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Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord for moving the first order. I was unaware that we were to take both orders together. I am perfectly happy to do so but I was not informed through the usual channels that the Minister wished to take both orders together. I wanted to make a 40 minute speech on the first and perhaps a 45 minute speech on

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the second! However, I shall not detain the House and prevent your Lordships dealing with other important matters on the Order Paper.

As we are taking the two orders together, I shall start with the contracting out of tax billing order. First, I am glad to see that there is no question of compulsion. That is an important issue and we would have opposed the order very strongly if there had been an element of compulsion. Secondly, I hope that the Minister can give an assurance that those who undertake to collect tax on behalf of local authorities will have proper confidentiality arrangements in their contracts.

Thirdly, I hope that the noble Lord can elaborate on what he said about enforcement. To say the least, it seems curious that private companies might be in the business of enforcing debts incurred as a result of non-payment of council tax or of any other tax that the local authority might be involved in. That is important because, as the Minister will readily recognise, people who do not pay their council tax are frequently unable to do so for many different reasons; indeed, I am sure that I do not need to go into the whole history of the poll tax to illustrate my point. I hope therefore that the Minister will be able to give me those assurances in his reply.

I turn now to the contracting out of investment functions order. I imagine, although the Minister did not say so in specific terms, that any contractor who is employed by a local authority to put out the cash of a local authority will be properly registered either under the banking Acts, under the building society Acts, or, as the case may be, under the Financial Services Act. If that is not the case, I hope that the noble Lord will tell me. We do not want cowboys putting in bids for local authority cash payments to be placed anywhere they like.

The Minister referred to CDs--that is, certificates of deposit. Are foreign exchange CDs excluded from this order? If the order is agreed to and there is a contract, are contractors allowed to put out a local authority's money into foreign exchange CDs? If so, under what circumstances and how? As local authority liabilities are all in sterling, it would seem to me slightly odd if contractors were able to invest in dollar, deutschmark or yen CDs of which there are plenty. Having said that, I have no particular objection to the orders to which the noble Lord has spoken. However, we need some reassurance on the points that I have raised.

Lord Lucas: My Lords, I thank the noble Lord for his support. I apologise for the fact that he was not given proper notice that we were to take both orders together. It had not occurred to me that that information might not have been transmitted to the noble Lord. I can only apologise. I can certainly confirm what the noble Lord asked me to confirm on the subject of compulsion. There is no wish that these matters should be a matter of compulsion; indeed they are strictly voluntary.

I shall deal, first, with confidentiality and enforcement as regards the tax billing order. Contractors will be covered by the requirements of the Data Protection Act in exactly the same way as local

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authorities. Information obtained for a specific purpose, such as the collection of council tax, cannot be used for another purpose without the knowledge of the persons concerned. Many people in the private sector are concerned with private information--for example, banks, solicitors and many others. Given the fact that the regulations are in place, we see no reason why the same standards should not be expected of contractors in this instance.

As regards enforcement, there are, of course, delicate decisions to be made in the recovery process. However, a contractor will be governed in the decisions that he makes by the law and guided by the policies set down for him by the employing council. It will be for the authority to ensure that both are observed. That will be an important residual function for the authority, however much it contracts out.

I turn now to the second order. Article 9(3) of the order makes it clear that contractors need to be authorised under Section 207 of the Financial Services Act 1986. I know that the noble Lord is more familiar with that Act than perhaps I am, but I hope that he finds that response to be satisfactory. Foreign exchange deposits are clearly not approved investments or, indeed, the sort of investments that we would be likely to think of as approved investments. I agree with the noble Lord as to the mismatching that would occur if such investments were allowed. We are not looking at this as being a risky portfolio; we are looking at it as being a reasonable collection of alternative and relatively safe investments. I hope that that gives the noble Lord the comfort that he desires.

On Question, Motion agreed to.

Local Authorities (Contracting Out of Investment Functions) Order 1996

Lord Lucas: My Lords, I beg to move.

Moved, That the draft order laid before the House on 25th June be approved [25th Report from the Joint Committee].--(Lord Lucas.)

On Question, Motion agreed to.

Berkshire (Structural Change) Order 1996

4.6 p.m.

The Minister of State, Department of the Environment (Earl Ferrers) rose to move, That the draft order laid before the House on 18th June be approved [24th Report from the Joint Committee].

The noble Earl said: My Lords, we have today nine orders to consider, which implement the last tranche of recommendations from the Local Government Review. The orders are similar in nature, but, if your Lordships will permit me, I should like to speak in most detail to the Berkshire order in view of the amendment which my noble friend Lord Peyton has put on the Order Paper.

