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Mr. Hurd: I thank the right hon. Gentleman for that helpful intervention, which I wholly endorse. The Bill is about enabling people; part of its driving force is to encourage greater participation so the least we can do
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is present the measure coherently and intelligently. Officials sometimes say that does not matter as long as we get the necessary powers. I do not agree. A Bill needs to tell a clear story about what it is trying to achieve and how it intends to do it. We should be clear.

My second point is about substance. If we are to accept—as a compromise—that the new freedom of local authorities should be restricted to arguing for reallocation of functions, we need comfort that what we believe is implicit in the Government’s position is made explicit in the Bill: if functions are transferred, money should follow. It makes no sense to transfer functions without resources. I believe that is implicit in the Government’s proposals but we want it made explicit. If functions and money are transferred, local authorities should have discretion over policy as long as they have regard to the objectives of their locally agreed community strategies—or sustainable community strategies, as we understand they are to be called. That is important for the reasons given by my right hon. Friend the Member for West Dorset (Mr. Letwin) on 23 May. We do not want it to be necessary for remit to follow function, so that, for example, if a local authority takes over the functions of a Business Link it will not necessarily have to take over the statutory remit of that body. We want local authorities to be free to innovate, as long as they can be seen to be working towards achieving a locally agreed target under the local authority agreement process.

We want local authorities to have that right not least because it will incentivise greater co-operation. In such circumstances, Business Link would have to work harder to go with the grain of what the community wants, because otherwise it would risk losing resources or function. Fundamentally, such a right gives us a mechanism to shake up the system—to correct failure and encourage innovation when things are getting jaded and complacent. I am sure the Minister agrees, because he is not complacent. I read the Committee proceedings of 23 May carefully and when the Minister was questioned by my right hon. Friend the Member for West Dorset about remit following function, he said:

He then enthusiastically gave us examples of best practice and innovation, such as the south Devon youth club that had left a big impression on him when he visited it. When we stated that we wanted a presumption that local authorities should be able to get the Secretary of State’s approval to take over spending, he said, “I agree”. I am not trying to embarrass him by reminding him of his comments—as an experienced Minister he is beyond that—I am simply trying to explain that the new clause has been tabled in good faith.

The Minister for Local Government (Mr. Phil Woolas): As ever, I am grateful to the hon. Gentleman for his courtesy. I am not at all embarrassed; indeed I am supportive of the point he makes. It may help the House if I point out that our policy in that regard has to be seen in the context of the architecture we are creating for local area agreements under the Local Government and Public Involvement in Health Bill. They are financial agreements as well as policy agreements.


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Mr. Hurd: I thank the Minister. We are all sensitive to the fact that he and his officials are trying to wrestle with the difficulty of reconciling and marrying the little fish that is the Bill with the whale of legislative reform that he is trying to ride through the waters of local government. There is an honest attempt at integration and I do not underestimate the difficulties of achieving it, not least in terms of timing. I stress, however, that we tabled the clause in good faith because we thought it reflected the Minister’s intentions and we wanted to make them explicit.

When the Minister responds, will he recognise that we need a mechanism to follow clause 4? Is he prepared to put on record the Government’s acceptance that resources must follow transfer of functions? Did we understand him correctly in Committee when he appeared to agree that remit should not necessarily follow function—that local authorities should have discretion over policy when function is transferred as long as it is geared towards locally agreed targets? If so, will he explain why he appears to oppose the new clause?

I hope that the Minister accepts that our discussions have been open, but if we cannot reach agreement, my instinct, shared by co-sponsors of the Bill, is not to push for a vote on the new clause. There is strong support for the Bill inside and outside the House, as the Minister knows, and a desire to see us agree about it, but there will be disappointment if there is a feeling out there that the Government are diluting the measure. I shall listen carefully to the Minister’s contribution and hope that we will hear reassurance that what we want made explicit is implicit in the Government’s intentions and that there is an appropriate mechanism, or a willingness to find reconciliation and common ground. I have to tell him that we think there is unfinished business; we want to give people real power to influence the spending of taxpayers’ money in their communities and, if need be, we shall continue the argument in the other place.

Mr. David Drew (Stroud) (Lab/Co-op): I commend the promoter of the Bill. He has waxed lyrical and I have no reason to take up much of the House’s time. I have attached my name to the new clause and I know that the spirit behind it is shared by the hon. Member for Falmouth and Camborne (Julia Goldsworthy).

