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Lord Williams of Elvel: My Lords, perhaps the noble Lord will forgive me for intervening. I have two questions. The noble Lord referred to the 17th century. Does he believe that the way forward is that pursued by Louis XIV which led in my view, and I am sure in the noble Lord's view, to the inefficiency of local administration which was part of the main cause of the French Revolution? Secondly, as regards the poll tax, it is all very well to say that you can vote for finance for the charges that you want. The problem with the poll tax, as Wat Tyler would have reminded the noble Lord had he been here, was that it was simply a head tax with no distinction between one source of income and another.

Lord Beloff: My Lords, there were weaknesses in the definition of what could constitute a tax of that kind, but a tax on individuals, perhaps of greater flexibility than that which appeared in the Bill, rather than a tax of property, seemed to me to be something which was espoused in one form or another by many of our witnesses.

The noble Lord referred to Louis XIV, and I know that the noble Lord has a special interest in France. But I was thinking about local government in this country at the time of the Glorious Revolution when there were, and remained, very considerable powers in the hands of local authorities, admittedly not elected, which proved extremely successful in guiding the country until the industrial revolution demanded greater central

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intervention in their affairs. Therefore, I am not shaken by reference to Louis XIV, who does not often figure in our debates.

Looking back, I can say that it was an extremely educative experience serving on the committee even though I share the disappointment of some of my colleagues that more of our recommendations were not looked at more favourably by the Government. That raises the question, referred to by several noble Lords, including the chairman, of what happens next. Clearly, it would be worth having some kind of inquiry, possibly parliamentary, possibly extra-parliamentary, to determine what is an almost irreconcilable logical difficulty. People say that they want local initiative, local autonomy and the capacity to innovate and experiment. At the same time they want services which are no different if they move from one part of the country to another. That is most obvious in the field of education, but one can perhaps see it elsewhere.

Those two things are very hard to reconcile. Does one prefer something original but different and so risk, when one moves, having to accommodate oneself to a new system? Alternatively, does one believe that uniformity of service and provision is something which every citizen of a democracy has a right to demand? Those are problems which certainly demand further consideration. Despite the Government turning down the ideas that the committee put forward, I hope that something will be done to address them in the future.

4.40 p.m.

Lord Monkswell: My Lords, I should like, first, to thank the noble Lord, Lord Hunt of Tanworth, and his committee for a most excellent report. I must admit that during the debate I had a blinding flash of revelation. I believe that the noble Lord, Lord Beloff, suggested that his membership of the Select Committee opened his eyes like--and I paraphrase his remarks--a series of anthropological lectures on a foreign race. At any rate, that seemed to be the gist of the noble Lord's remarks. It is curious that a senior supporter over the past 17 years of the Conservative Government, who have implemented, according to my noble friend Lord Williams, about 200 Acts of Parliament affecting local government, should turn round after the event and say, "I knew nothing about it; it was like a foreign race".

The latter is perhaps an explanation as to why this country no longer has an empire. If Conservative Governments have been followed by such assiduous followers for the past 200 years while implementing legislation which affected British citizens throughout the world, no wonder they turned around and said, "We are not totally happy about it". They just did not know what they were doing.

I could use today's debate to indulge in a long and probably rambling discourse about how badly local government has been treated over the past 25 years, and then take some time to suggest how things might be changed for the better in the future. However, I am sure that noble Lords will be glad to hear that I shall try to contain myself. I aim to make just a few simple points. First, I would commend anyone listening to our debate,

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or reading the transcript of it in Hansard later, to read the report itself. It is a very useful document which has been most skilfully compiled. I pay tribute to the noble Lord, Lord Hunt, to all the members of the committee and, indeed, to all the officers involved for their work. I would also recommend people to read the Government's response. Although I do not agree with all their responses to the recommendations in the report, at least they have at last recognised that there is a problem.

