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Mr. Peter L. Pike (Burnley): My right hon. Friend will know that only a minority of the country still has two-tier local government. Does his White Paper give such authorities the option to become unitary authorities? If that is not possible in the short term, does not the fact that the authority that spends the least--less than 20 per cent. of the total--has to collect the money go against the accountability that he seeks? Should not county councils have to collect their own money so that there is direct accountability, and so that people know where the money is being spent?

Mr. Prescott: I said at the beginning of my statement that much legislation over the past couple of decades, has been about organisational structure rather than services. Unitary authorities exist, and the general opinion on both sides of the House is supportive of them. Unitary authorities have increased during the past few years. Two-tier government remains in metropolitan areas and in county areas where there are district authorities.

Mr. Jenkin: Three-tier.

Mr. Prescott: In the background, there is also regional government, which I have always supported, which may shock the hon. Member for North Essex. There are questions about the structure of local government, but it would take two Parliaments to be able to deal with them. Anyone who considers organisational change in local government will know that there must first be a consultation document, then legislation that will take time

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to pass. I am an advocate of regional government, but for now there exist local authority structures that are both unitary and two-tier. We will seek to make authorities work as best they can. Where there are injustices, particularly as regards finance, as my hon. Friend the Member for Burnley (Mr. Pike) said, we shall seek to make matters fairer.

Mr. Christopher Chope (Christchurch): Does the Deputy Prime Minister accept that the consequence of today's announcement will be that people up and down the country will pay a lot more in council tax without any improvement in quality of service? His White Paper is entitled "In Touch with the People", but does he accept that he is out of touch with the people if he cannot tell us that people will get better quality services for the same or less council tax?

Mr. Prescott: Some of our changes to local authorities will make for better value, greater efficiency and improved provision of services. If we can do that, we can get more services for the same money. That is what efficiency and effectiveness are about. We have made changes to local authority financing regarding Treasury rules with which I was in considerable disagreement. Trading corporations in local authorities, such as airports--Manchester was a classic example--found themselves in difficulties because they had to borrow against the requirements of local government, instead of the requirements of a profitable company with considerable assets.

Changes to those rules will relieve local authorities of some expenditures and difficulties, and will enable them to put resources into providing better services. That will not cost the taxpayer one penny. We are making more intelligent use of the financial framework in which local authorities operate. Along with our best value system, that will mean better services. That belief lies at the heart of the White Paper, and we will be able to judge it over the next couple of years.

Judy Mallaber (Amber Valley): I welcome the Secretary of State's reaffirmation of the value of public service, and the measures for greater local accountability and local scrutiny that must go with it. Would he say more about the criteria that will be used to assess progress by local councils in considering political structures to meet that aim, and the aim of being closer to the people? Who will decide, and how, which councils are beacon authorities?

Mr. Prescott: The final point is highly relevant, and the White Paper contains a considerable section about beacon authorities. We use the term to identify centres of excellence. Some authorities, as we know, can build houses or provide services more efficiently than others. We want to highlight those authorities as offering the standards that we want for local authorities.

Mr. John Bercow (Buckingham): Like Wandsworth.

Mr. Prescott: It might be Wandsworth, or it might be a Labour authority. I do not seek to make any ideological point about it. Where best practice exists, we should try to use it. Where good practices do not exist, we should

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act to say so. The White Paper says that they will be unacceptable, and that we are quite prepared to take action in areas that do not improve.

Local democracy is not about having the worst, inefficient services; it is about being proud of running local services. Most citizens have no chance of determining a council one way or the other, and we are obliged to do something about services. Beacon councils meet that argument. On setting targets, whether for housing, or for provision of services, the Audit Commission has already done some work.

We should like to talk more about the outputs than about the inputs. The Audit Commission is largely concerned about getting value for money. That is quite proper, but the services that emerge are equally important. That is where we draw the distinction between compulsory competitive tendering and best value. We shall negotiate those targets with the local government associations and we shall take that matter into account. Governments always come under a certain amount of pressure when dealing with public expenditure to bring about the best practice. We stand for better quality services and best practices. That is what the White Paper is about.

Mr. Mike Hancock (Portsmouth, South): I am delighted with much of what the Secretary of State has had to say this afternoon. When the White Paper materialises into a Bill, I hope that he will not give up completely on the idea of having a change in the voting system for local government. Some of us think that that exercise would bring more accountability.

Can he explain how the options for change in the way in which a local authority is organised and run will be put to the people? I know from my experience of over 30 years in local government, some 20-odd elections and four changes in local government organisation that the party in power at the time decides on how the options are put to the people. The end result is nearly always geared to support the continuation of power rather than to give more democracy to the people.

I am refreshed to hear that the matter of regional government remains high on the Secretary of State's agenda, as it is on mine. As his White Paper passes through its consultation exercise I should welcome him adding weight to the idea that regional government is an option to which we should look forward.

Mr. Prescott: I thank the hon. Gentleman for his contribution, particularly for his words about regional government. As we all know, these major constitutional changes or, at least, boundary changes, are extremely controversial. There great heat generated by whether the area we live in is called one thing or another. I shall not pick an example because these matters get particularly hot. I believe in these changes and I shall take every opportunity to push in that direction.

As the hon. Gentleman knows, we have set up the Jenkins commission to look into types of political representation and voting systems. We have a manifesto commitment to have a referendum on the issue also. Those are some steps towards what he is asking for. We are trying different electoral systems for the Scottish Parliament, the Welsh Assembly and, indeed, the London mayor. The system of election for the mayor is different from that for the assemblies. It tries to encourage the maximisation of the vote.

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The election of mayor requires a candidate to achieve 50 per cent. support. We will use a system of voting that will encourage that. If there are more than two or three candidates, it will allow for it to be judged which of the last two candidates gets more than 50 per cent. of the vote. The maximisation of the vote is designed to encourage support for the mayor. Indeed, the additional member system allows for a combination of the system of direct election of a member to a constituency and the top-up principle.

Given our proposals for these elections, it is fair to say that this is a radical agenda and a major change in our electoral process. It is right for us to claim that, even if we do not go as far as the hon. Gentleman wants us to do.

Mr. Gordon Prentice (Pendle): These are innovative proposals which will transform the face of local government and will be widely welcomed. My right hon. Friend said that local authorities could trigger referendums. Given that we want local authorities to speak on behalf of their entire community, will there be any restriction on the types of issue and question that can be put to the voters in a referendum? Is there any provision for the voters themselves to trigger a referendum?

Mr. Prescott: Our White Paper may not go as far as my hon. Friend wants in regard to questions in referendums. We have chosen to suggest ways forward. For example, with regard to the mayor, the local authority is required to put its proposal forward and have a vote on it. If citizens are to initiate a referendum they must produce a petition signed by 10 per cent. of those involved. That is not a unique idea. It is used for parish councils--where a certain area calls for a parish area. In Hull, either Beverley or East Yorkshire--I think it was Beverley--was campaigning hard for that. My hon. Friend has granted Beverley the right to have a parish area because 10 per cent. of the people involved produced a petition.

We are prepared to consider a number of suggestions and one could be a proposal for an authority that wants either the mayor, the chief executive or the change in structure. We should also bear it in mind--I have said this once, but think that I should repeat it, particularly for those councils that might not like the idea of changing those structures--that, if the existing structure is found to be acceptable, that option can be put to the electorate,

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who can say, "We don't want a change. We're happy to accept the council's verdict." In many cases, the referendums will not be decision-making referendums but will merely offer advice.

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