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The order will abolish Berkshire County Council. In its place it will establish on 1st April 1998 six unitary authorities--one for each of the existing districts. It will also provide for certain other matters which follow on from that structural change. In each prospective unitary authority, there will be elections for the whole authority in May 1997. For Newbury, the order redraws the boundaries of electoral wards in order to correct the wide variations in the ratio of councillors to electors in some of the wards. For the same reason, the order provides for an additional councillor in Slough.

The order will make each of the unitary authorities a fire authority. That paves the way for an order under the Fire Services Act 1947 which will establish a combined fire authority for the county, effectively, therefore, preserving the existing Berkshire fire brigade area.

The order will transfer the county council's strategic planning responsibilities to the unitary authorities. They will then be able to work together to maintain a joint structure plan for the county. The order also provides for the continuing application of local legislation.

Unitary local government can bring many benefits including greater efficiency, less confusion and better accountability. It is for those reasons that we asked the independent Local Government Commission to look at the structure of local government in Berkshire, as well as in the other shire counties. There were six district authorities in Berkshire and the Berkshire County Council. In December 1994, the commission recommended that the present two tier structure should be replaced by a structure of five unitary authorities. They were to be based on four of the existing districts, together with a new authority which was to be formed by a merger of the two other districts; namely, Bracknell Forest and Windsor Maidenhead, thereby making five unitary authorities in all.

From some of the things which have been said on the subject outside your Lordships' House, noble Lords might be forgiven for thinking that the Government had gone against the clear advice they had received and were going down a path of their own choosing on Berkshire. That is not the case at all. My right honourable friend has accepted the commission's recommendations almost entirely. The commission recommended unitary local government throughout Berkshire. We have accepted that. The only point on which we disagreed was the proposed merger between Bracknell Forest and Windsor and Maidenhead. We considered that this would be unsettling and that a merger would increase the transitional costs.

The commission recognised in its report that a six-unitary-authority option could be expected to command wide public support. This was clear when the commission undertook its initial research into the views of the community. It was also apparent in the representations we received after the Commission's report was published. On top of that, six of the seven Members of Parliament for Berkshire support six unitary authorities. The seventh Member of Parliament, Mr. Rendel, representing Newbury, supports the abolition of the county council and the proposal for Newbury to become a single tier authority.

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All this persuaded us that a separate council for each district would best reflect the community identities as well as providing effective and convenient local government. And Parliament clearly states in the Local Government Act 1992 that local government should be so organised as to provide "effective and convenient local government". It is important to balance all these points.

Yesterday we had a discussion on polls and their value. Polls may be interesting in so far as they provide an answer at one particular time to one particular question. The way in which the question is formulated can easily affect the result, but we should take particular care when the opinions which are being measured may be affected by substantial publicity campaigns. The Government have to look beyond opinion polls and beyond campaigns. We have to consider whether change will reflect local identity, to use a quotable phrase, in all its manifestations and whether it will secure effective local government.

I am only too well aware that many people hate change. That is a perfectly natural human phenomenon, in which I participate regularly. Any change creates feelings of apprehension. Berkshire County Council has orchestrated a very effective and vigorous campaign against its own abolition. One can understand that. It is said that six authorities could not match the county council's scope for economies of scale. The county council also claims that it has already made all the savings which are possible and that the costs of local government will increase greatly. However, this argument is questionable, and it is also one which is not accepted by the district councils.

The six district councils of Berkshire have committed themselves to providing good services at no extra cost to local taxpayers. This is not the Government saying it: this is the local authorities themselves saying it. And it is after all the districts which will be held to account if they fail to keep their promises and live up to their guarantees. Although the county council says that there are economies of scale in being big, one also has to remember that the fashionable phrase nowadays is that being big is not necessarily so successful and that any potential loss of economies of scale needs to be balanced against the significant gains which can arise from bringing services such as housing, which is a district council service, social services, which is a county service, environmental health, which is a district service, and trading standards, which is a county service, all under one roof.

It is said that the voluntary sector is opposed to the abolition of the county council. It is perhaps the case that dealing with just one authority is simpler than dealing with six. On the other hand, smaller authorities with a more local base than that of a county council should be better able to assess the needs of their area and to ensure a close match between those needs and the provision of services. It is the needs of ordinary people which should determine how best the services are to be provided, not administrative convenience.

