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Lord Hunt of Tanworth: My Lords, before the noble Baroness sits down, on her first point perhaps I may draw her attention to paragraph 1.7 of our report. It states that we specifically did not consider the effect which our recommendations would have if there were a Scottish parliament and devolution. We could not do so. In a sense, it was outside our terms of reference, but unless one knew what the powers of that parliament were to be in relation to finance, one could not consider it.

The noble Baroness raised an important subject and the essential point that we were trying to get over is that if you abolish capping and have a reserve power to cap, which we felt was necessary, it should not be exercised at the whim of the Secretary of State thinking that it would be a nice thing to do in the case of a particular council. It should only be exercised after debate and approval in the appropriate parliamentary assembly.

Baroness Carnegy of Lour: My Lords, I thank the noble Lord for pointing that out. I appreciate that the committee decided not to take account of the possibility of a Scots parliament and I understood why. Nevertheless, the noble Lord, Lord Williams, having said that he was very much in favour of that approach, would have to accept the point which perhaps the noble Baroness, Lady Farrington, will take on board when she replies; namely, that some arrangement would have to be made for the Scots parliament. There are problems in making such a move in the circumstances of that parliament. That was my point.

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5.16 p.m.

Lord Prys-Davies: My Lords, as a member of the Select Committee I too wish to begin by giving my thanks for the manner in which the noble Lord, Lord Hunt of Tanworth, guided our deliberations with his outstanding skills as a former Secretary to the Cabinet. I also wish to thank our chairman for the clear way in which he presented the report's main recommendations to the House today. I am very pleased that the local government associations are greatly heartened that the report attaches vital importance to local government and its democratic legitimacy. I believe that that is one of the basic principles of the report.

I note that in their response the Government call in aid the well-established principle that local authorities are statutory bodies created by Acts of Parliament and hence are unable to act unless given specific statutory authority to do so. Of course, Parliament, in the end, is supreme. Parliament giveth and Parliament taketh away. Yet the local authorities have invoked the equally well-established principle that a local authority is itself more than the sum of its statutory functions. It has itself a distinctive role to play as trustee serving its community. I am gratified that the Government acknowledge that wider principle in at least two lines of the report.

Surely the proper relationship of central and local government must be based upon a common understanding which pays regard to the two principles which I have attempted to describe, both the restrictive and the positive. Indeed, unless that common understanding is there, it seems to me that we have a recipe for trouble.

To some degree, the relationship has always been adapting and changing. Yet, as Professor George Jones of the London School of Economics and a member of the National Consumer Council put it in his evidence to the committee:

    "something very serious happened in the 1980s".
For their part the Government recognise, in paragraph 8 of their response, that the traditional central and local government relationship, in their words, "broke down in the 1980s". As our chairman indicated, it was not for the committee to attribute blame.

The legislation of the 1980s left a legacy which has soured the central and local government relationship. There is also something else. Many councillors and council officials who gave evidence to the committee felt that they had been treated by too many Ministers as outsiders, constantly under unfair attack, while those same Ministers were never short of praise for the quangos, many of which now provide services formerly provided by local government and which are in the hands of unelected members appointed by Ministers. I have seen no evidence in the report that that criticism has been taken on board by the Government.

But, in fairness, the Government agree that the present state of relations must be improved. So where do we go? As the House has repeatedly been reminded, our report takes as its title Rebuilding Trust. Mutual trust is essential. How can it be rebuilt? For my part, I share the view, expressed by many of our witnesses, that we

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have to go back to the principle that local government is a cornerstone of what has been called "a viable system of local democracy." That principle is well illuminated in the evidence of Mr. Vernon Bogdanor, Reader in Government at Oxford University, and Mr. Simon Jenkins, chairman of the Commission on Local Democracy, in particular.

As we heard from our chairman, the committee fully agrees that there is not one single answer to the problem. There is not one single answer because the problems are far too deep-seated for that. There is a need for a package of significant measures. Those measures can be said to fall within three broad categories: first, the symbolic changes to recognise that local government has an assured place in the governance of this country; secondly, the strengthening of local government's position in its relationship with central government; and thirdly, the strengthening of local government's position in financial matters.

Time permits me to touch only briefly on some of our main recommendations and the Government's response thereto. We urge the Government to sign the Council of Europe's charter of local self government as an expression of a commitment to local government. Many witnesses pressed for that. They believed that signing the charter would send a clear signal to the local authorities that the Government wish to establish a new chapter in its relationship with them. Alas, the Government do not agree that it would be "a worthwhile step". Of course, I do not deny that there are difficulties for this Government in going down a path which is signposted to Europe. It is therefore gratifying that the Government say they support the principles of the charter and that these will be reflected in the new concordat between central and local government. That compromise is welcome. I hope that the preparation of the new agreement is given great priority in Whitehall.

The committee considered that there is a very good case for setting up a permanent committee of Parliament--not necessarily of your Lordships' House--to keep central and local relations under review. It would have the wide-ranging remit touched on by our chairman, the noble Lord, Lord Hunt of Tanworth, in his opening speech. That recommendation is supported by the evidence of Professor John Stewart and Professor George Jones and by the local authority associations.

I am saddened that, contrary to our hopes, the Government have not fully supported the proposal, although they have come part of the way. They have relied on the view which the committee chaired by the noble Earl, Lord Jellicoe, took of it in 1991. I re-read the debate held on 3rd June 1992 on the Jellicoe report. The climate has changed since 1992, and we now have the analysis of the Select Committee. I, for my part, am not satisfied that the arguments then advanced against it remain valid today. I find it difficult to believe that a permanent committee of Parliament with the wide-ranging remit described in the report would merely duplicate the work of the existing departmental Select Committees. We are entitled to ask whether those committees are producing the rewards which the proposed permanent committee could achieve.

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The Government have suggested the possibility of another ad hoc Select Committee in about five years' time. That would be a step in the right direction. Nevertheless, I suggest that an ad hoc Select Committee would not be so informative and so effective as a permanent forum operating within the remit that the committee suggested. I hope that in due course the House will pursue the proposal.

Again and again we heard that the local authorities are seeking a more active role as community leaders serving their communities. That implies that they should have freedom to supplement statutory services in accordance with local needs and aspirations and to raise money for that purpose. The committee believes that that role could be partly achieved by a new statutory power of local competence, although it would be legitimate for safeguards to be written into the proposed new power. I am glad that the Government accept the spirit of that recommendation and propose a review of existing Section 137.

