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Lord Barnett: My Lords, before my noble friend sits down perhaps she will be kind enough to answer my question. I am totally at a loss to understand her speech. Everything she said was irrelevant to the order. She said that the Government were shambolic but that, nevertheless, she would not vote for the amendment of the noble Lord, Lord Bancroft. I cannot understand why not. Paragraph (b) of the amendment says that the order should come back to us after the Government,

In other words, it is not suggesting that we should reject everything; it suggests that the matter should come back to us. In those circumstances, if everything the Government are doing is shambolic, why not support us?

Baroness Hollis of Heigham: My Lords, I am sorry that I was unable to persuade my noble friend, whose views on so many subjects I heartily respect, of the case that, if we supported it, a delay because of this amendment—for that is what it would mean—would hold up every other order in the pipeline. As a consequence, the long-established self-denying ordinance of this House should continue to be respected.

9.15 p.m.

Viscount Ullswater: My Lords, I shall not have the temerity to cross swords with the noble Baroness, Lady Hollis, on this occasion. The views that she put forward to the House are probably exactly the right ones.

Lord Williams of Elvel: My Lords, before the noble Viscount continues, perhaps I can say that my noble friend said that she hoped that the self-denying ordinance would continue in future years whatever the

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Government was. In accepting that the view my noble friend put forward was right, is the noble Viscount committing future Oppositions to that view?

Viscount Ullswater: My Lords, the House respects its own conventions and I welcome the opportunity that the noble Baroness gave us of keeping to those conventions. That was the purpose of my remarks.

I am grateful to your Lordships for the frank and thoughtful contribution to this evening's debate. Your Lordships raise a number of points and I shall attempt to reply to as many as possible in the time available. I must start with the noble Lord, Lord Rodgers of Quarry Bank, who asked me to identify early why a local government reform was introduced by statutory instrument and not by primary legislation. Of course, the approach adopted in England followed extensive consultation which received a wide measure of support. When the Local Government Act 1992 was taken through Parliament, those principles received widespread support.

However, I must address the issues to which the noble Lord, Lord Bancroft, drew attention in his amendment and on which he elaborated in his speech. The noble Lord mentioned the desirability of including provision for essential services. As I said earlier, the Government considered that carefully. Unitary authorities should be able to deliver the bulk of services themselves. However, the Government have always recognised that some functions may need to be considered on a wider basis than a single unitary authority. The draft order requires each of the new councils to look carefully at each function to see whether there should be voluntary arrangements—and I want to return to that later.

The noble Baroness, Lady Farrington, suggested that in the reorganisation of Scotland the legislation made clear the reorganisation of the specialist services. Of course the situation in Scotland where new councils are to be established everywhere, is entirely different. The Government's view is that voluntary arrangements are to be preferred to statutory joint arrangements, wherever possible. The benefits of unitary authorities include greater local accountability and a capacity to look at service provision in the round. Those benefits would be diluted by statutory joint arrangements. Nevertheless, the Secretary of State has powers to intervene where satisfactory voluntary arrangements are not made or where they break down, and the Government may be concerned to see that proper arrangements are made.

The noble Lord, Lord Bancroft, asked about emergency planning and specialist educational needs. I understand that, for civil defence and emergency planning, the Cleveland districts established clear and uncomplicated joint arrangement procedures. The districts are confident that the functions of those services will not be affected by reorganisation and special educational facilities and support services are already district-based, as has been mentioned.

As regards staff, ultimately, of course, it will be for the successor authorities themselves to decide on the organisation and selection of their staff. However, we expect that the great majority of staff—as my noble friend Lady Flather indicated, some 90 per cent.,

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including front line service providers—will transfer automatically by statutory transfer orders. We have always made clear that, although we hope that most staff will transfer to the reorganised authorities or accept voluntary retirement, a small proportion may be made redundant. The compensation provisions proposed for these cases have been set out in the Local Government (Compensation for Redundancy) Regulations 1994, which came into force on 28th December.

The noble Baronesses, Lady Farrington and Lady Hollis, indicated that the arrangements are not satisfactory. Local authorities are given discretion to pay up to 66 weeks' pay based on age, service and banding to eligible staff below the age of 50. I must remind the House and the noble Baroness, Lady Hollis, that these arrangements at the maximum are more than two and a half times more generous than otherwise statutorily provided under employment legislation. I know that a good many private sector employees would enjoy that form of redundancy. Other posts will be filled by recruitment. The Local Government Staff Commission is consulting on rules for ensuring that staff of outgoing authorities have as fair a chance as possible of securing a post in successor authorities. The Government have also made it clear that they expect chief officer and head of paid service posts to be filled by open competition where a continuing authority with new functions, like the Cleveland authorities, decides to create new posts with duties and responsibilities of a very different kind from existing posts. We in the Government care very much about the staff in Cleveland who have given such good service both to the county council and to the borough councils.

