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Our judgment, as I told the House on 5 December, is that if the proposal in the order is implemented, there is a reasonable likelihood that it will achieve the outcome specified by the five criteria. In short, our clear judgment is that the proposal meets all the criteria. On affordability, first, the estimated transitional costs are more than offset by the savings that the proposal is estimated to generate, which can be expected to be achieved well within the five-year limit that we imposed at the outset. Secondly, implementation does not involve any capitalisation to deal with revenue costs. Thirdly, implementation does not impose any costs that would have to be met by increasing the council tax. Fourthly, to the extent that in any one year the costs of transition are not covered by savings, they will be met by councils’ reserves, which are adequate.
We subjected the figures that the councils provided to independent financial advice, in order to assess both what the county council was telling us and, in light of what I said earlier, the flaws that others felt were present in those figures. On the basis of those figures, the advice that we were given by independent financial experts suggested both that the council’s figures and the expectation that the proposal might lead to savings of more than £18 million a year were sound and that the overall financial case was a low-risk one that imposed no barrier to proceeding.
Robert Neill: I am grateful to the Minister for giving way again. I want to raise a point that is not unique to the situation that we are debating. As far as I can see, no account is taken in the assumptions from the county council of any potential loss of grant. All local authorities receive £325,000 by way of grant for the costs of being in business. There are currently five local authorities in Wiltshire that receive such grant. What assurances can the Minister give that there will not be just one payment of £325,000 for the costs of being in business when we move to one council in Wiltshire? On the face of it, there appears to be a risk that we will lose those four elements of grant, which go to the existing authorities. Is there to be a different level of grant? That does not appear to be permissible under the rules, so how is it to be achieved and how will that shortfall be made up?
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Interventions need to be short if some hon. Members from Wiltshire are to be heard.
John Healey: I will take your advice to the House as applying to my responses, too, Mr. Deputy Speaker. I apologise if I am going on, but I am trying to answer questions as they are put to me.
We consulted on the issue of grant and the allocation of resources to the authorities last year, in preparation for the financial settlement. If the hon. Member for Bromley and Chislehurst (Robert Neill) is particularly interested in the detail, I can let him have it. In essence, when we move to create the new authority in Wiltshire, all being well in 2009, the allocation of budgets, set out for the next three years under the formula settlement that the House debated and approved last night, would automatically be pooled with that of the county council’s budget, to create the total budget for the new authority to carry out its new range of functions and responsibilities.
Let me turn to the order. Rather like the process that we conducted for encouraging proposals, we tried to take an approach in the order that will allow each area to adopt the arrangements that are best suited to it. We therefore prepared the order following consultation and full discussion with the councils concerned, not just the county council. Our aim was to ensure that the arrangements were those that the local people most directly involved would consider best suited to their circumstances.
First, the order provides that from 1 April 2009 there will be a single tier of local government in Wiltshire. Secondly, it provides for the existing district councils to be dissolved. The county council will be transformed into a new unitary authority with both district and county functions. However, we have made clear from the outset, and will make clear in the way in which we require the implementation plan to be produced and pursued, that this is not a case of the county council either continuing as it is or mounting a takeover of the district councils. This is a new start. We expect a new sense of leadership and direction in the authority, and we expect it to implement the proposals set out in its plan.
Dan Rogerson (North Cornwall) (LD): Will the Minister explain why the county council will, in fact, continue in a legal sense, even if it is to metamorphose in the way that he has described?
John Healey: I am perfectly open about this. Essentially, it was a toss-up. There was an argument for saying “Let us, at the point of creating the new authority, dissolve all the existing authorities and create what will be legally a new entity.” On balance, however, we felt that the advantages of that were outweighed by the complexities involved in transferring assets and staff, and the legal complexities. We decided that by allowing the county council formally to be a continuing authority—while making clear that it would be run differently and would constitute a new authority—we could achieve a much smoother transition and still achieve our aim of creating a new authority rather than allowing a takeover, which I have been extremely keen to avoid.
Thirdly, there will be a fresh senior management team, and once elections are held there will potentially be an element of new political leadership as well. The process of change is not a simple transfer of functions; this is a more radical, far-reaching change in the governance, leadership and service delivery arrangements in Wiltshire. The right hon. and learned Member for Devizes shakes his head. The order requires an implementation plan. We will monitor that plan, and staging posts along the way will ensure that we can create the fresh governance, leadership and service delivery arrangements that I mentioned, including scope for the community involvement set out in the proposals. The plan will cover budget, structure, staffing, transfer of assets and neighbourhood arrangements.
