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Robert Neill (Bromley and Chislehurst) (Con): Can the Minister help me on this point? If it is the case that the benefits are so obvious, why did the previous Secretary of State, as recently as July 2006, describe local government reorganisation as a great distraction? If that is the case, what objective criteria—benchmarks
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and measures—has the Minister put in place against which he can judge the evidence? I think he will tell me, as he has on previous occasions, that it is a subjective process. Is that really an acceptable basis on which to proceed?

John Healey: The prospect of any change can be distracting, disruptive and unsettling. That is certainly the case for those who are intimately involved with, work for, and serve on, councils in the Cheshire area, which is one of the reasons why I am keen that this House and the other place come to a decision on the proposals. People will then know where they stand. If this House and the other place vote to support the move towards unitary arrangements, it will allow everyone involved—as they are already beginning to do, whatever their initial view of the proposal’s merits—to begin to ensure that from 1 April 2009 we can put in place two effective unitary councils for the benefit of those in the area.

Mr. Mike Hall (Weaver Vale) (Lab): My hon. Friend said earlier that Opposition Members wanted the status quo. The status quo in Cheshire, which would be the retention of county councils and the district councils, was on offer when five of the six districts in Cheshire said that they wanted to retain it. What stopped the status quo being an option was Cheshire county council’s decision to go for a single unitary authority. That is when the districts changed their policy. It is important to note that throughout the consultation, the status quo was never an option after that decision.

John Healey: My hon. Friend has followed this matter closely from the outset, and throughout previous years. He makes a sound point.

It is not just a matter of the potential gains and how we assess them when judging the relative merits of the two proposals that meet the five criteria; it is also a matter of the consequences of making such changes. To that extent, we considered two things. First, we considered affordability. The hon. Member for Bromley and Chislehurst (Robert Neill) looks for harder criteria and better yardsticks. From the outset, we required the proposals that we looked to implement to deliver realistic savings and to have a payback period within five years. I can confirm that our assessment of the proposals shows that the transitional costs of such a change are more than offset by the potential savings. The payback period falls well within the five-year deadline.

Sir Nicholas Winterton (Macclesfield) (Con): There are seven Members from Cheshire who would like to contribute briefly to this debate, which is about Cheshire. I would like to make a suggestion. Would the Minister agree to make a very short introduction to the debate, and then allow Members to express themselves? Hopefully, Members will then allow him sufficient time at the end to make a winding-up speech. That would be a much more satisfactory way of dealing with the debate because it would allow those Members to express their views.

John Healey: Since I got to my feet, I have spent more time dealing with interventions than making the remarks I had originally proposed to make. If the will
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of the House, through any interventions I now take, suggests general assent to that idea, I am happy to take it up. In any case, I will do my best to answer the points raised in the debate. I recognise that the debate is well attended, especially by hon. Members from the area.

Mrs. Dunwoody: At the risk of upsetting the hon. Member for Macclesfield (Sir Nicholas Winterton), may I draw the Minister’s attention to the explanatory memorandum? Bearing in mind the fact that several changes have been made to the figures, it cites estimated annual savings of more than £16 million a year and transitional costs of approximately £25 million. Those figures were not in the proposal, which states that the ongoing savings will be £30.1 million and that transitional costs will be £16.6 million. In other words, the Government do not accept the figures that they presented.

Sir Nicholas Winterton: The hon. Lady did not upset me.

Mrs. Dunwoody: I will try harder.

John Healey: My hon. Friend the Member for Crewe and Nantwich makes an important point and helps me to make the next observation. In my view, it was important, when we considered the financial case and whether the proposals were affordable, not simply to take the figures submitted to us by councils that backed specific proposals. We therefore brought in, through the Chartered Institute of Public Finance and Accountancy and the Institute of Public Finance, independent financial experts who gave me, as Minister, advice on the case.

Mrs. Dunwoody: It has not been published.

John Healey: The figures and main conclusions of the independent assessment were set out—my hon. Friend just read them out. They led the independent experts to conclude that the transitional costs on a prudent basis would be higher and the savings would be lower than those in the proposal once the arrangements were in place. Nevertheless, the savings would be £16 million, which is at the higher end of the restructuring proposals that the House has considered and approved in five other areas. We concluded that the pay-back period would be well within five years—we calculated that it would be just over three and a half years.

Let me make a general point about the requirement for a broad cross-section of support. We said at the outset that we were not looking for evidence that a specific proposal commanded majority support, and that we would not allow any group or interest to have a veto over a proposal. The essential judgment that we had to make was whether there was a sufficiently broad cross-section of support to give us confidence that, if we proceeded with the proposal, it had a reasonable chance of being implemented successfully. That was our approach.

