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John Smith (Vale of Glamorgan) (Lab): Listening to this sad catalogue of events in Liverpool city council reminds me of the problems that I have with my council in the Vale of Glamorgan, where we are seeing not only a deterioration in services but the inability of the citizens of my constituency to make proper representations to the council. The problem has reached such an extent that hon. Members' correspondence to the chief executive of the Vale of Glamorgan council, containing sensitive information given to them in writing by their constituents, is routinely passed on to local councillors. Does my hon. Friend agree that it is totally unacceptable that such sensitive, personal, confidential information should be divulged in that way?

Mr. Kilfoyle: It is totally unacceptable. However, in Liverpool's case, I would love there to be an ability for issues to be referred on. MPs' inquiries to the Lib Dems in the city of Liverpool go into a veritable black hole, and if they reappear, they do so in transmuted form either in the legal services department or on the outer limits of the chief executive's department. I can guarantee that no one ever gets a straight answer to a straight question.

Will the Minister tell me what, if anything, can be done about this? What powers do Ministers have to ensure that people at the very top of local government do not inhibit what is otherwise a record of success? How, if at all, can Ministers intervene—and are they willing to do so?—to ensure not only that the city council is properly run in an open, transparent and accountable way but that Government moneys on which policies are predicated are being spent for the purposes that they were set out, on a value-for-money basis?

7.32 pm

The Minister for Local Government (Mr. Phil Woolas): May I start by congratulating my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) on securing today's debate? I know that he and my other hon. Friends who represent the city of Liverpool in the House rightly feel very strongly indeed about this issue. I also want to acknowledge the successes of the city of Liverpool, to which my hon. Friend rightly drew our attention, and to add to the story of Liverpool in recent years.

It is true that the city has the highest concentration of deprivation of any local authority in the country, with 26 of its 33 wards in the worst 10 per cent. nationally. However, regeneration schemes—particularly those involving European objective 1 funding—are helping to revive the economy and to bring a new optimism for the future. That is evident to anyone who has visited the city recently. Tourism, in particular, is now a major industry on Merseyside and has grown by 5 per cent. a year since the mid-1990s. It now supports some 22,000 jobs in the city.
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Most recently, in addition to the neighbourhood regeneration funds and other money that central Government have made available, Liverpool's successful European capital of culture bid for 2008 will add further impetus to the regeneration process. Indeed, it is already doing so. It is expected to generate some 14,000 jobs and lever in an additional £200 million in tourism in the run-up to the European capital of culture year. There is therefore a success story in Liverpool, as my hon. Friend rightly said.

In December 2004, the Audit Commission—which is of course independent of Government, and rightly so—awarded a grading of good on its comprehensive performance assessment rating, which was no change from the 2003 rating. The Audit Commission acknowledged, as my hon. Friend has done, that the council had made some improvements, which it identified in education, libraries and the use of resources. Other improvements are expected in those areas, based on the Audit Commission assessment, in the next 12 months.

In other areas, however, such as social care services—which my hon. Friend has highlighted—housing and the environment, the council's performance is much more mixed. A number of underperforming areas remain, such as housing, recycling, highways, supporting people and social care. Investments in services are showing some signs of improved outcomes, however. The Audit Commission's assessment is that the council should be well placed to continue to improve in those areas, in the way it works and in the services that it provides to local people—generally, that backs up the points made by my hon. Friend.

Let me briefly indicate to the House how far Liverpool has to go in its regeneration strategy by examining the floor targets for neighbourhood renewal funding that the Office of the Deputy Prime Minister makes available. On education targets—the percentage of pupils achieving five or more GCSEs or GNVQs at grades A to C—Liverpool's most recent figure is 41.4 per cent., whereas the figure for the north-west as a whole is 49.4 per cent. and for the UK overall it is 52.9 per cent. Liverpool is therefore some 10 per cent. behind. If we compare the health floor targets, the life expectancy of the male population of Liverpool is 72.5 years, whereas the national average is 75.9 years. By accident of birth, therefore, the people of Liverpool have a shorter life expectancy from the outset. Those are statistics and real-life facts that we cannot afford to ignore.