It is sometimes interesting to see what people who have had experience of unitary authorities say about them. It is easy for people to say unitary authorities will

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not work, that they will be more expensive, and so on. However, the chief executive of North Somerset Council, a unitary authority which came into existence in April this year, wrote to my right honourable friend the Minister for Local Government, saying:

    "Comments made about the strategic disadvantage of smaller unitary authorities have not proved to be well founded".
Smaller unitary authorities, he says, can take advantage of better local knowledge and can find the most effective method of service provision using the public, private or voluntary sectors. Therefore, unitary authorities, certainly in the opinion of those who have experience of running them, can prove to be better, even when it was thought beforehand that that would not be the case.

I turn now, if I may, to my noble friend's amendment. This is not just a Motion; it is not just a critical Motion. It is, if I might say so, a blockbuster of a wrecking amendment. It invites your Lordships, in no uncertain terms, not to approve the order. One of the reasons it gives is that Berkshire is the only county council of an historic county which is being abolished as a result of the Local Government Review. I cannot disagree with that; it is perfectly true. But it is not the Royal County of Berkshire which is being abolished, but the county council.

The Royal County of Berkshire itself is not touched. It existed for 1,000 years before ever the county council was set up. The county council has existed only since the end of the last century. So there is no reason why the Royal County of Berkshire should not last as long after the county council is abolished. What we are doing is replacing the method of local government within the county, and that is a very different matter.

All the attributes of an historic county will remain in place. There will, for example, still be a Lord Lieutenant of Berkshire. I understand that the district councils will ensure that they continue to support the lieutenancy. Also, it is not true that Berkshire County Council has been, in my noble friend's words in his amendment, "singled out" for special treatment. Berkshire County Council actually pressed the case for its own abolition; it was the only county council to do so. Of course the council has now changed its mind, but everyone can do that. The fact is that it supported the abolition case in the first place.

The local authorities in Berkshire, in their submission to the commission in 1994--only two years ago--which was agreed and signed by five out of the six district councils and the Berkshire County Council, said:

    "All councils, including the county council, recognise that unitary authorities are the best way of delivering services in Berkshire. The two-tier system has caused confusion since its introduction in 1974, and there is support for change within the community. Unitary authorities will be closer and more accountable to their communities".
So said Berkshire County Council and five of the six district councils. I do not think I could have put it better myself.

What now is the position? The county council was originally in favour of unitary authorities. The Local Government Commission proposed unitary authorities. All the representatives of the people, the elected

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Members of Parliament for the county, approved the proposals, and another place has approved the order. I suggest that your Lordships would be ill advised to go against that and to go against the longstanding convention that your Lordships do not overturn orders which have been approved by another place. For all those reasons I believe that the order will provide the best local authority administration for Berkshire. I hope that your Lordships will approve the order. I beg to move.

Moved, That the draft order laid before the House on 18th June be approved [24th Report from the Joint Committee].--(Earl Ferrers.)

4.20 p.m.

Lord Peyton of Yeovil rose to move as an amendment to the above Motion to leave out all the words after ("That") and insert ("this House deplores Her Majesty's Government's proposal to abolish Berkshire County Council on the grounds that of the 36 traditional shire county councils subject to the local government review only Berkshire has been singled out for total dismemberment, and calls on Her Majesty's Government to withdraw the order until such time as the people of Berkshire have had the opportunity to indicate support or otherwise for this position.")

The noble Lord said: My Lords, while of course I am grateful for the remarks of my noble friend, and I have listened to them with interest, I am sorry to say that I have heard nothing new this afternoon, probably because there was nothing new to be said on his side of the argument. Until a few months ago, when he became seriously ill, it had been the intention of my noble friend Lord Colnbrook to seek to persuade your Lordships that this measure was both ill-conceived and harsh in that it singled out the Royal County of Berkshire to be sliced up into six pieces and its powers and duties transferred to no fewer than six unitary authorities. My noble friend has done his best to explain why it is that the Government have gone even further than the Local Government Commission recommended. I am sure that I shall at least have your Lordships' agreement in sending a message of sympathy to my noble friend Lord Colnbrook, and expressing the hope that he will make a speedy and complete recovery and return to your Lordships' House before very long.