I should like to draw hon. Members’ attention to the main, although not all, elements of the order. We prepared the order, as we prepared those for other areas, through detailed discussion, with agreement as
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far as possible and certainly with consultation with all the affected councils—those who proposed the two unitary authorities solution, those who opposed it and those who took no view on the competing proposals.

The order provides that, from 1 April 2009, there will be a single tier of local government in Cheshire. Unlike the five other orders that the House has agreed, there is no continuing authority, but a wholly new start. The order provides for establishing two joint implementation committees, one for Cheshire, East, to be led by the current leader of Macclesfield, and one for Cheshire, West and Chester, to be led by the current leader of Vale Royal. They will serve before the elections in the respective shadow authorities, which we intend to set up this year. The order provides for elections in May on the basis of interim warding arrangements for those councils. It also provides for cancelling district council elections, which would otherwise happen in May 2008.

I accept that the time scale for implementing the proposals by April 2009 is challenging. There are good grounds for believing that that is achievable, not least the strong leadership that local government in Cheshire is providing for the work on implementing the proposals. There is practical co-operation, even from those who opposed the proposals, so preparations are well under way. The nature of the support and involvement that we can offer from the centre is also important.

Finally, the order sets out an approach to the transition that will be as effective as possible, minimise disruption to services in Cheshire, give a good deal to the service users, be fair and equitable to the council staff and, above all, help to lay the groundwork for a form of governance for the people, businesses and communities in Cheshire that will serve them well in the future. I commend the order to the House.

12 am

Robert Neill (Bromley and Chislehurst) (Con): I am conscious of the number of right hon. and hon. Members who wish to participate in this debate and will do my level best to keep my comments short. However, I should like to set out one or two important issues.

The Minister and I have got to know each other quite well in this round of local government restructurings. He knows that I have every respect for him, but when he tried to set out the proposition that the proposal somehow walked through the door of the Department for Communities and Local Government, without any prompting and without his wanting or acknowledging it, he did not do himself justice. The fact is that the Government have set up Henry Ford’s consultation: we can have any form of authority as long as it is unitary. The consultation really is as simple as that, and to suggest that the proposal is uninspired by a heavy hint from the Government is, to be as polite as I can be, disingenuous.

Andrew Miller (Ellesmere Port and Neston) (Lab): Will the hon. Gentleman accept from me that Ellesmere Port and Neston borough council’s all-party policy has for a number of years been to move towards a unitary solution? The council’s original preferred solution was to create three authorities, but it compromised on two.

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Robert Neill: I have no reason at all to dispute what the hon. Gentleman says, but since we are dealing with the whole county, it might have been a good idea to seek the whole county’s views. That is why it is surprising that, for example, my constituents in Bromley had a say in a referendum when local government was restructured in London, but his do not in this case.

Mr. Mike Hall: The hon. Gentleman has criticised the Government’s approach, but what is his solution for Cheshire: the status quo, one unitary or two unitaries?

Robert Neill: Many people would say that if the consultation were genuine, it is surprising that there should have been no option to improve two-tier working. That is rather odd, since the Government have sought pathfinder bids to do exactly that in other contexts. If that was good and acceptable in parts of the east midlands, I do not see why it is unacceptable in the north-west.

Christine Russell: May I tell the hon. Gentleman that in 2002, following a report by the boundary committee for England, all six districts in Cheshire and the county council looked at the viability of two or three unitaries? In 2006, a joint officers working party was established to consider whether to go for two or three options, so the proposals have not been plucked out of the air in the past few months. May I also tell him—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The answer is no. Speeches must be short tonight and interventions must be much shorter.

Robert Neill: I would have thought that the hon. Lady would make my point. If there were such a divergence of opinion, it would have been better to ask the people to start with, rather than imposing the change through worthy bodies on committees.

My point—we have gone through this many times before, but the principles do not change—is simply this. When we consider the large amount of risk, in terms of uncertainty and cost, that inevitably arises in any restructuring in local government—it is not too difficult to unpick the figures that have been quoted in support of the current proposals by citing the work of academics, such as Professor Chisholm and others—it is not unreasonable to say: first, that the onus of proof should be on those who propose change; secondly, that the burden of proof should be high; thirdly, that it should be based on firm evidence; and fourthly, that that evidence should be judged against clear and objective criteria. I am sorry to say that the conclusion, on balance, that this proposal has a more reasonable chance than the other is scarcely the application of any form of evidence to reasonable criteria. This is a suck-it-and-see form of politics, and it is not fair on the people who live in Cheshire or in any of the other affected counties.

The Government have not managed to make their case, which they have based entirely on one set of proposals. They have not explored the important alternative of improved two-tier working.

Mr. Mike Hall: Will the hon. Gentleman give way?

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Robert Neill: I want to make a bit of progress. I have let the hon. Gentleman intervene once, but if he will be quick, I will do so once more.

Mr. Hall: I agree with the hon. Gentleman that enhanced two-tier working was an option until Cheshire county council decided to go for a single unitary. Does the hon. Gentleman agree that that is what killed it?

