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Local Government (Contracts) Bill in Standing Committee B

Local Government (Contracts) Bill

Standing Committee B

Tuesday 1 July 1997

[Mr. Edward O'Hara in the Chair]

Local Government (Contracts) Bill

4.30 pm

Clause 1

Functions to include power to enter into contract

Mr. David Rendel (Newbury): I beg to move amendment No. 9, in page 1, leave out lines 6 to 10 and insert--

    `(1) It is hereby declared that every local authority has 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 any reasonable purpose in connection with its functions or duties (whether or not conferred by statute).'.

The Chairman: With this we may take the following amendments: No. 10, in page 1, line 13, leave out `under any statutory provision'.

No. 11, in page 1, line 19, leave out `the statutory provision' and insert `this Act'.

No. 12, in clause 3, page 2, leave out lines 35 to 37.

No. 13, in clause 4, page 3, line 16, after `functions', insert--

    `(whether or not those functions are conferred by statute)'.

No. 15, in clause 5, page 3, line 29, after `whether', insert `it was reasonable for'.

No. 16, in clause 5, page 3, line 29, leave out `had power'.

No. 17, in clause 5, page 3, line 36, after `that', insert `it was unreasonable for'.

No. 18, in clause 5, page3, line 36, leave out `did not have power'.

Mr. Rendel: Thank you for calling me so promptly at the start of the Committee, Mr. O'Hara. I am delighted to welcome you to the Chair and I congratulate you on that appointment. It is the first time that I have served on a Committee under your chairmanship, so it is difficult for me to say that I am sure you will be your usual self and fair to all sides, as I do not know what your usual self is. However, I am sure you will be fair to all sides in the Committee, for as long as it lasts, which I understand will not be for very long. I certainly do not intend to keep people here to discuss this original batch of amendments at great length, but we could perhaps help the Government strengthen the Bill by extending the powers that it proposes for local government.

I am slightly anxious that the Bill may do less good than expected and perhaps more harm than good in that it may imply further legal complications. If we are not careful, the Bill could turn out to be a way for lawyers to make a lot of money through the courts rather than a way to enable local government to do its job properly and more effectively than it does now.

The amendments would strengthen and to some extent widen and make more general the powers of local government in terms of the contracts it can put out and how it can deal with them. I hope that by increasing those powers we can help the Government and, more important, local government to achieve their aims.

That should be in line with the way in which the Labour party has promoted itself in local government in the past few years. I hope that the Government will look kindly on the amendments, see them as helpful, as they are intended to be, and take them on board, at the next stage of the Bill, if not today--who knows, perhaps the Government will respond favourably in Committee.

Word has come to me and, no doubt, to the Government and the main Opposition party, that some people in local government--the Local Government Association itself, and other bodies--are worried that the powers in the Bill will simply mean that there is more argument through the courts about whether particular contracts are legal and whether the certification arrangements should be brought into play. The amendments would make the powers more general and not constrict them in any way, which would be helpful to the Government and to local authorities. The Government may be in danger of tying themselves in knots with the Bill rather than releasing restrictions on local government, which appears to be their intention.

The Minister of State, Department of the Environment, Transport and the Regions (Ms Hilary Armstrong): Before speaking to the amendment, may I welcome you to the Chair, Mr. O'Hara. I am looking forward enormously to serving under your chairmanship. I have not served under you as a Chairman, but I remember that soon after you were elected to the House, we served on a Committee which was entertained by your singing and reciting some important Greek poetry, which enlivened the debate on an educational Bill. To judge by that experience, I am sure that you will tolerate the minor excesses displayed by any members of the Committee. It is important for new Members to see the way in which the Committee works and the ways in which we ensure that we occasionally enjoy ourselves, as well as making sure that the business is dealt with.

I would have expected the hon. Member for Newbury (Mr. Rendel) to table such amendments and he has not disappointed me. I wish that the world were as simple as he would like it to be and has expressed in the amendments. The Bill is not intended to change the relationship between central and local government by introducing a power of general competence, and it would be irresponsible to include that in the Bill without considering the entire relationship between central and local government and relating it to democratic reforms. I therefore resist the amendments.

Clause 1 applies to contracts entered into for the purposes of or in connection with the discharge of local authority functions and I am unsure how the amendment would add to the clause. I do not support any of the amendments to clause 1. They seek to rely on there being non-statutory local government functions, which would make the Bill much longer and more controversial, and it would take much more time to go through the House. We are anxious that the Bill gets onto the statute book as soon as possible.