Democracy as we know it can do two useful things. In the first place it can enable people in a community or society to come together to develop them. Secondly, it can enable that society or community to accommodate change. To do those things successfully there must be a climate of trust. I believe that the noble Baroness, Lady Hamwee, pointed out that if central government politicians do not respect local government politicians then they cannot expect respect in return. That does not apply just between the national political arena and the local political arena; it also applies to the European and--dare I say it?--the worldwide political arena. I hope that the report will help to build that mutual trust and respect which both national and local politicians need. It is essential.

Innovation and change is one of the things that local government can do most effectively. Indeed, that has been demonstrated, for example, over the past 150 years. I shall give your Lordships three specific examples. The first was mentioned by my noble friend Lord Williams of Elvel; namely, Joseph Chamberlain in Birmingham. He instituted the municipal provision of public utilities that is now taken for granted across the country. It is interesting to reflect that it took something like 30 or 40 years before Birmingham's experience effectively translated to London. However, that is another story.

The second example is one of competitive tendering, not compulsory competitive tendering, for local authority goods and services. I believe that that happened in the 1930s and 1940s. It was insisted upon by Communist members of the Leiston urban district council. To prevent the previous local councillors providing their friends and cronies with orders for council work, competitive tendering was insisted upon. Again, even today, that remains an essential feature of local authority activity throughout the country.

My third example is that of the Conservative controlled county council of Leicestershire in the 1950s and the 1960s. It realised the inadequacy of the secondary modern education that was being provided for a large proportion of their young population and instituted the system of comprehensive education which has benefited this country so much over the past 30 years or so.

I can understand why the following was not touched upon by the Select Committee. It is unfortunate that it did not do so, but I believe that it was slightly outside the committee's terms of reference. I have in mind the structure of local government. I have referred to three tiers of local government; namely, the small urban district county council and the county borough--the

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Birmingham-type situation. However, there is a third category which we no longer have and that is the ability of all the people living in a large urban conurbation to come together and have a directly elected council which can speak and work for that whole population. I make a plea that all the people in our urban heartlands--that is, the Glasgows, the Liverpools, the Manchesters, the Birminghams and the Londons of our country--should be able to elect a council to speak and work for the whole of that urban conurbation.

We did have such councils but they were lost. It is interesting to note that they were instituted by a past Conservative Government under the leadership of Sir Edward Heath who reorganised local government. He did so after a series of Royal Commissions on local government and indeed committees of inquiry stretching over a good many years. The final result was the local government reorganisation which began in 1974 and which went on to bring about the introduction of the regional authorities in Scotland.

Interestingly enough, that Conservative Government under Sir Edward Heath made two significant constitutional changes. The first was our entry into membership of the European Community, which is now the European Union. The other was the institution of the major elected authorities for the major urban conurbations. It is unfortunate that Sir Edward Heath's involvement in trade union/industrial affairs and in economic policies went wrong, but I believe that history will suggest that those two constitutional changes were of great significance. I hope that the actions of this Conservative Government of the past 17 years which have attacked both those constitutional changes will be reversed by the next government.

4.50 p.m.

The Earl of Kintore: My Lords, I also had the privilege of serving on the Select Committee under the chairmanship of my noble friend Lord Hunt of Tanworth. The chairman kept us in remarkably good order and any points that had to be conceded to produce a unanimous report were conceded with grace and humour. We were well served by our Clerk, Simon Burton. I wish him good luck in his new appointment.

I wish to address two points. As the only "independent" on the committee, apart from our chairman, I started the inquiry thinking that local government would be more effective if all councillors were non-political. By the end, I think I was just persuaded that political parties are necessary in local government to provide the necessary infrastructure. However, I hope the political parties will regard the prime function of their councillors as that of acting for the good of all their local electors. I realise there may be some noble Lords in the Chamber who consider that dominance by one political party of central government for too long is a bad thing. At the local level it is even worse. I am pleased to note at paragraph 42 of their response the Government accept that some form of proportional voting should be tried to achieve a better consensus at local level.

