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Local Government (Contracts) Bill
Mr. David Rendel (Newbury): I beg to move amendment No. 1, in page 1, line 10, at end insert--
'(1A) The power of a local authority to do any thing (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of its functions, includes the power to enter into a contract with another person for the provision or making available of assets or services, or both (whether or not together with goods), for or in connection with those purposes.'.
Mr. Deputy Speaker, I apologise for the confusion if you thought that my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) intended to move the amendment. In Committee, my hon. Friend raised an issue somewhat similar to the one raised by amendment No. 1 and said that, if he was dissatisfied with the Minister's response, we might well table an amendment on Report.
Having listened to the Minister's response on that occasion, and having had the opportunity to reflect on the matter again when it was reported in Hansard, I was not entirely satisfied with the Minister's response. Further reassurances are required before we feel it right to withdraw the amendment, because some sections of local government will continue to worry if the amendment is not passed and if further reassurances are not given.
The amendment in no sense tries to expand the powers of local government, which is one of the confusions that arose in Committee. The Minister appeared to feel that we were trying to expand the powers of local government. That was not the point of the remarks made by my hon. Friend the Member for Sutton and Cheam at the time, and it is not the point of amendment No. 1.
The amendment simply seeks to clarify the extent of the Bill and to ensure that it is wide enough to cover all those aspects of local government performance which I believe that the Government intend it to cover. In that sense, it is a helpful amendment, which tries to take out of the Bill that which might otherwise be a part of it and that leaves some of the potential contractors of local government in doubt whether local government really has the powers that it seems to think it has.
In her reply, the Minister said:
I believe it is fair to say that the Bill talks only of functions that are conferred or imposed by statutory provision, and if the amendment is to be withdrawn the Government must explain how the Bill can cover the potential use of some discretionary functions by local government--especially, perhaps, those new functions that may not yet have been thought about. New ideas are
always emerging on what local government may wish to be involved in, as new technology comes into use, and the Bill should cover any such new functions in which local government may be involved in future.
If the purpose of the Bill is as I understand it to be--to reassure potential contractors that they may go ahead with their contracts in the full assurance that they will be paid even if, on occasion, local government appears to have acted ultra vires--the amendment can only help the Bill to secure its true purpose. It will make it plain that the Bill does cover all the potential aspects of local government involvement, not only--as appears to be the case at present--those that are specifically laid down as the functions of local government directly in statute.
Mr. Eric Pickles (Brentwood and Ongar):
I do not intend to detain the House long in considering the amendment, but as it is my first time at the Dispatch Box--
Mr. Nicholas Soames (Mid-Sussex):
First-class man.
Mr. Pickles:
I thank my hon. Friend. I hope that I shall be here long enough to enjoy it.
What the Liberals said on Second Reading and in Committee has changed a little; at first they talked about a general power of competence and now they say that they want to extend it because they want to be sure that it covers everything.
I clearly recollect what happened in Committee. Several times I asked the Minister for Local Government and Housing whether discretionary powers were covered, and especially whether section 137 of the Local Government Act 1972 was covered. The hon. Lady was straightforward about that and unequivocal in her assurances that that would be covered.
At a future date, there may be a case for examining the general competence of local government, but I do not believe that it should come about as a result of the amendment. It is true that, if it was decided to reconsider the way in which local authorities receive their powers, something like the amendment would need to be considered, but those with experience of local government and the way in which it approaches matters of general competence believe that what we need is a clear statement of powers and responsibility, and the Minister, in fairness to her, gave the Committee precisely that. We need to understand where responsibility lies in local government and in terms of the council tax payer.
Local authorities have generally used the test that is set down in section 137 of the 1972 Act, which is one of direct benefit. There must be a clear demonstration that it is to the benefit of the local community or a substantial part of the local community or a substantial geographical part. It seems to me that, in ways of operating, powers are best left in terms of "must" or "may" take action, in recognition of the fact that there is always scope for ambiguity. That is why section 137 of the 1972 Act, and the previous section, section 111, came into existence.
In Committee, the hon. Member for Newbury (Mr. Rendel) suggested that we might try to reverse the position and lay down several exceptions, so that local authorities have a wide power except in the case of the exceptions. I believe that that is the idea underlying the amendment. Arranging things in that way would only
result in a long list of exceptions. Would we want a local authority to trade? Probably not. Would we want it to manufacture windows? Probably not. I can, however, think of examples when we might be disposed to allow local authorities such powers--when an authority was in charge of a disabled workshop, for instance. The Liberal Democrat approach will not, I believe, produce any great benefits.
I cannot help agreeing with Professor Grant's feeling that this approach is more symbolic than real. That sums up the amendment, too, and the general attitude of the Liberal Democrats to local government.
The Minister for Local Government and Housing (Ms Hilary Armstrong):
The Bill appears to enjoy the support of both Opposition parties, although they disagree about the amendment. I want to be helpful to both parties, if I can.
The effects of the amendment are difficult to ascertain. It would insert new section (1A), lifting its words from section 111 of the Local Government Act 1972. That section empowers authorities to do anything that facilitates
I fear that ingenious interpretation of the amendment might lure authorities into schemes in which their powers were at best highly ambiguous. The amendment would therefore seem to widen the effect of the Bill, which is not our intention. The Bill does not add to local authorities' powers. Clause 1 is designed merely to make explicit what is already implicit, so that authorities can more confidently enter into contracts in pursuance of their functions.
Where entering into a contract is necessary to help an authority discharge a function, but it is not confident of being able to rely on the provision for the power to enter the contract, the authority could rely on section 111, on the basis that a contract is incidental to or conducive to the performance of the function. There were doubts in some quarters whether the main statutory provision, or section 111, empowered an authority to enter into contracts in all cases.
The Bill removes that uncertainty. It does so by confirming, in clause 1, that the statutory provisions that confer functions also confer power to enter contracts for assets or services in connection with the discharge of those functions. The Bill makes this implicit power explicit. To that extent, inserting the words of section 111 is unnecessary. Indeed, such insertion could add an incidental power to an incidental power, thus augmenting local authorities' powers.
I know that this is getting complex, so I shall provide some examples of what we think might happen. The first concerns an activity permitted under current legislation; clause 1(1) would confirm it. An authority can enter into a contract for the provision and servicing of computers
and other office equipment required to discharge its primary functions--for instance, education or social services.
"the word 'functions' in the Bill covers both duties and discretions."--[Official Report, Standing Committee B, 1 July 1997; c. 12.]
That does not appear to be a normal definition of the word "functions," and it is unlikely that the Bill could be interpreted in exactly that way in plain English. I therefore ask for further clarification from the Minister.
"or is conducive or incidental to, the discharge of"
any of their functions. The amendment would enable authorities to enter into contracts for assets or services when relying on subsidiary powers under section 111, instead of primary powers. I wonder whether the hon. Member for Newbury (Mr. Rendel) realises that the amendment would have that impact.
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