The noble Lord, Lord Bancroft, also proposes that this draft order should be considered only when the Government's decision on all review areas is known. That point was taken up by the noble Baroness, Lady Hollis. Such a delay would prolong uncertainty and delay the benefits of change in Cleveland and elsewhere. The Government want local government structures which meet local needs. If that means not having a pattern which is administratively tidy, so be it. Those involved in local government in Cleveland, not least council employees, have had the prospect of reorganisation hanging over them since 1992. It is time to bring that uncertainty to an end. Moreover, the residents of Cleveland deserve to begin reaping the benefits of more accountable local government with more cost-effective and better co-ordinated service delivery as early as possible.

I come to Cleveland County Council's application for judicial review. The Government thought very carefully before laying the draft order before your Lordships. The county council's legal challenge was turned down on every count in the High Court and it has twice been refused leave to appeal. At each stage the courts took the view that the county council's case was a dispute as to the merits of the commission's recommendation thinly disguised as a legal challenge. Nevertheless, because of the delay caused by the case, the Government were obliged to put back the reorganisation date for Cleveland by a year. The county council is now seeking

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an oral hearing before the Court of Appeal—its final recourse. The department has applied for the expedition of the hearing, which has not yet been scheduled. However, I understand that the county council has written opposing expedition. I am sure that noble Lords will come to their own conclusions about the council's motives.

We believe that delaying approval of the order until the case is heard, possibly leading to a further year's delay in the reorganisation date—here I have to agree with my noble friend Lady Flather and indeed the noble Lord, Lord Stoddart of Swindon—would be a great disservice to the people of Cleveland. Subject to your Lordships' approval, we will want immediately to take stock of the legal position. If we decide to proceed, we will first write to the councils involved giving notice of the Secretary of State's intention to make the order on a given date.

Perhaps I may respond to one or two other questions. The noble Lord, Lord Bancroft, and the noble Baroness, Lady Stedman, and my noble friend Lady Faithfull questioned the tests of public opinion. In all tests of public opinion the four unitary option has been more popular than the existing system or the two unitary option. It was right that the noble and learned Lord, Lord Simon of Glaisdale, should remind us that the majority, namely, four out of six of the Cleveland MPs, support the four-district option. The noble Lords, Lord Bancroft and Lord Rodgers of Quarry Bank, and my noble friend Lord Gisborough, asked: why not re-create the county borough of Teesside? That may have been appropriate in 1968; I do not believe that it is appropriate for 1996. All four existing borough councils, including the three which were formerly in Teesside, have rejected the option. A four-authority structure has consistently been shown to be much more popular with local people than the Teesside-Hartlepool option.

Not one but three surveys were carried out for the county and districts jointly, the Local Government Commission and the county on its own. They all failed to back the re-creation of Teesside. Unlike 1968, the boroughs are keen to go their own way. But if in future they want to go the same way as they did in 1968, the door is open for them to apply to do so. Perhaps I may give a quotation:

    "It is very disappointing that the County council is still attempting to mislead the people of Cleveland at this stage. It really is time they accepted the decision of local people, the Commission and the Government and used their energies to help plan the way forward for the future".

I tend to agree with that view from a press release issued on behalf of the councils of Hartlepool, Middlesbrough, Stockton-on-Tees and Langbaurgh on Tees.

The noble Lord, Lord Rodgers of Quarry Bank, and my noble friend Lady Faithfull asked about the costs of reorganisation. In reaching our decision we anticipated that costs might be rather higher than the commission estimates. But we took the view that the savings and other benefits would, as the commission advised, justify the costs. The authorities who will be implementing reorganisation in Cleveland estimate that they can achieve net savings of £15 million per annum which is a little more than the estimate of the Local Government

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Commission of between £6 million and £11 million. I believe that those are the figures which the noble Lord, Lord Stoddart, quoted. That is not a bad return. It will benefit the people of Cleveland year after year.

The noble and learned Lord, Lord Simon of Glaisdale, asked about estimates of costs. Perhaps I may indicate that these are the district estimates and, after all, they are the closest to it. They believe that the net total cost over the transitional period from 1st April 1996 to 31st March 1999 will be £25.834 million. However, if one takes away the interest which arises because of the way the Government have chosen to fund the reorganisation, that comes down to just over £18 million. As I said, they also believe that there will be total ongoing savings arising from 1999 onwards of £15 million per annum.

My noble friends Lord Crathorne and Lord Gisborough and the noble Baroness, Lady Hamwee, were interested and concerned about future strategic planning in Cleveland. The commission has proposed that the four unitary authorities should maintain separate local plans but work together on a joint structure plan. We endorse that recommendation. The draft order gives effect to that by transferring the county's strategic planning responsibilities to the four borough councils thus enabling them to make voluntary arrangements for joint working on the structure plan. We are satisfied that voluntary arrangements for joint working in Cleveland will achieve the desired results.

The Cleveland boroughs have published their suggestions for a joint committee that will take the political lead and for an overview of structure planning, strategic highway issues and the strategic elements of waste disposal and minerals. They have also developed proposals for the officer groupings which would service those functions.

My noble friend Lord Gisborough gave a list of the organisations that he said were not supporting the four unitary authorities. Perhaps it is not surprising that my noble friend received all those letters. After all, he is the Lord Lieutenant, although I believe that he failed to indicate that fact in his speech this evening.

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