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Local government is big business. It will spend £74.5 billion in 1996-97, including capital and revenue expenditure. Most of the money is provided by central government--as we have already heard--but a small proportion is raised locally through the council tax. I note at paragraph 65 of the response that the Government state their belief that,

    "the council tax should raise a slightly larger proportion of money spent locally and current plans envisage a modest increase in the proportion met by the council tax".
I suppose the words that worry me are "slightly" and "modest". The Department of the Environment told us that council tax might raise, say, a quarter--that is, 25 per cent.--of local government revenue. While not knowing if my council tax for this year represents a figure of 25 per cent.--here I declare an interest as owner of a Band H house--I hope I may encourage the parties involved in local government to bear in mind that local authority expenditure should be kept within reasonable bounds. If that is the case, local authorities may then be able to restrain the increases they demand of the top band payers who raise insignificant amounts, but even these amounts are beginning to bear heavily on those who have to pay. I hope our report Rebuilding Trust will aid and carry forward positively the relations between central and local government.

4.54 p.m.

Lord Dubs: My Lords, it was a privilege and a pleasure to serve on the Select Committee chaired by the noble Lord, Lord Hunt. However, he also achieved at the end what I thought would be well nigh impossible when we started; namely, a broad measure of agreement among such a diverse membership. He certainly showed skills which in previous years the Cabinet had the benefit of.

I should perhaps declare an interest in that in the past I have been a local councillor on Westminster City Council and for a few years I worked in local government. Since that time there have been many changes in local government in this country. I believe morale is now lower and fewer people feel that to become a local councillor is worthwhile as a career and as an expression of civic duty. I agree with the thrust of our report that far more needs to be done to promote the image of local government. If that were to be achieved--I believe it is achievable--some of the comments made by the noble Lord, Lord Beloff, when he suggested that local government was not particularly interesting to people and that people did not care much about it, might be reversed. It is one of our challenges to try to make local government exciting and interesting to the local communities that are served by local authorities.

One of the key points that came out of our work was the question of centralisation. I note that over many years--particularly since 1979, but it is a longer-term trend--there has been an erosion of local government power. That has arisen partly because central government have sought to exercise tighter control over local authority spending. However, the matter goes further than that. I accuse the Conservative Government

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of having tried to suppress views emanating from local authorities which ran counter to the Government's beliefs. I believe that a healthy democracy is a plural democracy. One has only to look at the United States to see the differences of view expressed between the President and Congress and between the states and Washington. Those differences may sometimes be too wide but I believe it is healthy in a democracy that different points of view should be expressed. We have gone too far in trying to denigrate the views of local government when those views have been contrary to the policies of central government.

If powers are taken away from local government it becomes less attractive to serve as a local councillor. However, it has also had one other consequence which is that voting for local authorities has increasingly become a way of indicating views on national politics rather than on the worth of the policies and practices followed by a particular local authority. It would be a healthy move if we could devise ways in which people in local authority areas were as concerned about the policies of their local authority as about those of national government, and sought to reflect those concerns in their voting practices.

There is another problem which I think is as yet unresolved, and that is the dilemma to which other noble Lords have referred as to how to resolve the conflict between seeking to have uniform national standards of service throughout the country, as provided by local authorities, and giving local authorities the right to encourage diversity, and for local authorities to practise that element of diversity in the way they provide services. Clearly there are many pressures to adopt national standards. I refer to pressures of public expectations and pressures from the media and from the Audit Commission with its proper emphasis on performance measurement and comparison between one local authority and another. However, if we are to support local government and local diversity we have to accept that there have to be some departures from national standards. Another area in which local authorities have lost power is to quangos. That is a well developed argument and one which need not concern us too much this afternoon.

I now turn to finance. I am concerned that central government now contribute 80 per cent. of local authority expenditure. Not so long ago the figure was 50 per cent. I appreciate the argument made earlier this afternoon by my noble friend Lord Williams, when he prophesied something that I believe is widely expected; namely, that in their bid to reduce national taxation central government will impose pressures on local authorities to increase the amount they levy through the council tax. That may slightly change the percentage of central government support to local government, but it is not the answer that I seek. I should like to see a different method whereby central government contribute less and local government is therefore not so dependent upon central government funding. It is therefore a matter of particular regret that the Government have not accepted the committee's recommendations that the business rate should be returned to individual local authorities. That proposal is supported by the CBI and

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the Institute of Directors, among other bodies, and would help to make local government finance more independent of central government and therefore make local authorities more autonomous.

