tonbridge and Malling and the House as a whole will welcome British Rail's willingness to go beyond strict statutory requirements. As I said earlier, I recognise

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the importance of British Rail coming forward at one and the same time with all the elements of the package--the advantages to Kent, the proposal for a line and a statement of what the compensation arrangements will be.

It is clear to the House that a new line between the Channel tunnel and London will be needed at some stage in the future. The alternative is to choke the Kent rail network, which will adversely affect domestic as well as international services. That is a reason why this is not simply a matter of disadvantage, and anxiety to Kent, but has the potential for considerable gain to Kent. That is important.

It being half past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed , That this House do now adjourn.-- [Mr. Maclean.]

Mr. Portillo : I am pleased that my hon. Friend recognises that there can be advantages to Kent. I hope that the new line will benefit Kent travellers directly. An important part of the commercial case that could be made for this railway line could be that there should be express commuter services running along it. I am pleased that British Rail is examining the scope for such domestic services to use the line.

We all recognise that it is absolutely impossible to build a new line without some impact on the environment and adverse effects on the properties in its path. We need to ensure a reasonable approach to alleviating those effects. British Rail's announcement on 10 November is the first step down that road. I shall discuss with British Rail the approach that it will want to adopt once the preferred route has been announced, until such time as compensation provisions come into effect. I assure the House that the Government will take a close interest in that.

I thank my hon. Friend the Member for Maidstone for this opportunity to debate the matter. I hope that my remarks will be of some help to her and her constituents. I am under no illusion about the importance of this problem. I hope that the matter can be brought to a head as soon as possible so that certainty can reign and people in Kent and in those parts of London which will be affected can know exactly where they stand.

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ROF Burghfield

2.32 pm

Ms. Joan Ruddock (Lewisham, Deptford) : On a point of order, Mr. Deputy Speaker. I am aware of the lateness of the hour, but I see that the Leader of the House is in his place and I have come to raise an urgent matter.

At 6 am there was an explosion at ROF Burghfield. It was heard by local residents, a sheet of flame was seen by eye witnesses and some windows as far as a mile away were shattered. This is of great importance because ROF Burghfield is the manufacturing site of Britain's nuclear warheads. The surrounding villages already show an abnormal leukaemia cluster and you, Mr. Deputy Speaker, will appreciate the tremendous anxiety of the people in the area because of the explosion. It is essential that we have a statement and I ask the Leader of the House to facilitate one, even at this late hour, from the responsible Minister, so that people can be reassured about radiation leaks and dangers. All too often ROF Burghfield is shrouded in secrecy and people do not know what goes on there.

The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham) : Further to that point of order, Mr. Deputy Speaker. I have no information which is in any way helpful to the House or to the hon. Lady, but of course I shall make inquiries and see what I can find out.

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Local Government (Management)

2.33 pm

Mr. David Wilshire (Spelthorne) : First, I take this opportunity to note the late hour and to thank Mr. Speaker, through you, Mr. Deputy Speaker, for allowing me to raise a matter on which I feel strongly. I also thank the Minister for sparing time to attend the debate. I begin by making two brief personal observations. First, all that I want to say about the management of local government services is based on my own personal experience. I served for six years as a council leader. My remarks are not based upon abstract theory. Secondly, I draw the attention of the House to the Register of Members' Interests. It discloses that I am the co-director of the political management programme at Brunel university, where work on this question has been carried on for some time.

Why, then, do I think that these issues need to be aired? Any examination of the management of local government services does not require legislation. That must be welcome news to all hon. Members and to local government everywhere. Legislation alone will not secure the future of local government. All hon. Members want its future to be secured, but legislation is only half the story. It will end abuses but it will not improve services. That requires skilful management. Moreover, any legislation that is passed has to be implemented. That is a challenge for effective local government management.

Another reason for airing the matter on this occasion is that local government management has not been systematically studied during the last 15 years. About 15 years ago the Baines report was published. That report was made by bureaucrats for bureaucrats, not by managers for managers. We must look carefully into the management of local government services, if local government is to flourish. Whatever we may say or think about it, local government is essential and it will not go away.

That begs the question how local government should be managed, if it is not to be managed according to the Baines model or if it is not to be managed as it is now being managed by many authorities. There are three key points to bear in mind.

First, local government should be managed by real managers, not by administrators. Secondly, local government should be managed by an appropriate form of management. Local government is not Marks and Spencer, even if some of us think that it should be. It can never be that. Thirdly, local government services must be managed in a businesslike way, although those services are not businesses. Managing services in a businesslike way amounts to asking for a major cultural change in many organisations. I know from my experience that it also calls for major organisational changes. Both cultural and organisational changes can be traumatic experiences.

We require real managers in local government. The Government can play their role by encouraging real management in local government, by making facilities available for it to develop and, if necessary, by providing funds to speed up the training.