As the Bill’s promoter rightly said, we have taken an awful lot of time over the Bill. I think it is fair to say that, in recent weeks, I have seen more of him and the hon. Member for Falmouth and Camborne than I have of my family. I have also seen a lot of the hon. Member for West Ham (Lyn Brown) and the Minister, and it is good to see Ron Bailey in his Box. Perhaps some of us will want to keep him in his Box.

Mr. Deputy Speaker: Order. The hon. Gentleman is an experienced Member of the House and knows that we do not refer in that way to people sitting outside the Chamber.

Mr. Drew: I shall pay careful attention to your advice, Mr. Deputy Speaker.

Mr. Oliver Letwin (West Dorset) (Con): I am sure that the hon. Gentleman would not wish to mislead the House. It is quite impossible to imagine Ron Bailey in any kind of box.


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Mr. Deputy Speaker: Order. That is not a very helpful intervention. I suggest that the hon. Member for Stroud (Mr. Drew) moves gently on.

Mr. Drew: I shall move speedily on.

This is an important new clause and it is clear that it will not be pressed to a vote. The spirit behind it is well intended and I hope that the Minister will clearly spell out how the Government intend to listen to what has been said in Committee and today. There must be a mechanism, because functionality without the resources to back it up involves a somewhat meaningless gesture. The Government have made it clear that the Bill must be been seen in parallel with the Local Government and Public Involvement in Health Bill, which I hope will be enacted shortly. There is talk about how the mechanism will work in the local area agreements, which I hope we will now see as local area and spending agreements, because the issue is all about money and how it will make a difference. Will the Minister therefore spell out how the mechanism will operate in practice?

We have compromised and we have been willing to compromise. This Bill has been one of compromise and consensus and everyone says that that is a terribly bad thing because it means that we get bad legislation that is all mushy and means warm words to everyone. However, I think that we will come out with a good Bill and this issue is at its kernel. There is healthy disagreement on a philosophical point about the degree to which we can genuinely devolve resource allocation to a local level and persuade Government that what local areas want to do is appropriate and right. If that cannot be done under this Bill, it would be good to know how it can be made to happen; otherwise, what we will have is not a poisoned chalice, but there will be a lost opportunity for local areas. When they look to carry out their functions in all sorts of promising ways, the money will not be there.

I hope that the Minister is listening to what we are saying. We are trying to work through some difficult points, but doing so on the basis of unanimity. I hope that we will genuinely learn how the mechanism can be made to operate. Local communities must understand that and, as the hon. Member for Ruislip-Northwood (Mr. Hurd) explained, the point must be made explicit; otherwise local communities may use the mechanism in a way that some of us do not want them to. I hope that the Minister has heard that point, and he should have heard it because it was made on several occasions in Committee. I know that there is a way forward and I hope that he will explain what it is.

I make no apology for seeking a compromise even if we reach a compromise on a compromise, given that we will not press the new clause to a vote. The spirit of what we have said is important, so I shall now sit down and listen to what the Minister has to say.

Julia Goldsworthy (Falmouth and Camborne) (LD): I do not intend to jeopardise the Bill’s progress by speaking over-enthusiastically to try to ensure that local communities can participate in their own local policy making. I am pleased that the Bill has returned to the Floor of the House after a rather long and winding journey, with plenty of fits and starts, to get us to where we are today.


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New clause 6 and whether we need clause 5 have been at the heart of the most heated discussions that we have had on the Bill. As the hon. Member for Stroud (Mr. Drew) said, the danger of consensus is that we end up with mush and warm words. What I want to be protected is a real sense of narrative in the Bill. It is good news that the Minister has accepted clause 4 and that we will have clear reports on public spending at local level. However, something must flow from that; if nothing does, all we will do is raise expectations at a local level but fail to deliver any action. To provide a narrative and to meet the public’s expectations of what the Bill can deliver, we need a mechanism to flow from clause 4.

10.15 am

After everything that the Minister said in Committee, we are disappointed that one of the amendments to the Bill will delete clause 5 without any replacement. I support the new clause tabled by the hon. Member for Ruislip-Northwood (Mr. Hurd), because we are arguing that there should be a narrative. The new clause is our suggested compromise. As I say, we do not want to jeopardise the Bill, but there must be mechanisms flowing from clause 4, and we still do not see them.