I have the same view about the other amendments in the name of the hon. Member for Newbury. The Bill does not deal with the future relationship between central and local government, but should simply ensure that local government is able confidently to enter into contracts with the private sector. On that basis, I resist the amendments.

Mr. Christopher Chope (Christchurch): I, too, welcome you to the Chair, Mr. O'Hara. Conservative Members do not have much time for the amendments. I noted the diffidence with which they were moved by the hon. Member for Newbury. He mentioned this subject on a Second Reading and the Minister gave a convincing response. I have always been fair-minded in debate: if I am convinced by an argument, I am more than willing to accept it, and certainly I thought the Government's arguments against the Liberal Democrat proposals were absolutely right.

Mr. Rendel: I am grateful for the chance to respond briefly to the Minister's comments. I would have loved to have had the opportunity to table an amendment to introduce into the Bill a power of general competence. However, that would have completely changed the Bill, rather than simply amending it. The amendments do not go as far as the Minister would have us believe. It would be nice if such an amendment were possible, but that would not be within the rules of the House.

The amendments are rather more modest than has been suggested. They are intended to increase the powers of local government and to move towards more general powers, but it would be wrong to suggest that they are an attempt to introduce a power of general competence. It is clear that the amendments relate strictly to contracts made by local authorities and that those contracts, while they may be for ``any reasonable purpose'', have to be in connection with the normal functions and duties of local authorities, not outside them. The amendments are not, therefore, an attempt to do what the Minister said. For that reason, I had hoped that she would take a more generous view of them than that which she outlined.

The Minister said that she was not quite sure what the lead amendment meant--perhaps she has not yet had sufficient time to look into it in great detail. I shall, therefore, provisionally seek leave to withdraw it in the hope that she will have a chance to get to know what the amendments really mean before Third Reading. I hope that she will then realise their importance and value and seek to table similar amendments on Third Reading. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ms Armstrong: I beg to move amendment No. 20, in page 1, line 16, leave out from `for,' to end of line 18 and insert

    `a party to the provision contract other than the local authority.'

The Chairman: With this we may discuss Government amendment No. 30.

Ms Armstrong: There are more Government amendments to the Bill than I would have liked. That is a consequence of our making sure that, having published the Bill, we consulted speedily, but also in some depth, with the parties that it would affect.

In the debate on the previous amendment, the hon. Member for Newbury said that the LGA had expressed concerns about the Bill. The LGA strongly supports the Bill's main objective and the Bill as a whole, but it has made representations about details in the Bill. We tabled the amendments as a result of discussion with and representations from the people and bodies that the Bill will affect.

Both provisions in the Bill as introduced concern contracts between a local authority and a financier in connection with a provision contract, which is referred to in clause 1(2)(a) and clause 4(2).

It is a likely feature of a public-private partnership contract that there will be a contract between the authority and the financier, which gives the latter the right in certain circumstances, such as insolvency or poor performance, to nominate a replacement for the original provider. We recognise the importance of these ``step-in rights'', as they are called in the business.

For that reason, we want to make it clear that an authority's ability to enter into a contract with a financier in connection with a provision contract, as referred to in clause 1(2)(b), includes a power to contract with a financier of a contractor who replaces the original contractor under the provision contract. I hope that that is clear to hon. Members on both sides of the Committee. For the same reason, we also want to make it clear that a contract can have the protection of certification under the Bill if it is a contract with a person providing finance for any provider who takes over as a contractor under a certifiable provision contract.

Other situations may arise in which there is a replacement financier or provider for a project, but in which a new contract is entered into. Clause 1 would apply to any such new contract.

Amendments Nos. 22 and 23 will extend the benefit of certification to any new contract with a provider or a financier which is strictly a replacement of the original one.

The amendments will ensure that, if, for the reasons that I have outlined, the parties to the contract change, the certification procedure will none the less hold, even if the financier, the contractor or, indeed, the contract is renewed.

These are fairly complex technical matters, but I hope that that explanation will assure hon. Members that we are not trying to do anything tricky by the amendment--we are simply trying to ensure that the intent of the Bill is recognised in all areas.

Amendment agreed to.

4.45 pm



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