Those who sit on this side of the House will, I am sure, be readier than others to recognise the massive achievements in many fields over 17 years of successive Conservative governments. There will, however, be some--perhaps quite a number--among my noble friends on this side of the House who will feel a good deal less comfortable as regards the field of local government, in which the record, I believe, has been far from happy. They will not find it all that easy--I do not find it easy--to avoid the conclusion that in one instance after another the Government have simply got things wrong. Certainly over the years the loyalties of many of the Government's own supporters in local councils have been greatly strained. Ministers have from time to time--I am sure they did not mean to do so--given the

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impression of being possessed by an almost ineradicable hostility towards local government, and of aiming to hobble, if not to fillet, its total structure.

The consequences for the Conservative Party have been dire. Whereas it controlled 36 county councils in 1977, and 19 in 1989, it now controls only one. There has been during those years a positive bombardment of legislation. There have been no fewer than 210 Acts of Parliament bearing upon the functions and duties of local authorities. Orders, regulations and circulars have poured out in abundance. There have been few things like it since the time of Noah, only this time there has been no rainbow in the sky, nor any sign of a dove returning with some evidence that the flood may be subsiding.

Considerations of your Lordships' patience and time preclude me from mentioning more than two particularly ill-starred ventures in this field. First, the poll tax proved to be a costly and unmitigated disaster. Secondly, there was visited upon us the Local Government Commission, which at first seemed like an attempt to heal the wounds and to find out exactly what it was that people wanted. However, it soon drifted into a somewhat superficial exercise, the purpose of which seems to have been to persuade people of the merits of unitary authorities.

It is, I think, hard to say whether the commission's preference for unitary authorities arose from its own convictions, or from suggestions received from elsewhere, or whether it was enticed by the siren voices of the districts who claimed to be closer to the people and well able to perform the county councils' duties in addition to their own. By contrast, in the early stages the county councils were slow to see the dangers and came near to letting their side of the argument go by default.

The commission recommended, as a result of its first round of deliberations, the extinction of four county councils and the mutilation of six others. A resounding chorus of protest ensued and persuaded both the Government and the commission to have second thoughts. Those resulted in some welcome reprieves, of which, I am happy to say, my own county of Somerset was one. For the Royal County of Berkshire, however, there was no such happy outcome. It is alone in being shoved rather abruptly into the Government's bacon slicer. Rather oddly, the county council is being taken to task for having at first fallen in with the Government's proposal and accepting its own demise. There are, however, a number of factors which should be borne in mind before too much is made of this argument which the Government are wont to trot out from time to time.

First, I suggest to your Lordships that there is nothing inherently wicked, or even wrong-headed, in having second thoughts. I feel sure that Ministers would be the first to give friendly accommodation to such an idea for they have been known to change their minds themselves from time to time. Secondly--this seems to me to be important--the council's own complexion and leadership have changed. Thirdly, the council has learned from the way in which the protests of others have been received that invitations from the

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Government to climb aboard their tumbrel can be turned down. Fourthly, the proposal itself has changed, as my noble friend said. Whereas at the beginning there were to be three or four unitary authorities, the number has now grown to six. Last, and most importantly, people have begun to reflect upon the price they may have to pay. Present estimates are that the owner of a house worth £100,000 will have to find a further £90 a year to meet transitional and continuing costs.

My noble friend on the Front Bench invited your Lordships to look at what has happened in other unitary authorities. I have done so. The other day I received a letter--I am sure many noble Lords have received similar letters--from Councillor Bob Pitt of Middlesbrough. He reflected on what had happened in Cleveland. He wrote:

    "I cannot emphasise too strongly the disastrous legacy which the Local Government Commission has left for the people of my own area. It is now absolutely clear that the Commission hopelessly under-estimated the costs of making the change to smaller unitary authorities and that the prospect of predicted savings, even in the longer term, is negligible".
He went on to say that whereas the Local Government Commission had estimated its costs to be £18 million, so far approval for reorganisation costs of £32 million has been given by the Government, and the estimated likely cost in the end is £42 million.

Other anxieties have begun to arise as people begin to face the multiplication of boundaries. It will not be easy to carve up the county's arrangements for education or for libraries. Specialist services for the young, old, blind, deaf and mentally handicapped, affordable on a county basis, may be too much of a burden to bear for an authority a fraction of the size. Moreover, the charities which make a huge contribution to such services are organised on a county basis and cannot be parcelled out to match the new set up.

I have had a number of letters from various charitable bodies. In the interests of time I shall cut the extracts very short. The Berkshire Autistic Society states:

    "We greatly fear that new authorities will not wish to be involved with children's problems to such an extent".
Reading Deaf Children's Society states:

    "We cannot see how the effective provision of special education can be carried out by smaller education authorities without incurring considerable additional financial burden on the local taxpayers".

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