Robert Neill: I am going to let people from the county respond to that one, while I get on with making the simple point that the hon. Gentleman ought to consider the fact that, at the end of the day, we are left with a set of proposals that will reduce the number of councillors across the whole of the county. They do not set out a coherent framework for what exists beneath the unitary level. Nor do they answer the serious questions about the methodology used to make the initial financial case. Finally, they do not demonstrate a groundswell of opinion. I think that the Minister used that term in relation to the earlier order on Shropshire. There is manifestly no groundswell of opinion here. That view is held by Members on both sides of the House.

This is yet another example of the Government tinkering, with what can only be described as partial motives. I wonder what makes anyone think that parts of Cheshire should be treated in a different way from parts of the other counties that surround our major conurbations. There is no consistency in the Government’s approach. It is not based on evidence, and they do not have an intellectually coherent anchor on which to hang their case. With respect, they would have done better to listen to Sir Michael Lyons, who is not unacquainted with local government in the north-west of England. He said:

I think that Sir Michael was right, and it is a pity that the Ministers did not listen to him.

12.7 am

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab): I was astonished at the way in which the Minister introduced this order. Whichever way we look at it, the Department said in 2007 that it was going to look for reorganisation. It is important to understand what it was asking. It said of the bids for unitary status:

The Department then went on to make it clear that it would take note of local views and expect to consult a vast cross-section of the people involved, and that it would certainly take account of those working in education and social services and in any other areas that would be directly affected by the order.

When it became clear, to people’s astonishment, that the council was actually suggesting a proposal that was not supported by the majority of Cheshire ratepayers, there was an enormous attempt to discover exactly
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what the council had meant in its letter which stated that it was “minded” to put forward this suggestion, and that it would be based on the criteria that had been discussed. The reality is that it was not based on anything of the sort.

We must be quite clear that, in the discussion on the figures that were put forward for the authorities, there has been a constant shifting of the goalposts, and not just by the Department. A bid based on Chester has constantly changed. The savings have changed, the administration costs have changed and it is very clear that the information given to the Government was not strong enough to support their view—otherwise, they would have been quite prepared to support the request made under the Freedom of Information Act for a copy of the assessment and would not have needed to refuse it. If the report vindicates the decision further to change the financial envelope, why does the Department wish to conceal it? There must be a reason.

We should make it quite clear that when the decision to opt for a unitary basis for the whole of the county of Cheshire was made, it was not done for something as simple as the status quo. A great deal of work went into making it clear that we were prepared to consider a county region, that we were aware of the economic and political costs and that we were very clear about Cheshire’s ability to attract direct investment flows from all around it. We are all aware of Cheshire’s close connections with Liverpool, Manchester, the Potteries and north Wales, which make it unique in its operation.

What is now clear, however, is that no matter whether we look at the independent review of Local Government Futures, the assessments done on behalf of the county or the subsequent assessments by the Department itself, the impact of this reorganisation will be absolutely disastrous. The county will be divided into two, both unitaries will be faced with direct economic problems and they will both lose money.

Under the current needs methodology, the report concluded that west Cheshire unitary would be entitled to £82.7 million of formula grant and east Cheshire £54.1 million; but the proposed two-unitary model, when uplifted to the present settlement figures, allocates only £76.4 million to the west and £60.4 million to the east. The local agreement deprives the west of £6.3 million of formula grant a year—2.5 per cent. of council tax—and the funding is effectively permanently lost in the form of a financial subsidy to the east because in three years’ time, the national grant distribution formula will be applied to the two unitaries using their locally agreed allocation. It is totally unrealistic to assume that one authority will agree to provide a substantial financial subsidy to the other. In fact, it may prove to be unlawful and in breach of the authority’s fiduciary duties to council tax payers.

Although we looked closely into the economics, it is not just a matter of the amounts of money involved. Almost without exception, the education services wrote to Ministers making it very clear that, whether it be the teams built up to deal with special education or social services, they would all face very real difficulties with the reorganisation that was being pushed through over their heads. What happened? The Minister in the other place, Lord Adonis, wrote to them, saying effectively,
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“Oh well, we are very concerned about what you say, but don’t worry, after you have reapplied for your own jobs you will have to work together”. Well, that is brilliant, is it not? First, we will divide you up; then force you to go through an entire reorganisation; then we say, what is really important for the county is that you work together. Some people may not find that insulting; I find it absolutely bizarre.

We want to know exactly how the Government intend to make up the shortfall in finances. We want to know exactly how they imagine that a carefully planned authority, which has just been given an excellent rating—a better rating than it had before—can be expected to tear itself in two and produce a level of change that will meet the needs of my constituents in any way.

In reaching her decision, the Secretary of State took the view that a single unitary authority would not reflect the

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