Traditionally, local government services have been administered rather than managed. Among the less endearing features of local government is a strong central core of administration. The power of the treasurer in local government is formidable, awesome and often obstructive.

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Input is the main controlling factor. How much money is put into local government is the main means of control. That does not lead to effective management. Responsibility is devolved to officers who often find that they do not have the authority to go with that responsibility. The story of the person who is responsible for postal services in a local authority not having control over the postal budget or not being able to control the purchase of stamps is the all-too-familiar a story of responsibility and control being detached from one another.

Worst of all is the fact that in the traditional system of local government roles are confused. Chief executives are not quite sure what their role is ; chief officers are not quite sure about the difference between them and chief executives. What is probably most serious of all, councillors are not quite sure where they fit into the pattern.

Sadly for local government, there have been dramatic developments elsewhere in the public sector. There have been major changes in the Civil Service. Above all, the National Health Service has been at the forefront of change, in the overhaul of its management structures. However, those lessons have yet to filter through significantly to local government.

The model that I would urge upon the Government to consider for local government is the model that they adopted for the National Health Service, with its process of general management as a way forward. My experience and my belief is that the analysis brought to bear on the Health Service is absolutely right in the NHS and would be absolutely right in local government.

That takes us on to what needs to be done to develop more effective managers. First, it is necessary to establish a strong general management lead in the officer structure and then create strong and effective service managers in posts that really matter. The role of a general manager has to be made absolutely clear. A general manager is not a chief executive, nor is he a typical departmental head or chief officer in charge of an empire. General managers have to be free from service responsibility, they have to work across all services with meaningful control of all that goes on. They have to have the authority that chief executives often do not and more than anything else they have to get away from the idea that the job of general manager is somehow to chair in a mystic way a management team that all too often is composed of people who are invited to look across all services while having their own empires to defend.

The role of service managers also needs to be clearly understood. Service managers need to be free to deliver the services for which they are responsible. They need the authority and the control to do those jobs. They need their own budgets and they need to be able to decide how to spend them. They need their own cost centres and they need to be able to bid for their own resources.

It is never going to be possible to manage a service, be it in the public sector or elsewhere, without proper and effective control of the staff. The manager, not the personnel department, must do the hiring and firing, The manager, not the personnel department, must argue for the structures and suggest the grades. To manage effectively, a manager must have his own targets based on

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outputs which must be based on quality and not numerical factors. I have never been impressed on being told the number of times that a council cuts the grass in a year. I am much more interested in how long the grass is before they think it needs cutting. That is the targeting and control that they need.

In addition, local government needs to adopt an appropriate form of management. Local government is not a business. It cannot be run like Marks and Spencer for the simple reason that local government cannot withdraw from statutory functions, as a business can if it is making a loss. Councillors can never become line managers in the business sense. In their franker moments, councillors sometimes admit that they are unclear about their role, and that they seem to lack some of the skills that are needed. Therefore we have to identify a third manager in local government--the political manager. When we understand and work out that role, we shall get away from the conflict between councillors and officers and the complaint that all too often, councillors are officer-dominated.

Finally, one has to ask what is involved in managing services in a businesslike way. It is not possible to go into detail in such a brief debate, but certainly the customers must come first. That is the key to it all. Secondly, the central bureaucracy must be dismantled, and, thirdly, it must provide business budgets. Certainly there have to be incentives for managers. The authority that I used to lead now has a profit-sharing scheme for its DLO because the DLO makes so much profit.

A review of local government is not only a good idea but it is long overdue. Despite all the legislation, which I willingly support and believe to be necessary, as long as it is only legislation and not a major overhaul of local government services, we shall not secure the future of a flourishing local democracy in Britain.

My experience during 11 years in local government has taught me a number of things. If management is overhauled it gives councillors a much more satisfying role. It gives them greater control of authorities and, therefore, enhances democracy. My experience has also taught me that if management is overhauled better services are provided and more services are obtained from the same amount of money.

I learnt also that if the power of the centre, particularly the financial centre is ended--the lawyers have their own budget, and have to recover their own costs, and the planning department is free to use in-house lawyers or go down the street to a private firm of solicitors if it prefers --it saves a great deal of money because overheads will shrink. If one is careful, the money saved can be re-invested and given to the managers who deliver the services. The money that was spent on overheads can be spent on local people. My hon. Friend the Minister may talk about all the things in which he used to be involved, such as competitive tendering. All the changes could make it easier for in-house people to win the contracts because they would be better managed and more cost-effective. My experience has also taught me that better-managed authorities mean jobs that are more secure and union support.

All those objectives have been achieved in one council that I know. I know that many other Members have similar experiences. We would all say that if the Government can encourage local government services to be better managed, and encourage officers and councillors

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to do their jobs in a better way, then, without passing another law, there will be better services, better democracy and a much more secure future for local government.

