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11.21 pm
The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford): I beg to move,
- That the draft Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, which was laid before this House on 20th June, be approved.
- That the draft Local Authorities (Contracting Out of Investment Functions) Order 1996, which was laid before this House on 25th June, be approved.
The orders will help to address that situation in two ways. The first is concerned with the contracting out of local taxation billing, collection and enforcement functions and the second with local authority investment functions. The aim is to clarify for local authorities their discretion to use a contractor for service provision in those specific areas.
The Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order is intended to clarify an authority's powers to contract out its billing and its collection and enforcement functions on council tax, community charge and national non-domestic rates. The order will enable most of the statutory functions relating to billing and to the collection and enforcement of local taxes to be delegated to a contractor, if the authority so wishes.
There are, of course, some exceptions. Local authorities have certain powers to instigate firm action against those who do not meet their legal obligations. Those actions include applications for the committal of a debtor and the imposition of civil penalties--powers that should remain the exclusive territory of authorities. Therefore, the order does not allow the delegation of those powers to a third party. Decisions to reject an individual's appeal against council tax liability and to pass it to a valuation tribunal, and whether discretionary relief should be applied on non-domestic rating, will also remain the responsibility of the local authority.
The second order will clarify a local authority's powers to contract out functions relating to investment. The order will set in place some good practice principles. It relates to a range of investments, but they must be approved investments under the Local Government and Housing Act 1989. Approved investments have been used for the investment of local authority funds over the years, and they provide a sound basis for the order.
Contractors will have to be suitably qualified. They must follow proper investment and accounting practices and comply with local authority instructions. They will not be able directly to sub-delegate decisions on functions. While the order does not prohibit a contractor from
making an arrangement for the exercise of functions by another person, I have insisted that, where such an arrangement is made, the other person must be approved by the local authority directly. Contractors will be obliged to make three-monthly reports to the authority and to provide any information that the authority may request.
Ms Hilary Armstrong (North-West Durham):
The Opposition do not oppose the orders, because they enable local authorities to contract out but do not force them to do so. With that level of discretion, authorities will be able to make decisions according to what they think will provide the best value to local taxpayers.
However, several issues arise out of the orders, which I ask the Minister to consider. We are anxious that the Government do not use them as a means to compulsion via the back door. Compulsion has not worked in local government, and the most effective relationships between local government and the private sector have been established when they have been entered into on a voluntary basis of partnership. That is how we think matters should proceed in future, so that local government's public ethos can operate alongside the private sector's efficiency and market-driven efforts.
I am not a sceptical person, Madam Deputy Speaker, as I am sure that you know. However, one wonders what relationship there is, in particular, between the contracting out of the tax billing, collection and enforcement functions and other proposals made by the Minister several weeks ago and a current consultation process. Those consultative proposals advocate the extension of the proportion of financial services that local authorities will be forced to put out to tender from 35 to 65 per cent. Some authorities would have no choice but to contract out the tax billing, collection and enforcement functions if those proposals are approved.
Those who are cynical or sceptical might regard the proposals as only appearing to be voluntary, whereas, in the long or medium term, the Minister might make them compulsory by means of the proposals that he announced several weeks ago, forcing local authorities to contract out those functions. The draft order was put out to consultation in 1994, and we are now in 1996. Perhaps something that will happen before 1997 may have caused the Government to lay the orders now.
As I said, I am not a cynical person, and I am sure that an impending general election has nothing whatever to do with the Minister's decision. However, while we are not opposing the order, because we believe that local authorities should be able to secure the best value for local people by using the mechanisms that are most appropriate to local circumstances, we oppose the extension of compulsion for the reasons that I have mentioned. Local governments must be able to bring together the important stakeholders in any area to ensure that they are working effectively in response to the needs and aspirations of local people. Compulsion does not enable that close working relationship. Local government wants to develop
real partnerships and the means of working with the private and voluntary sectors. Compulsion is stopping good, healthy relationships developing.
As to confidentiality and public responsibility, vast amounts of information will be available to the contractors who bill council tax and bring enforcement proceedings in the case of non-payment--and it offers the potential for abuse. It is crucial that the Government make it clear that that activity must be kept separate from any others of a company bidding for a contract. Large utility companies are already seeking mergers with others, and may want to know whether an individual is a good payer. They could obtain that information from council tax collection, which could affect their decision to make other services available to the individual in question.
Such a practice would not be legal or proper; nor would it uphold the standards that we expect of publicly accountable local government officers. I hope that the Government will take steps to ensure that confidential financial information obtained by a contractor will not be used for any other purpose without the individual clearly giving permission.
What comments has the Minister sought from organisations interested in confidentiality and related matters? Has he received advice from the Office of Data Protection? We must be confident that the public's right to privacy is properly protected.
Contractors should be expected to comply with a national code of practice. The public are vulnerable, and we want an assurance that any organisation performing the functions in question will respect the sensitivities that will be involved and will use its powers responsibly. That means the provision of appropriate and accessible collection points, methods of payment most appropriate to the individual and giving advice on meeting payments to people on low incomes. I note from the order that a contractor will be responsible for collecting the liabilities of a deceased person. When such a duty is not performed carefully, incredible offence and distress can be caused to the bereaved family of the deceased from whose estate the council tax is sought. How will the Government ensure that the sensitivity for which a public body can be held accountable will be observed?
The contracting out of investment functions is a slightly different matter. Local authorities have been asking for such a measure for some time. Four to five years ago, the Government questioned whether local authorities had the power to delegate investment management on superannuation funds. They subsequently legislated to clarify local authority powers in relation to the delegation of investment management on superannuation funds but did not do anything about the delegation of everyday general fund cash management. Many local authorities assumed that they had such general powers already, but it became clear that some people questioned it. Local authorities have therefore been asking for some time for the matter to be clarified and for specific powers to delegate cash management. In many senses, it is therefore welcome that the Department is now responding to such requests.
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