The review is welcome. But we find that it is the Government's intention that a power under an amended Section 137 is not to be exercised in a way which will increase total spending of the local authorities. The committee (in paragraph 6.27) found that Treasury argument unconvincing. Surely it is for local electors, to whom the councils are accountable, to determine whether the additional expenditure is acceptable or unreasonable. So I fear that at the end of the promised review the Government will miss the opportunity to strengthen the role of the local authority as community leader.

I should like to mention briefly compulsory competitive tendering, which, as we say in the report, is a clear example of central regulation of local government. The committee recommended a review of whether CCT should now become voluntary and in any case less prescriptive. It is a pity that the Government seem to have set their face against that recommendation. But that is another reform which could be a symbol of greater trust and confidence on the part of the Government in the local authority's ability to serve its community.

We have indicated that action is also required on the part of local authorities to promote local government. We have heard of the low level of public interest in local government generally and low participation in local elections. Those must be matters of concern. It is important that local government leaders in England, Wales and Scotland should get to grips with the issue. I note in their supplementary written evidence that the local authority associations accept that they too must be ready to make a fresh start.

In conclusion, I hope that the publication of the report and the Government's response mark the opening of a new and constructive debate about the role of local government in the future. It is time for all concerned to realise that unless we move forward along the lines suggested in the report there is a danger that local government could wither away. Would that matter? I think it would. I believe, notwithstanding the

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increased mobility mentioned by the noble Lord, Lord Beloff, that strong local government in partnership with their communities is important to the health of local communities and democracy.

5.30 p.m.

Lord Gray of Contin: My Lords, I appreciate that it is inevitable that a Motion to consider a Select Committee report will inevitably lead to a certain amount of repetition. But I make no apology for starting my remarks by joining with others in paying tribute to our chairman. The noble Lord, Lord Hunt of Tanworth, chaired our committee with total acceptability. His guidance when we were deliberating was profound; his tolerance when we were taking evidence was equally impressive and I am sure that we are all delighted to have served on a committee under his leadership.

I should like also--briefly because it has already been elaborated upon--to say thank you to both our professional advisers and also to our clerk, Mr. Simon Burton, whose tireless work was much appreciated by everybody.

I have to admit that I was less than enthusiastic in relation to one or two of our recommendations. But if a Select Committee is to produce a unanimous report, everyone has to make concessions. In the end we were able to produce a report which, at any rate I feel, is worthwhile and forms a basis for improved relations between central and local government. I trust that it will not be cast aside to gather dust, but will be used as something which may sow seeds among those who read it which will grow into fresh developments. Indeed, my only worry about the report is the warmth of the response to it from the other side of the House. I always feel a little apprehensive when I have been involved in something which receives as much praise from our natural opponents as the report has done.

Probably the most satisfying aspect so far is that it has been given a positive welcome both by the Government and by local authority associations. Both sides seem prepared to try to work positively to come at least some of the way towards the other's point of view. The tone of the Government's response is optimistic and the briefing paper from the local authority associations for today's debate carries a different tone from much of the evidence we heard earlier this year. That is good and augurs well for the future. Indeed, the Government go so far as to suggest that their responses form a package of proposals which can open a new chapter in their relations with local government.

I am glad that the Government were able to accept a good many of our recommendations in principle, if not to the letter. It is rather like a Minister at the Committee stage of a Bill who accepts an amendment in principle but does not like the drafting. We now look forward to the Government's implementation of the good will which they have shown in accepting a great deal of what we suggested.

However, we should not forget why we are where we are. The main reason is the abuse of the old conventions which existed between national and local government--abuse by only a minority of councils. That gradually

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resulted in the introduction of measures to ensure that local authorities kept within their budgets. If those are to be relaxed, there must be a positive indication that local authorities will co-operate and put behind them some of the blemishes they attracted in the past.

I was interested in what my noble friend Lord Beloff had to say about the poll tax because I happen to agree with him. In principle, it was probably the answer. I still believe that had my party in another place been prepared to accept an amendment around two-thirds of the way through the discussions in Committee which would have taken into account ability to pay, that may well have gone through. I agree with my noble friend Lady Carnegy of Lour that it might have made a considerable change to the whole of local government as we know it today.

Certainly the Government's responses are positive on many of the recommendations. For example, the recommendation for existing guidelines to be expanded is virtually met; the power of local competence is accepted in spirit; experimentation with new forms of internal management and alternative electoral systems is accepted; and the Government agree that they will examine our recommendation that Whitehall arrangements be changed. It is only when we come to the financial aspects that the Government do not go along with much of what we want. I suppose one must admit that it is relatively easy to accept proposals from the Opposition Benches; it is relatively easy to accept them from our Back Benches, but when one has to implement them and make them work it is a totally different matter.

The noble Lord, Lord Williams, gave us one of his interesting addresses this afternoon. But I noticed that he carefully avoided the question of capping. He did not deal with that in any serious way at all. I am not surprised. During our deliberations we received, among other documents, a paper from the Scottish Local Authorities Management Centre at the University of Strathclyde. It was interesting in as much as it was as critical of the Labour Party as it was of the Conservative Party. When we are dealing with the question of capping it is interesting to read what the document says at page 9:

    "It is alarming that the Labour Party in its published consultation proposals seems to accord the same priority to expenditure control as the present government in order for Ministers to discharge their macro economic responsibilities a 'reserve power' of capping will be retained".

The report goes on to be rather scathing about that position. I merely wanted to point out that those who think that a change of government will lead to a loosening of the reins in relation to expenditure are barking up the wrong tree. It seems to me from everything said by Mr. Gordon Brown and other Front Bench spokesmen that a future Labour Government would treat local government in regard to expenditure in not too different a fashion from the way it has been treated over the past 17 years. We must not forget that local government brought most of those measures upon itself. No government could sit back and allow local government to defy government policy in relation to local government expenditure and not do something about it. That is precisely why the present Government

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took the necessary steps and I believe that those steps would be enforced just as rigidly by a new Labour Government, if we ever have one.