2.46 pm

The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope) : I congratulate my hon. Friend the Member for Spelthorne (Mr. Wilshire) on his stimulating speech about the management of local government services. He has shown, as he has on previous occasions, an insight into the problems based on knowledge and experience as the leader of Wansdyke council and as a member of that authority before he became the leader. I hope that his remarks will be widely read by members and officers in local government. My hon. Friend's contribution gives me theopportunity to discuss the action that the Government have taken through the Local Government Act 1988 to try to bring about a new approach to management in local government. That was the essential purpose we had in mind when we planned the legislation on competition, which is now embodied in the first part of the 1988 Act.

My hon. Friend has described the action which a good and progressive Conservative-controlled authority was taking of its own accord, without needing the spur that the Act provides. But, alas, too few authorities have been prepared to take the long cool look at all management activities and structures which Wansdyke put in hand with such productive results. If we had waited for voluntary action to bring the kind of changes that were needed in local government generally, I fear we would have waited a long time.

The truth of that is proved clearly by the spate of activity that has accompanied the passage of the Act. Large numbers of advertisements appeared for managers to run competitive processes. There were innumerable articles on the challenge that lay ahead and how best to deal with it. Seminars and conferences were launched on every side--and did very good business. My hon. Friend and I have spoken at a number of those conferences.

All that suggests strongly that few authorities were in a position properly to define and describe the services they needed and the way in which they could best and most effectively be provided. Most have found their existing command and control quite inadequate to handle service delivery in a competitive environment. There was clearly a widespread fear that present cost levels were less than competitive. The kind of self-examination which we have seen in Wansdyke had few imitators.

All this made somewhat ironic the impassioned pleas that we heard from so many authorities and from the local authority associations, asking to be left alone to decide whether or not to go in for competition because they were in the best position to know whether their cost levels were such as to deliver the best value for the ratepayer's hard-earned money. They cannot have it both ways. If their service delivery was already so efficient, competition should have presented them with few problems. There would have been no need to question existing management structures, nor any need to consider whether to break loose from control service provision, nor any need to cast around for people capable of managing the provision of services.

Already we are seeing that substantial cost savings have been identified, bonus schemes are being drastically

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revised, the level of central overheads is being questioned, asset holdings are being pruned as spare capacity is identified and clear and simple organisational structures are being adopted in place of vague and informal ones. For example, a report published for Income Data Services, which came out last week, showed that increasing numbers of councils are merging all their direct service organisations into a single business unit so that they can compete more effectively with the private sector. This means new profit-sharing schemes, the encouragement of work force participation, of such methods as team briefings and quality circles, and new incentives for managers such as performance related pay. There is also a new and welcome move towards term-limited contract arrangements for senior staff.

All of this only confirms what the Government have believed all along--that any organisation that is left to run without outside pressures on its efficiency for any length of time is likely to fail increasingly to deliver real value for money. The Audit Commission's findings have repeatedly confirmed that this is a fact of life. I can assure the House that, the Government see competition as a way of strengthening local government. Clear decision-making processes, full and regular information on cost levels and reductions in these cost levels can only work to the benefit of members, officers and ratepayers, and therefore of the local democratic process as a whole. That is why the legislation is specifically designed to strengthen the organisations in local government that are responsible for the actual provision of services--always assuming, of course, that they are capable of being strengthened in this way. What the Act says is that council employees can continue to provide direct services, but only if they can show--in fair and open competition--that they can win a tender in the face of counter bids from the private sector. If they are not capable of doing this, the ratepayer would be better served by whoever can win the contract on such terms. The advantages of transparency in management and costing are guaranteed by the requirement that each of the services made subject to competition must be separately accounted for--with costs, including overheads, and revenues properly identified. We would expect most services as a rule to achieve the not unreasonable rate of return of 5 per cent. on capital--and we have required the auditor to comment on how far they are successful in this objective. We have also provided appropriate-- and in some cases, I fear, all-too necessary--sanctions. The savings that this revaluation in the management of local government offers are certainly very substantial indeed. The leader of Bristol city council has said publicly that savings of £600,000 have already been identified. Berkshire plans to save £800,000 a year just on school cleaning alone and Langbaurgh received a bid of £150, 000 for street lighting which previously cost it £450,000. Those are just isolated examples. The Audit Commission, in its recent report on competitive tendering for parks and open spaces said that it had found, from its limited experience of tendering to date, that authorities could expect to achieve savings of between 10 and 30 per cent. on the previous price, with overall net savings of between 5 and 25 per cent. For parks and green spaces alone that could add up to savings of up to £200 million a year without any reduction in quality of service. That is just in the service area, which people might regard as relatively mundane--a total of £200 million a year.

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The prize that we are looking for is, in every sense, worthwhile. The savings are not to be measured in money alone, although these are likely to be considerable, but in improved management, better cost structures, better motivated and better rewarded work forces. Where Wansdyke has pointed the way to what can be done, other councils should be following. That will result in better and more efficient services for the public.

Question put and agreed to.

Adjourned accordingly at six minutes to Three o'clock.

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