Fourthly, the order provides for some of the key transitional arrangements. Principally, it provides for the setting up of an implementation executive whose role will be to develop the necessary plans and budgets to drive the development of the new council. It will be led by the county council, and its membership will be drawn from members of the county council and all the
district councils. Its composition is specified in the order. It was discussed in detail with all the affected councils, and it is based on consensus. To provide the necessary support for the executive, the order provides for a team of officers, again drawn from the county and all the districts.
Julia Goldsworthy (Falmouth and Camborne) (LD): The order sets out exactly how many people should be on the implementation executive and from which local authorities they should derive, but it also says that the nominations
“shall, to the extent that it is practicable to do so, secure that...the Conservative Party, the Labour Party and the Liberal Democrats are each represented”.
Will all the main parties be represented as set out?
John Healey: That is certainly the intention, and it is clear in the order that that should be the case.
The order specifies that elections will take place in Wiltshire in line with the usual county cycle, in May 2009. There was complete agreement between the county and the districts in Wiltshire that the elections should be held in 2009, not 2008, principally because, by that time, we expect the Electoral Commission to have been able to undertake an electoral review, so that the arrangements for that 2009 election can be based on new wards that better reflect the community and neighbourhood pattern of the county. The order creates the new unitary Wiltshire council, and it puts in place the key elements of the transition.
I said earlier that I am keen to say a few words about the position of the employees. We all recognise that this is inevitably an unsettling time for employees of the affected authorities, and while the detailed arrangements are for local councils as employers to consider, they will be developed within a set of national principles that we will put in place to ensure that all staff are treated fairly. We have made it clear that all staff who are employed immediately prior to 1 April 2009 by the authorities that are to be abolished will become employees of the new unitary authority. We have also made it clear that those employees will be protected in line with the principles of the Transfer of Undertakings (Protection of Employment) Regulations 2006, as if those regulations applied. I made that commitment when I announced our final decisions on 5 December, and I am happy to reconfirm it to the House. This means that all staff who transfer to a new unitary authority will enjoy transfer on their current terms and conditions, and it will then be for the new unitary council to decide its new staffing structures in accordance with employment legislation generally and the TUPE regulations.
Our approach provides for an effective transition that is as efficient as possible, and one that avoids as far as it can disruption to services, gives a good deal to citizens and service users, is fair and equitable to council staff, and, above all, opens the door to creating what in Wiltshire could be one of the future flagship local authorities of our country. I commend the order to the House.
11.8 pm
Robert Neill (Bromley and Chislehurst) (Con):
The Minister is certainly right to observe that restructurings of this kind are naturally unsettling. They naturally bring with them risk—in both financial and organisational
terms. My party therefore takes the view that such restructuring should not be undertaken unless compelling evidence of significant advantage is demonstrated. To restructure on the basis of a hope and a wing and a prayer is simply not good enough. Important practical, technical and constitutional issues arise.
John Healey: Does the hon. Gentleman not believe that the system of 20 community forums and the strength of the strategic leadership set out in the proposal, and for local taxpayers not least the £18 million a year in annual efficiency savings, are grounds enough for going ahead?
Robert Neill: Because there is regrettably a dearth of specific evidence to back up those assertions, I must say that there is a lack of objective evidence to support them. The key point is that because of the implications, such a change should be undertaken only if there is compelling objective evidence. What we managed to get from the Minister was the fact that there are no objective tests to see whether the five criteria are met in any given place. An entirely subjective exercise is being carried out. That is unsatisfactory, and it sets an extremely dangerous precedent.
Julia Goldsworthy: The hon. Gentleman is clearly setting out his party’s cynicism about the proposed unitary reform across the country. Will he just remind me which party is in control of Wiltshire county council and who put forward this proposal?
Robert Neill: I am sorry that the hon. Lady uncharacteristically seeks to take a cheap shot on that issue. The principle that I am discussing would apply regardless, because parties of an entirely different complexion are in control in other parts of the country, so it does not apply to any one place.
Robert Key: May I just aim off a little when the hon. Lady speaks like that? I should point out that Salisbury district council is deeply opposed to this approach, and it is controlled by the Liberal Democrats.
Robert Neill: I am grateful to my hon. Friend for making that point. It may engender a modicum of silence from further down the Chamber, and it proves the virtue of doing one’s local homework. It also sits rather ill with the Government’s contradictions on this issue, because this is part of a process of reorganisation that will involve a number of areas. Back in 2006, the previous Secretary of State, who is still in the Cabinet as Secretary of State for Transport, described the whole question of local government reorganisation as a great distraction. I suspect that she was nearer the mark than her successor and the current ministerial team, for the reasons that we have set out.