The evidence we received was not particularly inspiring. However, I would not criticise those who came to give us evidence. I say it was not particularly inspiring because it said very little new. It did not feed us with any number of ideas that we could turn over and think about. It was very much along the old lines: much criticism of the present system and much criticism of the present Government, but no exciting alternatives. However, I do not criticise those people. I merely state fact. I do perhaps criticise ourselves as a Select Committee. Perhaps we were not exciting enough; perhaps we were not radical enough; perhaps we were not able to give the intellectual spark to produce a report to which both government and local authorities could immediately have responded, "Here they are. They have hit the nail on the head. This is exactly what is needed". I feel sorry that we did not rise to the challenge placed before us.

I have already indicated how highly we all thought of our chairman. However, it does not really matter how good a chairman is. If the ideas are not forthcoming from the members, there is not a great deal he can do about it. I hope that, if a future ad hoc committee is set up in five years' time, perhaps our successors will be able to give that intellectual spark and to create something which can be universally accepted. I strongly support the chairman in the Motion he has put before the House.

5.40 p.m.

Baroness David: My Lords, I am sorry that the noble Lord, Lord Gray of Contin, is so suspicious about the attitude of the Opposition. I should have thought that, as a member of the committee, he would have been rather pleased to have had a generous and, I think, sensible approach from this side. I am also rather surprised that he does not seem more enthusiastic about his own committee's report when everyone else has praised it; and I am going to do the same.

I should like to thank the chairman, the noble Lord, Lord Hunt of Tanworth, most warmly for a very good and clear report which I have thoroughly enjoyed reading. The report has come at a very opportune moment, when the local government associations are to amalgamate and when central government seem to be a little more flexible and willing to listen than they were. As both the report and the White Paper recognise, this will offer an important opportunity to take advantage of the new climate and to re-fashion a positive working relationship between central and local government. I also congratulate the noble Lord on achieving a unanimous report. That was a great achievement when one considers the membership of the committee. I believe that a unanimous report will have much more effect in Parliament.

I should perhaps declare my interest. I have been a councillor in Cambridgeshire and I am presently a vice-president of the ACC and the AMA. Last week

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I was at the last ACC conference in Eastbourne, which was presided over by Sir Frank Layfield, who told me how much he appreciated the report.

It begins by stressing the importance of deciding whether local government was,

    "primarily a means of administering a national service at a local level or a means by which local people democratically make their own choices about local services".
The committee came down strongly for the latter. Local government is democratic, as quangos and appointed bodies are not. Layfield is quoted:

    "Local government has a value in its own right in promoting democracy; it acts as a counterweight to the uniformity inherent in government decisions".
Democratic accountability has not been respected by this Government.

What is disappointing is that the Government are not willing to sign the Council of Europe's charter of self-government, as many others have said, which would have been, as the report says, an obvious first step in signalling the value of local government in the UK. This refusal seems illogical, since the DoE accepts that the UK system of local government powers conforms to the charter. The noble Lord, Lord Hunt, himself said that. One can only suspect that there are party political reasons for this refusal. The Labour Party has said that it will sign up to the charter. But the White Paper does state that the Government intend to agree, with the new local government associations and the Welsh AGA, a statement covering the same ground as the charter and setting out the role and status of local government in England and Wales, and that this would be included in any expanded guidelines. I suppose we should be grateful for that, but it does seem to be rather odd logic.

The guidelines are to be developed into a more formal concordat. That is satisfactory. What strikes me on reading the guidelines is that they are admirable and, if followed, would be a real help to local government. But has there really been informal discussion with the associations at the early stages of developing policy affecting the role, functions, organisation, financing and operating of local government and its services? I suspect that the consultation promised has been minimal and that the period in which to respond to the proposals has been much too short.

The recommendation for there to be a permanent parliamentary committee to maintain an overview of central/local government relations is something about which I confess I have some doubts. The White Paper rejects it, drawing attention to the existing departmental committees in the Commons which, interestingly, it says the Government,

    "intends should in future have more opportunities to scrutinise legislative proposals, including those affecting local government".
I hope that really happens. The more early scrutiny, the better. If Ministers could be questioned after even a Second Reading debate on a new Bill, and would then pay attention to what emerged from that session, a great deal of parliamentary time could be saved and a better Bill produced. A similar committee to the one chaired

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by the noble Lord, Lord Hunt, should be set up in the course of the next three or four years to monitor developments.

A very legitimate concern of the committee is the lack of interest in local elections shown by the low percentage of those voting. The White Paper does propose that the LGA and the Welsh LGA should join government in analysing current difficulties, with public participation. Power to experiment with different internal managements and different voting structures and patterns should be given. The Government have given an undertaking to legislate in this area.

If local government is allowed to innovate, to experiment, to pay a lot of attention to its community role, and if the wide general power which would help to support that community role is conceded by the Government, I believe that it will encourage people to be more interested in what is going on locally. With very reduced powers, it is not altogether surprising that there has been, I am afraid, a greater lack of interest in local elections.

Local government has been very innovative in the past. Chief officers have had ideas--and good ideas--and I was very glad to hear what the noble Lord, Lord Beloff, said about the good quality of the officers who gave evidence. I speak from my own experience of Cambridgeshire where our most famous chief education officer, Henry Morris, invented the village college, providing education, services and care to people of all ages in its area. From the village college grew the community school and the community college. Although the idea of local management of schools--LMS--had been talked of, Cambridgeshire was the first to put it into practice. That was in my time in the late 1970s. We were also among the first councils to have truly representative governing bodies, adding parents and teachers and independent people to the councillors. So much can be done with good will.

I want to say a word about secondment. The report recommended an expansion of existing programmes. The Government appear to agree and congratulate themselves on what has already been done. I would suggest that 70 exchanges in three years was not very much when you consider the number of senior officers there are in all our councils. I do not know whether the fact that the social services have a positive and creative relationship with the Department of Health was because of secondments or on some personal basis. But Mr. John Ransford, secretary of the Association of Directors of Social Services, said that positive relationships were enjoyed with both Ministers and officials.

There had been an enormous amount of round table work on the Children Act and as one who took an active part when that Bill was going through this House, that certainly showed in the legislation. It was very enjoyable working on that Bill. The noble and learned Lord, the Lord Chancellor, was perhaps a benign influence on all of us, but everyone was concerned to get the best Bill possible.

