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There is a joke going around Hull at the moment: what is the difference between Hull city councils Kingston Communications shareholding committee and the local freemasons? The answer is that we have some idea of what goes on among the local freemasons,
but we have no idea of what goes on in the Kingston Communications shareholding committee.
It is surprising that the local Liberal Democrat manifesto stated that the party was going to ensure that its councillors engaged in meaningful consultation with local people. It claimed that
for too long in Hull, decisions have been taken behind closed doors with little regard to the views of the people whose communities and families they affect.
Well, 19 days into its time in office, the Liberal Democrat council blew that one, did it not?
My concern is simply that, in an age when all political parties want to gain the trust of local people, strengthen local democracy and engage and consult in a meaningful way, the action taken by the Liberal Democrats in Hull is arrogant. If there had been discussion in the local election campaign about such an important issue, at least there would have been some debate and discussion about an asset built up by generations of Hull people.
My second point stems directly from that, and has to do with the possibilities flowing from the historical local telephone company and the resulting asset base that the council owned in Kingston Communications. I understand that the portfolio holder for Hull city council was advised that the dividend on the shareholding in Kingston Communications could be higher if the council sold its shares and reinvested in the market. However, I understand that other options, which could have been bolder and more focused on the future needs of the city and its people, were available.
With a 31 per cent. shareholding in Kingston Communications, the council had a real opportunity to look at some interesting ideas to benefit the city where the company was born and had prospered. Since I was elected in May 2005, many of my constituents have contacted me about the monopoly position of Kingston Communications in Hull. It is the only telecommunications and internet provider in the area, with uncontested dominance in the local market. Now the influence of local people through a major shareholding in the company has been lost; we have a straightforward privately owned monopoly supplier in the city, with no guarantees about choice or quality of telephone and internet services. Moreover, people have no say in what happens to local Kingston Communications jobs.
One option Hull city council could have considered was how to use its shareholding to force the management of Kingston Communications to realign the corporate strategy towards what is called an open horizontal model. That would have meant that the cabling in the city was brought under the ownership of the cityperhaps by forming a separate company to do thatto ensure that it benefited all who wanted to use it. There could have been investment to install fibre-optic cabling and to ensure that it was made available to all who needed it. The process is akin to the roads being available to whoever wishes to use them, with services provided by lots of different businesses that use the roads.
I am informed that similar models are under development in cities in Europe, such as Amsterdam. An open access model would allow investment to fund an infrastructure upgrade in the city region and allow
for telecom companies to compete with each other for customers by buying access to the fibre-optic network. It would allow the use of other service providers in Hull, so there would no longer be a monopoly supplier as at present. The model would yield great socio-economic wealth to the community of Hull, and put the city on the global map as the first in the UK to adopt it.
The idea has great merit in terms of what would best help the city develop economically and speed up its much needed regeneration. It would put the council at the centre of the process, acting as the guardian for the city, making sure that the cabling in the city was used for everyone. It could secure employment in the city, which of course is now not guaranteed. Kingston Communications is obviously focusing its business on the corporate sector and much of the companys investment is directed away from Hull at present. The model would ensure that existing and new investments in telecom services and networks were kept in Hull and Humberside. It would be good for the regional economy and local jobsthe modern, skilled local jobs that is Hull is crying out for.
I have set out only one option, but an imaginative and thoughtful debate could have taken place in the city if we had had a far-sighted local authority that was really looking to regenerate the economy in Hull by using digital technology and investing in the wider community. The Lib Dems have again wasted a real opportunity, with a short-term approach to an historic asset of the city. Councillor Sloan, the portfolio holder, said:
The decision to sell the councils remaining stake in Kingston Communications was made because it was in the best interests of the city, its people, local businesses, local shareholders and indeed the company.
I am not sure that it was in the best interests of the city, local people or local businesses simply to grab the money and run. The council could have done something much more imaginative and much bolder. The Lib Dem council in Hull has wasted an opportunity.