However, we need to go further. The committee throws out a few hints in that direction. It would be right and proper to seek ways of providing additional income for local authorities. One example might be that the road tax on motor cars could be transferred from central government to local government. After all, the presence of motor cars is a burden on local authorities, which have to find parking space for them; motor cars exercise pressure on roads which local authorities have to meet. It might be better if the income and the process of collecting the road fund tax could be transferred from central government to local government. We should also look at other sources of income for local government in order for it to achieve more independence from central government.

It is right, as the committee states, that a power of local competence should be given to local authorities to raise money for other purposes--a power rather wider than the old Section 137 as it was called. Obviously some reserve powers would have to be given to central government to ensure that there was no abuse. But it would be a proper way of allowing local government to exercise some element of independence.

I should also like to see more freedom for local authorities to experiment in constitutional matters, as the committee suggests. The idea of elected mayors is an interesting suggestion. They might well give more focus to a local authority and might attract more interest in local government on the part of electors. Certainly at the time of the GLC there was a great deal of interest in that body. The GLC established something in the minds of its people that most local authorities do not establish.

I accept that if we are to move to the position of having elected mayors--I support the idea merely on an experimental basis--there would have to be a change in the role of elected councillors; and that would possibly involve some diminution in their powers. It is worthwhile examining the idea of elected mayors, but I see that problems might arise. We might also move to annual elections for councillors, with one-third of the members of a council retiring every year. That is the practice in some areas, but not in others. It would be a good thing if it became universal. It would make local authorities more sensitive to changing opinions on the part of their electorates.

Finally, I turn to a point that was outside the remit of the committee, and it concerns local government in London. I am not sure that it should have been outside our remit, but I accepted the decree that it should be. I believe that since the abolition of the GLC there has been a constant weakness in local government in London. The various measures devised to bring together the 32 London boroughs and the Corporation of London simply do not represent a democratic way of providing local government for the capital of this country. It is right that following a change of government there should be a move not to bring back the GLC in its old

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form but to provide some strategic body that can represent the people of London and look after the overall interests of Londoners.

5.4 p.m.

Baroness Carnegy of Lour: My Lords, the noble Lord, in a very interesting speech, bemoaned, as did other speakers, what he sees as the diminished power of local government. I agree with him. I also agree with my noble friend Lord Beloff in his remark that had we been able to implement the poll tax, albeit in a much more flexible form than that in which it came before Parliament, local government now would have a lot more power than it has and would probably be raising more than 50 per cent. of what it spends. But that is history.

I read the report with very great interest. It is a masterly report. It contains a number of ideas that are new, at any rate to me. I was not a member of the committee. I wish to confine myself to two limited points, both as they might affect Scotland in particular. The first concerns the report's evidence and recommendation on the capping of local government expenditure. The second relates to what is proposed for competitive tendering.

On capping, the Select Committee concludes that a council's spending should no longer be capped by central government unless a council's budget is clearly unreasonable. It recommends that whether a budget is reasonable should be determined by a Select Committee of Parliament, which would receive recommendations from the relevant Secretary of State backed by means of a statutory instrument. The noble Lord, Lord Williams, who is presently not in his place, indicated that the Labour Party liked that idea.

The question arises as to what would happen in Scotland should Mr. Blair win the general election and implement his plans for a Scottish parliament. That parliament, out of a block grant from Westminster together with any amount raised in Scotland as additional income tax on the Scots--the so-called tartan tax--would be entirely responsible for allocating central funding to 32 Scottish local authorities as well as for legislating for local government.