Contrast that with the atmosphere when education Bills were going through the House. The Society of Education Officers, in evidence to the committee, said

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that relations were very poor and that there was a gap in terms of policy making and a lack of real partnership on major educational issues. Surely, if there had been more secondments, relations and understanding would have been improved. I was sorry to hear what the noble Lord, Lord Beloff, said about civil servants, if they are as bad as he made out. I believe that there probably has been a deterioration in the quality of civil servants, but I had hoped that the secondments would work and that there would be good enough people to come to local government and to learn how it works. However, I believe that relations are, as far as the education officers are concerned, a bit better than they were.

It is typical that it is only in the section on finance that the Government disagree profoundly with the committee. That is very disappointing to me. It takes away from the value of the Government's response, which started by being pretty emollient and good. They seemed to agree with a lot that the committee recommended. But to turn down the recommendations on capping, SSAs, CCTs and the non-domestic rates seems to me to be profoundly disappointing. The trust that it is hoped to rebuild will not be encouraged by that.

I must end by saying that as a true believer in local government and as one who regrets very much the diminished role and loss of powers it has suffered in the past 16 years, I am immensely grateful for this report and its hopeful title, Rebuilding Trust. It will take time to rebuild that trust, but a start has been made and I hope that it heralds a happier time ahead for the relationship between central and local government.

I am pleased that many of the recommendations in the report are already Labour Party policy. I hope that the noble Lord, Lord Gray of Contin, will enjoy that. I recommend to those noble Lords who are interested in this subject that they read the Labour Party document Recovering Democracy, Rebuilding Communities. I believe that they might find that quite informative and helpful.

5.53 p.m.

Lord Sewel: My Lords, perhaps I may add my congratulations to those of other noble Lords to the noble Lord, Lord Hunt of Tanworth, and his committee for providing us with the report that forms the basis of today's debate. The report has many virtues--it is concise, it is clear and, at the risk of being misunderstood, it is politically correct.

I do not know whether in the course of the debate the noble Lord, Lord Gray of Contin, and the noble Baroness, Lady Carnegy of Lour, have been laying the ground for the Conservative Party's first manifesto for a Scottish parliament. If so, it would appear to have one policy--bring back the poll tax. I have to tell them that we shall be very happy to fight the election on that basis.

I was a member of my own council in Aberdeen from 1974 to 1984, and between 1982 and 1984 I served as president of the Convention of Scottish Local Authorities. Those were not happy days for local government, especially in Scotland where, to many of us, it seemed that we were being used almost continually

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as guinea pigs for policies and legislation. Once they had failed and been seen to fail in Scotland, they were then applied to England.

It was during those years that central government moved from influencing to actually controlling the level of local government spending. It was also the time when central government both exercised more detailed control over local government and also moved areas of activity outwith local government's sphere of influence. By the time I left local government it had lost control over local taxation and it had seen its powers further reduced.

But it had all started so differently. The Royal Commission report under the chairmanship of the late Lord Wheatley led to the fundamental change in the structure of local government brought about through the Local Government (Scotland) Act 1973. The Wheatley report appeared to promise a new age for local government and perhaps for the first time argued the case for local government from first principles. Wheatley was about a system of local government in which local councils were strong enough and had sufficient capacity and capability to tackle in a co-ordinated and comprehensive way the problems confronting their communities. What Wheatley was attempting to establish was a strong local government system within which local authorities would be able to provide local solutions to local problems against a set of locally defined priorities. There was to be a decisive shift away from the idea of local administration to that of local government, or what is now called local governance. Local councils, while remaining creatures of statute, were to be something much more than the passive administrative agents of central government.

Wheatley wrote about the need even then to bring about a fundamental shift in the balance of power from central to local government. Those were brave days, but things turned out, sadly, rather differently. Now, some 30 years on, the Wheatley Report is still worth reading. It is interesting and fascinating how so many of the same issues and concerns that appear in the Wheatley Report resurface in our own Select Committee's report and in the debate today.

If we are to discuss the relationship between central and local government, we have to ask some pretty fundamental questions about the nature of our political system and the distribution of power within it. Essentially, the case for a strong system of local government rests not so much on issues of service delivery, important as they are, but on local government's contribution as a key building block in the structure of a democratic, pluralist political system. Pluralism is a difficult concept to define, yet in essence it is about the diffusion of power within the political system and especially to those intermediate institutions in society that stand between the individual and the state. A society that enjoys a richness of strong, vigorous and autonomous intermediate institutions enjoys the best defence against both totalitarianism and authoritarianism. Indeed--and this is one of the ironies of the past 20 years--the party opposite has historically been sensitive to such propositions and has traditionally been suspicious of centralised power. Of course, from time to time there is a need for reform, but over the past

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20 years or so those institutions that act as a check on the power of the state have not so much been reformed, they have been enfeebled.

The report draws our attention to the idea of local governance as a possible way forward for local government. I believe that such an approach has a lot to offer. It is a model which sees local government, because of its democratic authority and legitimacy, acting as the local community leader. It provides the means by which local problems and challenges are not only identified but are challenged by bringing together the local interests and agencies drawn from the public, private and voluntary sectors. They are all given focus and direction. But one of the major costs of the rise of the quango and of the enfeeblement of local government has been fragmentation at the local level: the mushrooming of different, largely unaccountable organisations with often differing and conflicting agendas. In the future I believe that local government is going to be required to play a local strategic leadership role, bringing together and helping to focus the work of all those organisations that both affect and have a stake in the future of their communities. If not, I do not see how such diverse problems as urban regeneration on the one hand and rural depopulation on the other can be tackled effectively.

However, for such an approach to succeed, it would be necessary for central government to rethink its relationship with local government. I do not think that the conventional partnership model has ever been wholly adequate or accurate to describe the relationship between local and central government. There have always been too many contested areas. There have always been too many areas where objectives and outcomes have not been shared. In recent years the response of central government to those tensions has been brutal in its clarity. Central government dominates and says, "We'll abolish you if you disagree".

What I am asking for and what I think is necessary if we are to make progress towards the idea of local governance is a move away from central dominance, but we should not replace that with a system of city states. We need a system in which central government's relationship with local government is marked by the toleration of difference. That is essential. It must be recognised that in a diverse society such as ours, with its richness of different local communities, those local communities will be tackling different problems and challenges. In such circumstances, the emergence of local priorities and local policy outcomes, which may differ from those of central government, should not be seen as a threat, but as the mark of a flourishing, plural, democratic society.

