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Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),

Question agreed to.

11 Nov 1997 : Column 810

Local Government (Contracts) Bill

Lords amendments considered.

Clause 1

Functions to include power to enter into contract.

Lords amendment: No. 1, in page 1, line 19, after ("financier") insert
(", or any insurer of or trustee for the financier,")

10.14 pm

The Minister for Local Government and Housing (Ms Hilary Armstrong): I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Michael Lord): With this, it will be convenient to discuss also Lords amendment No. 9.

Ms Armstrong: Clause 1(2) provides that a local authority may make arrangements with financiers for step-in rights; that is, rights to intervene where the contractor is unable to meet his obligations to the authority or to the financier. The amendment provides that these arrangements can also involve--[Interruption.]

Mr. Deputy Speaker: Order. I ask hon. Members to leave the House quickly and quietly if they are not taking part in the debate.

Ms Armstrong: The amendment provides that these arrangements can also involve financiers' insurers or trustees. Amendment No. 9 amends clause 4 of the Bill to provide that a contract between a local authority and a financier's insurer or trustee may be a certified contract and thus may have the protection of clause 2 (1) of the Bill. That is the "safe harbour" provision.

Lords amendment agreed to.

Clause 2

Certified contracts assumed to be intra vires.

Lords amendment: No. 2, in page 2, line 22, leave out from first ("a") to end of line 27 and insert ("local authority has entered into a contract which is a certified contract
("the existing contract") and the existing contract is replaced by a contract entered into by it with a person or persons not identical with the person or persons with whom it entered into the existing contract, the replacement contract is also a certified contract if--")

The Minister for London and Construction (Mr. Nick Raynsford): I beg to move, That this House doth agree with the Lords in the said amendment.

Clause 2 (4) provides that, where a certified contract is novated--that is, replaced by another identical contract because a new contractor or financier is substituted for the original one--the new contract shall also be a certified contract. The amendment makes it absolutely clear that, for these purposes, a contract is replaced only if the parties to the contract are different.

Lords amendment agreed to.

11 Nov 1997 : Column 811

Lords amendment: No. 3, in page 2, line 37, at end insert--

("( ) The application of subsection (1) in relation to a contract entered into by a local authority does not affect any claim for damages made by a person who is not (and has never been) a party to the contract in respect of a breach by the local authority of any duty to do, or not to do, something before entering into the contract (including, in particular, any such duty imposed by a statutory provision for giving effect to any Community obligation relating to public procurement or by section 17(1) of the Local Government Act 1988).")

Mr. Raynsford: I beg to move, That this House doth agree with the Lords in the said amendment.

The amendment reflects concerns raised by the hon. Member for Christchurch (Mr. Chope) in Committee, as well as points made during the outside consultation. The amendment makes it clear that clause 2(1) does not prevent a person other than the contractor from bringing an action against the authority seeking damages because procurement procedures had been disregarded. In particular, we have in mind a claim by an unsuccessful bidder for the contract who feels that proper procurement procedures have not been complied with. Such legal action could result only in the payment of damages by the authority and not in the setting aside of the contract. It would not, therefore, affect the position of the appointed contractor or his financiers.

Mr. Christopher Chope (Christchurch): We are grateful for the Government's response to the concerns expressed on the issue.

Lords amendment agreed to.

Clause 3

The Certification Requirements

Lords amendment: No. 4, in page 2, line 41, at beginning insert
("The requirement specified in this subsection is that")

Ms Armstrong: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 5 to 7.

Ms Armstrong: The amendments clarify a point about the certification requirements referred to in clause 3, and ensure that the requirements for certifying contracts will operate as intended. As long as a certificate states that it has been copied to any persons prescribed in regulations, and confirms that requirements imposed by regulations concerning the issue of the certificate have been complied with, the contractor can be satisfied that the certificate will not be invalidated if it becomes evident that the authority has not in fact done those things.

Lords amendment agreed to.

Lords amendments Nos. 5 to 7 agreed to.

11 Nov 1997 : Column 812

Clause 4

Certification Requirements: Supplementary

Lords amendment: No. 8, in page 3, line 25, at end insert--
("( ) Where the certification requirements have been satisfied in relation to a contract by a local authority within section 1(3)(a) or (d), the local authority shall secure that throughout the period for which the contract operates--
(a) a copy of the certificate which has been issued is open to inspection by members of the public at all reasonable times without payment, and
(b) members of the public are afforded facilities for obtaining copies of that certificate on payment of a reasonable fee.")

Mr. Raynsford: I beg to move, That this House doth agree with the Lords in the said amendment.

The amendment was drafted in response to an undertaking that I gave to the hon. Member for Christchurch in Committee. It requires a local authority that has issued a certificate, other than the receiver of the Metropolitan police district or a probation committee, to secure that a copy of the certificate should be freely available for inspection by members of the public at all reasonable times, and to provide facilities to allow copies to be obtained for a reasonable fee. The authority remains under that duty for as long as a certified contract operates.

Mr. Chope: I am grateful to the Minister for his positive response on this open government amendment, which originated with the Opposition. Perhaps he could explain, however, why it does not extend to the receiver for the Metropolitan police district or to a probation committee.

Mr. Raynsford: I feared that the hon. Gentleman would pursue that point: it is a complicated one, and I ask him to bear with me while I explain the circumstances.

Unlike other local authorities, probation committees are accountable to the Home Secretary and not to the local taxpayer. They are under a statutory duty under section 4 of the Probation Service Act 1993 to ensure that probation services are provided efficiently, and the Home Secretary has statutory powers to intervene when a probation committee fails to discharge its duties responsibly.

The expenditure of probation committees is 80 per cent. funded by the Home Office. Only about 20 per cent. is funded by local authorities, and much of that is supported by revenue support grant from my Department. Only a small proportion is raised by local taxation and, accordingly, probation committees are primarily accountable to central Government.

Sir Robert Smith (West Aberdeenshire and Kincardine): It occurs to me that that is just about the ratio of funding for local government at the moment: 80 per cent. from central Government, and 20 per cent. raised locally.

Mr. Raynsford: The hon. Gentleman is talking about something that is not relevant to the specific Lords amendment. If he consults the procedures of the House, he will realise that he is speaking wide of the mark.

11 Nov 1997 : Column 813

Probation committees are not subject to the disclosure requirements of the Local Government (Access to Information) Act 1985. The accountability of probation committees to the Home Secretary for the effectiveness and efficiency of the services they provide covers the lawfulness of the contracts that they enter into, and, through the Home Secretary, they are accountable to Parliament. The Home Secretary monitors the provision of probation services through Her Majesty's inspectorate of probation and the Audit Commission.

In view of those existing arrangements, it is not necessary to require probation committees, for reasons of public accountability, to allow inspection of certificates by members of the public.

On 16 July, my right hon. Friend the Home Secretary announced the prisons/probation review, which, after public consultation, may have a major impact on the structure and organisation of the probation services and the legislation covering their functions. Similar arrangements apply to the inner London probation service, where the receiver for the Metropolitan police district acts for statutory purposes in place of the responsible authority--that is, one or more local authorities. The probation committee for the inner London probation service is also accountable to the Home Secretary.

The receiver for the Metropolitan police district is not subject to local government disclosure requirements. The receiver is for most purposes not a local authority. Through the Home Secretary, as police authority, he is accountable to Parliament. His general liability to account and be answerable with the Commissioner of Police of the Metropolis is contained in the Metropolitan Police Act 1829 and the subsequent 1851 Act.

Lords amendment agreed to.

Lords amendment No. 9 agreed to.

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