Would it be appropriate for a Westminster committee to consider the Secretary of State for Scotland's recommendation on what are reasonable budgets for Scottish local authorities? I think not. In any case, the idea seems to be that there would no longer be a Secretary of State for Scotland to do any recommending at Westminster. I take it therefore that in Scotland the committee that would do the recommending would be a committee of the Scots parliament to the Scots parliament. I suppose that that parliament would then act by means of a Scots form of statutory instrument, if it had one. However, I wonder how easily the members of a Scots parliament and its committee would accept that the council had budgeted unreasonably. One must remember that they would not have determined the overall block grant in the first place.

We heard from the noble Lord, Lord Williams of Elvel, at the outset of the debate that in contrast to the Government the Labour Party would probably

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implement this proposal. I wonder whether the noble Baroness, in winding up, might be able to tell us whether the Labour Party considers that it would work in Scotland--whether the mechanics would work in relation to a Scots parliament, and whether the politics would work. It could be an important point. As local government and its funding would be a major part of the work of a Scots parliament, it would doubtless have to be catered for in any devolution Bill.

My other points relate to competitive tendering, which has hardly been mentioned so far in the debate, and whether it should continue to be compulsory. The Convention of Scottish Local Authorities, like the local authority associations south of the Border, in its brief to noble Lords indicated that it believes it should be voluntary. The Scottish National Party said, in evidence to the committee, that compulsory competitive tendering is:

    "a prime example of inappropriate central government policy applied to local Authorities".
It also said that it had had,

    "disastrous consequences on local Communities and local Authorities".

The Select Committee's report takes the view that competitive tendering has brought about major changes of management style and approach which have been good, but it also expressed the view that they would not have come about without some compulsion and that if compulsion were to end there would need to be an alternative. I agree with that. I would add that in Scotland the alternative would need to be a pretty strong one, at least if the part of the country where I live is anything to go by. When Tayside Regional Council was set up in 1974 under Conservative control, we used competitive tendering in many areas of our activities from the outset. We did it partly to aid cost effectiveness, but also to invigorate the local economy. In Dundee, which was part of our area, the private sector had withered on the vine because traditionally it stood little chance of contracts in the midst of such an enormous public sector.

We councillors took a lot of care in designing our system and in appointing a really able official of great integrity to operate it. The system worked extremely well. But when, 12 years later, a Labour council took over, supported by the Scottish National Party, there was little enthusiasm. As a Conservative central Government began to take a grip, efforts were increasingly made in Tayside to undermine the system.

Also, private sector competition does not seem to be viewed with great favour in the three all-purpose councils that have succeeded the Tayside Regional Council. A team recently appointed by the Secretary of State for Scotland to investigate residential care for the elderly has found that all three of the new authorities are paying more for accommodation in publicly run homes than they would in the local private sector. In the Scottish National Party-run Angus and Perth and Kinross councils, council homes for the elderly cost £200 and £150 a week more respectively. In Labour-run Dundee, it is £100 a week

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more. What is more, the added costs, says the inquiry team, are not leading to better quality care. That attitude does not bode well for the formal system of competitive tendering which we are discussing in this debate. In Tayside and, I believe, throughout much of Scotland, should tendering no longer be compulsory, there must be a very strong alternative indeed.

I add just one final point. To work, a competitive tendering system must clearly have the confidence of both business and the public. Councillors need to confine their role to agreeing a good system, choosing the official to operate it and making the final decisions on the official's recommendation according to predetermined criteria.

In my view, for councillors to allow themselves to be beholden in any way to potential tenderers for contracts would compromise the integrity of a council's system from the start. I profoundly disagree with Mr. Ashdown when he said that there was nothing wrong in inviting potential tenderers to contribute to party funds so as to meet councillors at the Liberal Democrat Party conference in order to hear about business possibilities in local government, however general the discussion may have been. Councillors need to keep at arm's length the whole tendering procedure until they exercise their statutory responsibility of deciding which tender to accept. I dare say that it is not only in Scotland that the framework for competitive tendering must be both clear and strong.

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