It may not be possible to resolve the problems today but, as the hon. Members for Ruislip-Northwood and for Stroud have said, we want to be sure that there is a way forward. If there is not, all that we will achieve is raised expectations. When the public see the public money that is being spent in their local area, they will push at an open door and say, “Hang on a minute. If x is being spent in this area and we don’t agree with it, why don’t we have a say on how it is spent?” I imagine that such pressure will be exerted, so I hope that the Minister will anticipate the problem and deal with it before it arises locally.

Mr. Woolas: Let me try to reassure the hon. Lady about what she has described as the narrative and about the consequential actions. I strongly agree with her point about raised expectations, but may I put another point into the pot? She says that she is scared of mushy compromise, and we are all scared of that. However, she is also a proponent of the view that what happens in Cornwall is different from what happens in, say, West Dorset. I do not want mushy compromise to take away the important point the Bill’s promoter made: if one is a localist, one accepts differences.

Julia Goldsworthy: I absolutely agree with the Minister. We need to celebrate diversity. Business Link is a good example of that. My constituency, and Cornwall more widely, have more small businesses at micro level per head of population than anywhere else in the country. Business Link provides services across Devon and Cornwall, and even in that small area there will be a real need for a diversity of solutions to meet diverse problems.

The Minister is right. We need to celebrate diversity by finding a mechanism that allows diversity to be captured. At the moment, we have a snapshot of how central decisions have an impact on funding at local
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level, but no mechanism to give us a sense of what will flow from that and how local communities will be able to take real decisions. Function follows power, and that is followed by money. At the moment, that chain is broken.

Mr. Woolas: This is an important point. The power that will be unleashed by the local spending plans in what is now clause 4 and the ability of local areas to set the 35 targets that are expressed in the Local Government and Public Involvement in Health Bill will be different in different areas. There is support across the parties for putting those two things together, as that would create a powerful and, I expect, helpful tool.

Julia Goldsworthy: Again, the Minister is right. It is important that there is symmetry between this Bill and the Local Government and Public Involvement in Health Bill and that local area agreements offer a way of discussing such issues. We debated how to break the impasse in Committee. There is a danger that if agreement cannot be reached locally, progress cannot be made.

I hope that the Minister will be able to reassure us that he recognises the importance of something flowing from clause 4 for reasons of narrative and function. Although the Government have not put forward any options on that today, I hope that they are committed to ensuring that changes are made that will make sure that the important narrative of the Bill is not lost.

Mr. Letwin: I do not think that anyone in the Chamber intends to press new clause 6 to a Division. However, what we say about it will be important, as there will be further discussion in the other place. In addition, as the Bill proceeds through the other place, as I hope it will, there will be wider public discussion.

It is important that we tease out the difference of substance that my hon. Friend the Member for Ruislip-Northwood (Mr. Hurd) ably began to expose. Almost the only difference, although it is crucial, between new clause 6, which my hon. Friend tabled—it is supported by the hon. Member for Stroud (Mr. Drew) and, morally at least, by the hon. Member for Falmouth and Camborne (Julia Goldsworthy)—and new clause 1, which was tabled by the Minister, lies in new clause 6(4), especially paragraph (b). New clause 1 will allow, as would new clause 6(2), the function carried out by a public body through expenditure identified in the local report to be sought by the local authority. So far so good. The problem is that new clause 1 does not make it clear both that the money follows the function and, critically, that in the use of the money that follows the function, the local authority to which the function has been transferred should have the ability to achieve the objectives of that function via a different method from that determined for the public or central authority whose functions have been transferred to the local authority.

If that sounds like a complicated sentence, let me try to crystallise the argument in a simple example that the Minister and I constructively discussed in Committee. I said:


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the very example cited by the hon. Member for Falmouth and Camborne—

such as something completely different from what Business Link, acting on behalf of the Government, was proposing as the means of supporting local business. I went on to say:

My remarks on such matters are neither here nor there because the Minister has the power and it is what he says that matters. He said:

I said:

That was my response because it seemed then that the Minister accepted that we were not just talking about a power grab, whereby a local authority took over a function and carried on business as usual, albeit in its hands, but that we were actually talking about whether a local authority could decide not to spend the money the way that Business Link spent it, or the way that Business Link’s remit determined that it should be spent—to put it in the terms used by my hon. Friend the Member for Ruislip-Northwood—but to spend in another way, which the local authority thought was the best way to promote local business, given the agenda of promoting local sustainable communities.

The crucial difference between new clauses 1 and 6 is that new clause 6(4)(b) precisely spells out that


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