Of course, the toleration of difference will have to be exercised within boundaries and there are limits, but those limits should not be as closely drawn as they are today. I do not think that we would do well by trying to be too precise in defining the relationship between central and local government through statute. I am a strong supporter of the "I know what it is when I see it" school and do not place too much faith in the usefulness of abstract definitions.

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One of the key proposals in the report which I found attractive was that relating to the establishment of a parliamentary committee to oversee relations between central and local government. It is a pity that the Government have been less than lukewarm in their White Paper response to that proposal. Such a committee could undoubtedly exercise a much wider breadth of view than a more narrowly focused and perhaps more centrally oriented departmental Select Committee. One of the useful functions that could be exercised by a permanent parliamentary committee such as was advocated in the report would be to act as something of a whistle-blower and to draw attention to where either central or local government was pushing too hard at the boundaries, where local government was going beyond the limits of tolerable difference and where central government was seeking to impose too great a degree of central control and direction.

We have had the benefit of an excellent report which has produced an equally excellent debate. I hope that the Government will listen and reflect rather than pursue further a narrow, constraining and ultimately distorting agenda. In their White Paper the Government have started what should be a more positive process. For my part, I remain an advocate of strong local government operating within a local governance framework because I am convinced that not only will that provide the means by which local problems can best be confronted in an integrated, effective and comprehensive way, but because I believe that by going down that road we also strengthen and revitalise our democratic, pluralist political system--and that is a worthy and necessary objective.

6.4 p.m.

Lord Tope: My Lords, like others I start by paying a warm tribute to the noble Lord, Lord Hunt of Tanworth. His Select Committee was the first of your Lordships' Select Committees on which I have had the privilege to serve and, as one who frequently has to chair committees in other places, I found it an extremely valuable learning experience to see the gentle but firm skill with which the noble Lord steered us. To the surprise of many of us, we managed to produce a unanimous report without too much difficulty. That is a considerable tribute to the noble Lord.

Those who have managed to reach Appendix 7 of the report will note that our interests are declared there. I have some considerable local government interests, but absolutely none in central government so my place on the two sides is clear.

We have had some discussion today about when local government's golden age might have been. Some noble Lords have said that it was in the 1960s. The noble Lord, Lord Williams of Elvel, suggested that it was some time before the Liberal Government of 1906. The noble Lord, Lord Beloff, told us that it was in the 17th century--except that local councillors were not elected then. I must admit that that has its attractions at times. However, whenever the golden age of local government occurred, it certainly has not been in the 22 years in which I have served in local government.

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Indeed, no sooner was I first elected than the then Secretary of State told me that the party was over--before I had even got there.

I am clearly on one side of this debate--and that is because I have a strong belief not only in local government, but in local democracy. There is a difference. As I am so strongly on one side of the debate and because all my experience comes from one side, I am also sometimes one of local government's strongest critics. That is why I wanted to start my remarks by saying that I recognise, as do many in local government, that local government itself or at least some parts of it--that is an important qualification--has played a part in the deterioration of the relationship between central and local government. For too long we have paid the price of the damage that was done by a minority of local authorities in the 1980s. I acknowledge that. Indeed, that fact was acknowledged in the first evidence that was given to the committee by local government politicians when Sir Jeremy Beecham acknowledged that it had been a mistake in the 1980s for some local authorities to believe that it was essential for them to have a policy on Nicaragua. That is right, but those days are past, and very few, if any, local authorities now take that view.

The report is important because it recognises, first, that there has been a deterioration in the relationship between central and local government and, secondly and most importantly, that there are things which must and can be done about it. As someone from local government, I have been pleased by the tone of this debate because without exception every speaker has led me to wonder whether there is a problem. When listening to the debate one would think that the importance and the strength of local government and local democracy were already fully recognised. I must agree with the noble Lord, Lord Gray of Contin--I suspect that this will surprise him because we have not always taken the same view of the evidence that we have heard--that the evidence that the committee received was long on the problems but rather short on the solutions. I accept that as a member of local authority associations I have some responsibility for that.

However, as I listened to the evidence I became increasingly convinced that the fundamental problem is the low esteem in which local government is held in this country. At the root of so many of the issues that we considered was not only the low esteem in which local government is held in general, but sometimes the low esteem in which local government holds itself. I was struck today when a noble Lord referred to local government as the training school for Parliament and for national government. Perhaps that is a statement of fact, because one of the things that I discovered during our deliberations was that 280 of our current Members of Parliament had at some time been local councillors. I suggest that one of the matters that is wrong with the relationship is that too many good quality local councillors see their only progression as being to Parliament.

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One of the strengths of the report is the unanimity of its recommendations. The most important recommendation which goes to the heart of the issue is that there should be a concordat between central and local government. That goes substantially further than the existing guidelines, which were themselves considerably watered down from what was initially proposed to central government. I should like to quote briefly that part of the report which specifies the nature of the concordat. I believe that in principle it goes significantly further than simply beefed-up guidelines, however desirable they may be. The report suggested that the concordat should cover the constitutional place of local government, the role of local government and the financial base for local government. It should place a requirement on central government to consult local government about any changes to that relationship. It should also include a commitment by central government to consult local government on policy proposals and legislation affecting matters for which local government has a responsibility, and--this is important--there should be a commitment by local government to respond within a certain period of time. I believe that that concordat goes to the heart of what is needed to address the problems of the relationship and the low esteem in which local government is now held in this country.

The noble Lord, Lord Williams of Elvel, in a sense provided a trailer for the noble Baroness, Lady Farrington, who follows me in this debate, when he spoke about the Council of Europe Charter of Local Self-Government. I will not say very much about it because I know that the noble Baroness is an expert in such matters. However, one of the important features of that charter is symbolic rather than real. Nothing would change the day after it was signed. However, it would be a recognition by central government, of whichever party, of the importance of local government. Noble Lords have suggested today, and others have suggested elsewhere, that the Government's disinclination to sign the charter is primarily because it begins with the word "European" and that may cause difficulties with some members of their party. That may have been one of the considerations. I suspect that when the Minister replies to the debate he will not reveal that to us. Having read the charter, I wonder whether the real problem is that someone else in local government has also read it and realised that it is at least questionable whether the United Kingdom qualifies under the terms of the charter as having local self-government. I will not take time in pursuing what I believe to be an important point.