The Parliamentary Under-Secretary of State for Communities and Local Government (Angela E. Smith): I congratulate my hon. Friend the Member for Kingston upon Hull, North (Ms Johnson) on the way in which she put her case to the House. She clearly has deep concerns, and the passion with which she spoke and her commitment to her constituents does her enormous credit. Her views are shared by other Hull Members. The Secretary of State for Education and Skills, my right hon. Friend the Member for Kingston upon Hull, West and Hessle, has moved to the Back Benches todayunusually and, I hope, temporarilyto show his commitment and his deep feelings about the issue, which are shared by the Deputy Prime Minister, my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott).
All local authorities, including Hull, have to make complex decisions about how best to manage their assets and investments, but those are matters for the judgment of each authority; central Government have
no powers to intervene. We want authorities to have as much flexibility as possible to manage their investments, which was one of the freedoms we conferred under the prudential capital finance system in 2004. Before that, investments were subject to a complex system of regulation that we inherited from the previous Administration. Now, instead of regulations, we have statutory guidance, which is in simple language and gives authorities considerable discretion to make decisions.
Authorities are allowed to pursue any form of investment that they consider appropriate. They may also cash in existing investments whenever they want. No Government consents are required at any stage. It is a matter for the political judgment of the local authority. However, the investment guidance contains important safeguards for local taxpayers. It requires the authority to produce a yearly investment strategy, which must be put to the full council. The strategy must set out the general investment policies of the authority and explain how risks will be monitored and managed.
I listened carefully to what my hon. Friend the Member for Kingston upon Hull, North said that she would like the Government to do, and I understand how deeply concerned she is. However, putting any constraints on the disposal of shares by local authorities would be inconsistent with the freedoms that we have recently conferred on them. When making decisions on whether to acquire, keep or dispose of an investment, an authoritys main concern should be security and seeking to minimise the risk of losing money that it holds in trust for the local community. Having addressed that, the authority may seek to maximise its return from its investments.
All of an authoritys investments need to be monitored carefully, and authorities must be ready to respond to changing market circumstances. That may sometimes lead to long-standing investment policies being reversed or changed. These are complex matters, which require specialised professional advice. There can be differences of opinion between technical experts. It is important that, for any sale to take place, the council must fully investigate all the options that are open to it. When making decisions about the disposal of any asset, we would expect the authority to consider the impact that the disposal would have on the community, the broader local economy and, of course, jobs.
I understand my hon. Friends regret at what she feels is a lost opportunity to consider other alternatives. I was struck by her comments about the opportunities available in Amsterdam. If she can undertake that kind of research in the time she has had available, she may want to ask her local authority what opportunities it took to research the available alternatives. Clearly it is too late for that to have an impact on the sale, but she may want to look into the matter to reassure herself and her constituents about whether alternatives were considered.
I appreciate the fact that the council could not have laid out its exact plans in this matter, but I was interested to hear my hon. Friend say that her understanding from the Financial Services Authority was that a commitment in the manifesto to review all assets would have been acceptable and would not have caused any difficulties. I want to refer to a story in a
local Hull newspaper; it is regular reading for me. The article is dated 25 May and states:
A few months ago Lib Dem leader Carl Minns was dismissing the idea of selling off the city councils remaining stake in Kingston Communications as typical Old Labour thinking.
I can assure Councillor Minns that, judging from the comments made by my hon. Friend, it is certainly not Labour party thinking.
Despite the deep concerns that my hon. Friend has raised, there is little that I can do in this matter. It is a matter for the discretion and judgment of the local authority, and the administration in Hull has decided to proceed in this way. If she wants to raise any complaints about financial impropriety, and would like the Audit Commission to look at them, she can look at the rules and regulations to see whether the complaints can be investigated. However, I am not aware that Hull city council has acted improperly financially. We are talking about a matter of judgment, and the councils judgment is clearly at odds with that of my hon. Friend.
Adjourned accordingly at eighteen minutes past Seven oclock.
That the draft Community Drivers Hours and Recording Equipment Regulations 2007, which were laid before this House on 14(th) May, be approved.
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