The crime figures show, for example, that burglary dwelling offences per 1,000 households in Liverpool in 2003–04 were at around 30, as opposed to the national average of 18.5. Those are the sorts of problems that we are addressing through neighbourhood renewal and regeneration. Perhaps most tellingly, my hon. Friends who represent the city of Liverpool have constantly referred over the last few years to the target of achieving full employment. The 2002–03 overall employment rate in Liverpool was 59.7 per cent., compared with 74.5 per cent. for the UK as a whole. On education, health, crime and employment, Liverpool's performance was below the neighbourhood renewal fund floor targets. The situation is therefore serious, and the Government are right to monitor it, as my hon. Friend has asked us to do.
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Let me address directly the question that my hon. Friend has asked me in correspondence and in this debate relating to the reports of the dispute between the council leader and the chief executive of the city council. Two key factors can be considered: either it is an employment matter in which the Government have no jurisdiction and which should be dealt with internally by the council as part of its responsibility for staff management issues, or it is an issue of political ethics and conduct for which the local government Standards Board for England is responsible. It was with such situations in mind that the Government established the board in the first place. As my hon. Friend will know, we are still trying to ensure that it works as effectively as possible. We are working closely with the Graham committee and the Office of the Deputy Prime Minister Committee, which has reported on the matter.

I understand my hon. Friend's concern and his desire for Government to be seen to intervene in what is a worrying situation for him, for other Members with an interest in Liverpool and, no doubt, for the people of his city. I must tell him, however, that the Government do not intervene in the affairs of democratically elected councils lightly. The intervention powers that we have are under the best-value regime. They are a weapon of last resort, to be used in the worst cases of performance failure when problems are deep-seated and endemic. As my hon. Friend will know, in the six years for which the powers have been in the statute book, we have used them only twice: in Hackney and, more recently, in Hull. When we do use them, we do so in accordance with a protocol that we have agreed with the Local Government Association.

In the two cases in which the powers were used, there was strong evidence of failure in service quality and governance. Even then, the Government explored a number of options before using their legislative powers. When they use the powers, they must be certain that they have strong evidence to support intervention and that they are behaving reasonably; otherwise, they are at risk of judicial challenge.

The Liverpool case now throws itself into the limelight. As I have said, the Audit Commission has rated the council as good. Although its services are not uniformly excellent—far from it, as I hope my statistics
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have made clear and as we have heard from my hon. Friend—they have achieved a good rating in some respects, and the Audit Commission's latest statements about its overall direction have been positive. There are currently no performance grounds on which any reasonable Minister could act under the legislation.

That is not to say that we will not be taking a close interest in how Liverpool fares. My officials and their colleagues from the Government office for the north-west have been monitoring the situation to determine what effect, if any, it has had on the council and in the city. In the immediate future, we will keep a close eye on the council's performance on key services and the governance that it offers local people.

There is no doubt that the events that precipitated the debate are worrying. As has been said, they may well damage the council's image—the way that it is seen by its partners and potential investors in Liverpool. Like my hon. Friend, I greatly regret what has happened, but it seems to me that the most sensible thing for the Government to do in the short term is give the key players a chance to sort out the problems. I welcome the appointment of Sir Michael Lyons to facilitate arbitration between the leader and chief executive of the council, but we must watch the situation carefully.

As I have said, our powers of intervention rest on best-value legislation. The Minister can insist on some relatively minor procedures, but the four main powers are to direct the council to take specified action in respect of specified functions, to direct that specified functions be exercised on behalf of the council by the Secretary of State or his nominee, to hold a local inquiry into the way in which a council is carrying out its functions—I think that my hon. Friend referred to that in the correspondence—and to allow the Secretary of State to direct the Audit Commission to carry out a best-value inspection.

As the main issues highlighted recently appear to be related to leadership generally, and to relationships within the council leadership, I doubt at this stage whether a satisfactory case could be made for use of either of the first two powers. The third—

The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

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