I turn to the Government's White Paper response. I am pleased that the local authority associations have given a qualified welcome to it. I believe that that is a right and positive response. We need to build upon whatever is there for us to build upon. Others have said that they are disappointed with the response. To be disappointed one must have expectations in the first place. The only expectation I had was that the Government might agree to sign the charter on local self-government because they would not accept anything else in the report. My expectation was that the Government would provide warm words on the attitudinal points--those which dealt

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more generally with the relationship--and there would be a specific "no" on the finance-related recommendations. I was not disappointed. My expectations were met in full, except for the European charter. We have received warm words from the Government about the relationship. I hope and want to believe that they are meant. I strongly support the intentions of the new Local Government Association to try to build upon those warm words and develop that relationship. But warm words must be backed by real actions. Words alone are not enough. At the same time as we have warm words on the White Paper we are faced with an Education Bill that results in further powers being taken away from local authorities. We also have the Secretary of State for Health attending a conference on social services and announcing that there is to be a White Paper which proposes to take away social services provision from local government. In parenthesis, it was remarkable that in taking the evidence the relationship between social services directors and the Department of Health appeared to be markedly better than anywhere else within the central/local government relationship. Therefore, even where it is good it is now to be damaged. These are issues that need to be raised and discussed, not announced at a conference and put into a White Paper in this way. It must be developed in the way that the suggested concordat will do.

If we are to rebuild trust, as the title of the report proposes, central government must learn to trust local government, and local government must feel that it is trusted. Nowhere is that more important than in the realms of finance. For that reason, although I am not surprised, I am saddened that the Government still do not recognise that. It is the fundamental right of a democratically elected local council to determine the needs of its community, the priorities to meet those needs, the level of tax required to pay for them, to balance them, and to be properly and democratically accountable locally for the decisions that it takes. If local government is to be trusted that is the real test of that trust. Until we get back to that stage it will not happen. The recommendations of the committee which other noble Lords have addressed well--the noble Lord, Lord Hunt, in his intervention, put the case extremely well on capping--go a long way to meeting that. I am sorry that they drew back just a little from positively recommending local income tax. I believe that that would go even further towards creating the kind of direct link that many noble Lords in this debate said was needed.

I touch briefly on the CCT arguments. I believe that this is also a key measure of trust between central and local government. I have never been in favour of compulsion. I do not like it. But I will concede that it is probable that in the first instance there would not have been so much progress--I use that word carefully--in competitive tendering had there not been an element of compulsion. However, the Government's proposals in that respect were not driven primarily by a desire to improve competition--something which I believe that most, though not all, local authorities now embrace--but by a desire to take services away from local government. All of the rules and regulations surrounding

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CCT were designed, not for a level playing field on which local authorities could genuinely test whether their service provision was competitive, but to ensure that wherever possible those services went to the private sector. I believe that it is a tribute to local authorities that so many of them have been able to retain their service provision and to do so competitively.

I say a brief word about the parliamentary committee. The noble Lord, Lord Hunt, in his intervention made reference to that committee in the context of capping. The suggestion was that the parliamentary committee should oversee the relationship between central and local government. It may be just a drafting error, although I suspect that it is more significant, that in the summary of the White Paper the Government refer to it as a parliamentary committee to oversee local government matters. To oversee local government matters is substantially different from overseeing a relationship between central and local government. If the Minister can reassure me that that is only a drafting error and it is not what the Government mean, I will listen with care.

I turn finally to community leadership. The Select Committee has made some useful recommendations on the development of the role of local authorities as community leaders. I believe that to be a very important future role for local government. It is, and is likely to remain, the only local democratically elected body with proper accountability to its community and the ability to take an overview of the interests and needs of that community.

Reference has been made to the problem of low turn out; of voting on national issues--there is no time for me now to explore that. I have to say that when I avidly read any report I can about what is happening in local elections I find that they are invariably written by national political correspondents and speak only of their implications for national government. Rarely do they say much about local government.

We can say a great deal about how to improve the ability of people to go to vote in terms of a different day for elections, different electoral arrangements and so forth. Noble Lords might not be surprised to hear me say that by far the best way to increase turn out and accountability is to introduce proportional representation. I have always believed that local government is well suited to a system of proportional representation.

The committee recommended that local authorities should have an opportunity to experiment, including in relation to electoral arrangements. My noble friend Lady Hamwee from the London Borough of Richmond-upon-Thames, and I, as leader of the London Borough of Sutton, feel a certain discomfort over that. My party has 84 per cent. of the seats on my council with about 53 per cent. of the votes. In the London Borough of Richmond-upon-Thames it is slightly less than that. We do not defend that, but I am not sure that we wish to experiment with proportional representation until and unless the London Boroughs of Newham and Haringey agree to join in the experiment. Nevertheless, it is an important point which would do much to increase interest in local democracy.

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There is much talk about experimenting as regards the right and opportunity to be different. That is important. The right to experiment is important. I am sad that the Government are a little lukewarm about it, for all their fine words, which I support, about internal management. The right to experiment is one thing: for those experiments to take place we need also the climate to experiment. If local authorities are to be bold enough to undertake experiments--we must recognise that by their nature some experiments must fail, and we may learn more from a failed experiment rather than from one which is an assured success and therefore not truly an experiment--they must know that if those experiments fail, or are perceived to fail, they will not be descended upon from a great height by Ministers, or big wigs from their own party; they are not going to be pilloried in the media. In other words, we need to have a climate in which well thought out experimentation--not reckless experimentation--is a good thing when encouraged positively. It is the kind of climate about which my friend Lady Hamwee was talking in the free communes in the Scandinavian countries.

To conclude, the report is entitled Rebuilding Trust. We need to return to that. If we are to rebuild trust, central government must trust local government and local government must reflect that trust by behaving responsibly and by playing a positive part in the central and local government partnership in the way that the concordat suggested in the report envisages.

The health of our democracy depends upon the strength of its roots, and its roots lie in local democracy. The report makes some major proposals towards achieving that. I was privileged to have served on that committee. I support the report most strongly.

6.24 p.m.