May I return to the real concern? If one is going to make changes, there must be strong evidence to support them. Such evidence has not been set out in respect of this order. The suggestion that it will bring significant financial advantage depends on a particular case that has been put together, and it is challenged by a number of the other parties. When one examines the detail of that case, one sees that it rests on a number of assumptions about how the transitional costs work out and what the savings will be. Those are not borne out by close examination of the evidence.
I was interested to hear the Minister say that there will be a particular treatment of grant. I assume it will apply across the piece, but that was the first time that we had heard about it. That grant treatment was not taken into account in the proposal in setting out the savings. The districts have put forward their own contention, which would tend significantly to undermine the one put forward by the county council—the point being that there is conflicting evidence and, to return to my principal point, there are no objective criteria by which to judge it. It is thus difficult to see how the case for change can possibly be made against that background. We will return to that issue throughout this process, because the same principle seems to apply across all the orders that the House will have to consider in due course.
One final thing worries me about the Minister’s stance, although I appreciate that he may have inherited this situation. He said that there must be consistent evidence, but a few breaths before, he said that the evidence will vary from authority to authority; so it is difficult to have any great faith in the process.
I should also ask some questions about the order itself, because it concerns me. The Minister hits on a point about this not being a takeover. He has been at pains to stress that, and it is set out in the explanatory memorandum. The reality is that if he looks at it fairly, he will see that it is difficult to say to anyone outside this process that it is anything other than a takeover, given the construction of the implementation executive whereby the chairman, who has the casting vote, shall be the leader of one particular authority—of the county council, as opposed to anything else—whether or not there is consensus. There is no obligation to seek consensus. The fact that there has been willingness on the part of the members of all the district councils to try to work together to make the best of the bad job that has been foisted on them is to their credit, rather than to the credit of the Government, who have set forward this unsatisfactory proposition. It is difficult to sell a built-in working majority in favour of one partner as a collaboration of equals, rather than a takeover.
I am also concerned that the work of the implementation executive will not be adequately scrutinised. That is important because it is at the time of the transition that the hoped-for savings are most likely to be lost and costs are most likely to overrun. Scrutiny at that stage is therefore especially important. There is, interestingly, a duty on the districts to co-operate on implementation of the transition plan in both paragraph 6.7 and paragraph 11, but surprisingly there is only an option for collaboration on scrutiny. I do not understand why the scrutiny provision—in paragraph 8.6—is not also an obligation. The provision on scrutiny is not as rigorous as that on the duty to take executive action, but both are important. From all that I know of what happens in Wiltshire, the districts will ensure that there is proper scrutiny, but the orders do not guarantee that—and they should. That is a technical concern about the nature of the orders.
The political composition of the implementation executive also raises concerns. It is an odd creature, because it does not follow the normal requirements of proportionality. It provides certain guaranteed places, but there seems to be no precedent for that, and I would be interested to know why it has been set up in that way.
It is perhaps significant that the Joint Committee on Statutory Instruments says, of an identical provision in one of the other orders:
“The use of the powers in the manner proposed is an unexpected use of the powers conferred by section 13(1) of the 2007 Act”.
It is an odd departure, and I would like to know the justification for it. On the face of it, it appears to be an arbitrary use of the procedure.
John Healey: I am sure that the hon. Gentleman will make that point in subsequent debates, but I hope that he will make it clear that the comment from the Joint Committee that he quoted was not made about this order and this restructuring.
Mr. Deputy Speaker (Sir Michael Lord): Order. Before the hon. Gentleman responds, may I just say that while it is obviously important that the Front Benchers set out their position on the matter, this is a short debate and I am sure that several hon. Members from the county concerned wish to make their contributions.
Robert Neill: I made that caveat, but the provisions are very similar and run through all the orders. I wished to flag the issue up for the future.
There is a dearth of supporting material to make a compelling case for the need for change. My right hon. and learned Friend the Member for Devizes (Mr. Ancram) asked the Minister to detail those who support the proposition, and he was unable to do so. Against that background, it seems that the case is not made. The evidence base is too thin to embark on this proposal on its own merits or on a course of action more generally in relation to the orders, which potentially set significant precedents. For that reason, at the appropriate time, we will oppose the order.
11.19 pm
Julia Goldsworthy (Falmouth and Camborne) (LD): I shall keep my remarks brief as I know that many hon. Members wish to speak on matters that are of great importance to their constituents.
The statutory instrument is the beginning of a process to outline the move to local government reform. In this case, we are seeing the replacement of two-tier authorities with a single unitary structure. I would like to emphasise that the Liberal Democrats have no dogmatic opposition, as we believe that it is very much up to local authorities to decide what is best for their areas. Liberal Democrats in district and county councils have been absolutely right to emphasise that point.
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