Baroness Farrington of Ribbleton: My Lords, I, too, compliment and thank the noble Lord, Lord Hunt of Tanworth, and all the members of his committee. It is an excellent report. At the end of the debate, it is even more remarkable to note that the report was agreed unanimously.

I wish to declare an interest as a serving county councillor and a member of the Association of County Councils, which is due to be replaced next April by the new Local Government Association. That is a welcome development for local government.

This has been a good and important debate. The issue is crucial because we need to live in a healthy democracy. That must include democratic subsidiarity and strong local government with a capacity to respond to local circumstances. My noble friend Lord Prys-Davies stressed the need for an understanding of the local community initiative and diverse issues such as economic development initiatives--pilot schemes and innovation. They all enrich the quality of life of the citizens of the UK with the provision of specific services through local government.

I shall refer to three issues raised in the report and during the debate. The first is the European charter; the second is the need for partnership; and the third is the vexed issue of finance, especially SSAs. The report

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rightly recommends that the UK should adopt the Council of Europe's charter for local self-government. I have a special interest in the charter because, as a member of the Standing Conference of Local and Regional Authorities of the Council of Europe, I was present and voted for the adoption of the charter. We sought support and understanding from colleagues in other countries as the UK Government insisted on watering down the proposals in the charter and, having achieved that, sadly refused to sign it.

DoE witnesses to the committee confirmed that the UK should have no problem in signing the charter. Despite that, the Government still refuse to do so. Presumably they will also oppose the acceptance of the charter within the revision of the treaty as requested by the Committee of the Regions. I declare an interest as a member of the Committee of the Regions. With the noble Lord, Lord Tope, and other Members of your Lordships' House, our CoR membership has convinced us of the need for the treaty to be revised within the EU in line with the charter which applies to the Council of Europe to ensure that European citizens both in the wider Council of Europe Europe and, in this case, in the EU have a greater say through genuine democratic subsidiarity which should begin in our cities, towns and rural communities where decisions can best be made at local level through full, universal, democratic choice.

Many people within the UK have for a long time been critical of Brussels. Perhaps they were unaware of the degree of centralisation of their own country until services affecting them and their families showed them the danger of the centralised state in which they live. The UK would be in an even stronger position in the process of working to encourage the development and strengthening of pluralist democratic societies, structure and stability in the countries of central and eastern Europe were we to be signatories to the charter. It is a sad irony that on many occasions the pressure on countries seeking membership of the Council of Europe to sign the charter has been applied even by representatives of our Government, notwithstanding their refusal to sign the charter.

During the debate there has been welcome stress on the report's recommendations with regard to the value of partnership. It is impossible to comment upon the wide range of issues raised in that area. However, the need to unlock the potential at local level, to respond to many of our economic, social and environmental problems, has been stressed by the report and by contributions today. We hope that the Government's agreement to review the scope of Section 137 funding will enable even greater initiative at local level. My noble friend Lord Borrie referred to the sort of development that has taken place in my own county of Lancashire through Lancashire Enterprises. There is a long list of authorities, Conservative, Labour and Liberal Democrat controlled, which have pioneered the way in that field of economic development.

I wish to refer to the vexed issue of local government finance. The report recommends the return of the non-domestic rate to local government and a reversal to the use of capping as a reserve power only where an authority has clearly set an unreasonable budget.

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There has been much dishonesty in the relationship between central and local government in many fields but nowhere greater than in the field of local government finance. I agree with the noble Baroness, Lady Platt of Writtle, who welcomed the shift towards council tax for the raising of revenue at local level. But my doubts, fears and concerns are strengthened by bitter experience over my many years, since 1973, in local government. It will be said by many Members of Parliament, and in the presence of many Members of Parliament both here and, more importantly, in the other place, that the result of government policy will be an inevitable increase in council tax bills with no improvement in service, an approximate increase in taxation of 5 per cent. being needed to raise every 1 per cent. of additional expenditure and to make up the shortfall. When that happens, sadly, there are those who lack political integrity who will return to their constituencies and make a party political point that those parties in government at local level are scurrilously raising taxation without any necessity to do so. That is the tragedy.

The second tragedy of local government finance during my time in local government since 1973 has been the development of the standard spending assessment. It is necessary for any government to develop and establish a system for the distribution of grant from central government funds to local government. SSAs are inevitably crude. Perhaps I may give a few examples to demonstrate that crudity. SSAs are broken into components by service area. The SSA for the fire service changed dramatically during the time the Minister was at the Home Office because of a change in the calculation of the formula concerning the Isle of Wight and whether an island authority could reasonably be expected to call on fire brigades from adjacent fire authorities at the time of an emergency. It is clearly a nonsense to suggest that a fire engine can drive across the Solent to tackle a fire. But the vagaries of changing the system made quite a marked difference because the calculation then became based on length of coastline. That took funds away from many fire authorities and gave them to another.

I understand that London, which is not an area on which I am an expert, has an SSA system which calculates degrees of social need, financial poverty and hardship. I understand that the system assumes that something in the order of 12 per cent. of all those living in the City of Westminster are considered to be in the category of social deprivation. There is also an assessment about the need to have regard to the number of visitors which an authority has. The result of those two calculations leads to a system of SSAs which places approximately 12 per cent. of visitors staying in the Savoy or the Ritz in the band of social poverty and need. It is unlikely that the City of Westminster is putting people who are homeless in the Ritz or the Savoy.

I make those points as serious points because any system or formula is bound to have a degree of crudity when it is worked out in Whitehall. I do not sneer at Ministers unless I believe that they are deliberately manipulating the system. But it is wrong, tragic and

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bad--bad for government, bad for local people and bad for local democracy--as the report says, for it to become a rigid measure of controlling the amount which is to be spent at local level.

It is important to protect and improve minimum standards for people. Noble Lords have referred to that. It is important that we recognise that government will always have a role to play. But when government cynically increase teachers' pay with end loading and when they say cynically that the grant will not increase but that the authority's ability to spend will increase and when those same government Ministers claim that that is an example of profligacy in local government, then we see the system being undermined.

It is critically important that we look forward. It is critically important that we do not engage in, and embark upon, a further war of attrition. I lived through the war of attrition in the early 1980s when I would say that it was six of one and half a dozen of the other. There were bad authorities. But there were government Ministers who demanded of local government that there should be no cuts in services, no rate increases and no rent increases.

The noble Lord, Lord Beloff, referred to the importance of the calibre of people who are local government officers. Personally, I have found the same high calibre among the civil servants with whom it has been my pleasure to work from local government. There is one deep difference. It is that officers at local level have to stand in public meetings night after night and answer detailed questions from the public as to what they are doing and what their political government is doing. They must face that. Therefore, I do not think that it is a difference of quality; it is the importance of changing the service.

The charter needs to be signed. It is important for us to go ahead. CCT is important and has achieved savings. But from these Benches we would argue with the noble Baronesses, Lady Platt of Writtle and Lady Carnegy of Lour, that it would have been better for the people working in those services had they as individuals been protected by a national minimum wage so that the savings were not made by cutting the pay levels of the poorest in the community.

From these Benches, I repeat the commitment made by my noble friend Lord Williams of Elvel. We believe that this country must sign the charter. There is a need for a clear statement of the powers and duties of local government. We believe in a pluralist local system, as described so well by my noble friend Lord Sewel. We believe in a reduction in the dependence on central government grants; decisions made should be more transparent. We look forward to rebuilding trust; we believe that the report paves the way to achieving that worthy and important objective.

6.40 p.m.

The Minister of State, Department of the Environment (Earl Ferrers): My Lords, we have had an interesting debate and the House will be grateful to the noble Lord, Lord Hunt of Tanworth, for having introduced today's debate and for giving your Lordships

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the opportunity to discuss one of the most important factors of a democracy--the relationship between central and local government. Noble Lords have also expressed appreciation for the masterly way in which I understand the noble Lord, Lord Hunt of Tanworth, chaired the Select Committee. Indeed, a substantial tribute has been paid by those speakers this afternoon who served on the committee.

The committee deliberated for some nine months and produced a valuable report in a short time on a system of local government which has developed over many decades.

The Government welcome the Select Committee's examination of this subject and see the report as an important contribution to the debate about the nature of local governance in Great Britain. In turn, I was pleased that my noble friend Lord Gray of Contin was glad that the Government have gone as far as they have.

The development of good relations between central and local government is something which has to continue over time. The Select Committee's report, and the Government's response to it, should not be regarded as the end of a story--or, indeed, the beginning of one. It is merely a step on the road--a most important one--in the continuing development of what is, after all, a living constitution.

Local democracy is an essential element in the constitution of any democratic state. It is one of the hallmarks of a free society--along with the respect for human rights, the rule of law and a freely elected government. But just as there is no one universal model of a free society, there is also no one blueprint for local democracy.

Here in the United Kingdom, our local democracy is the product of our own traditions and of our unique constitutional experience. We have a constitution which continues to develop; therein lies its strength.

Today our local democracy provides democratically elected local authorities which provide the leadership of local communities; which have important roles in overseeing the implementation of various regulations; and which have a major part to play in providing, or arranging, different services to the locality.

Local government is also involved in carrying out the national priorities for the economy and in ensuring that certain minimum national standards exist--such as, for example, in education. I agree with the noble Baroness, Lady "T. Dan" Hamwee, as she likes to call herself, that it is important to encourage people--and the right people--to go into local government. Of course, that does mean that a certain element of pro bono publico is needed behind those people.

The Government also share the committee's view that the traditional relationships between central and local government broke down in the 1980s. We agree that, from that point, there needed to be a rebuilding of trust. Indeed, I would echo those speakers who have already said that it is most appropriate for the report to be entitled Rebuilding Trust. It is important that that is achieved.

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Over a long period of time, relations between central and local government were always conducted informally. That continued during the period after the war when local authorities began to do an increasingly large number of things and when they began to spend an increasingly large amount of money. But there came a point at which central government were bound to acknowledge that the activities of local government were such that, when taken together, they had a real effect upon what central government could decide and what it could--and should--do at the centre. I suppose that that probably reached its zenith when a Labour Secretary of State, Mr. Tony Crosland, said, in a state of frustration on a famous occasion, "The party's over".

The noble Lord, Lord Williams, said that since 1979 there has been a deliberate and sustained assault on local government. I know that the noble Lord likes to use fairly graphic expressions from time to time but I believe that he went too far in that respect. Of course there has not been an assault on local government; indeed, we believe it to be an extremely important part of the constitution.

It is common knowledge that, from 1979, the Government took a very firm step to manage the economy and to ensure that people were given value for money in what local government did. It was pretty unpopular with some, but the economy today demonstrates that that was the right thing to have done.

Then, some in local government began to see themselves as an alternative voice on how the country as a whole should be run. Some tried to break the Government's plans to cut spending by pushing up their own local spending in the knowledge that many of their voters would be protected from increased local tax bills by the benefits system; that many local businesses do not have the vote and, therefore, could do little about their increased rates; and that many people who benefited from increased local authority spending did not actually pay any rates. That, of course, was the genesis of the poll tax, which the Government prefer to call the community charge. However, as my noble friend Lady Carnegy said, had that continued in operation, that may well have resulted in local authorities having more power. Other people tried to use their local platform to influence matters which properly belonged to central government.

My noble friend Lady Platt of Writtle pointed out that the committee said that there will always be tensions between central and local government and that we must try to lessen them. That is absolutely right. Clearly no government, whether this Government or one of another political complexion--if one can extend one's imagination to that enormous extent--can afford to find themselves in a position where they cannot decide major issues about the national economy. After all, the Government provide 50 per cent. of all that local government spends. If one adds to that the non-domestic business rates of 25 per cent., what is actually produced in the locality from the council tax is about 21 per cent. in broad terms.

The noble Lord, Lord Tope, wanted local government to be free to do what it wants and then to be accountable. However, I am sure that the noble Lord will realise that

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when you look at such figures obviously a government of any persuasion have a great interest in the way in which the money from taxpayers is spent. The government of the day have to be able to decide on the overall level of public expenditure, both central and local, which the economy can afford. They have to be in a position to decide their priorities for central government spending.

If local government collectively seeks to raise significantly the total amount which local government spends, then central government is bound to be forced to do one of two things: either they have to abandon their overall strategy for spending and taxation, or reduce their expenditure in other areas of the public sector--such as, on the health service--below the level which they consider appropriate. That is the position in which central government found themselves in the early 1980s.

The Government, therefore, took steps to make formal that which had previously been a reasonably well accepted informal understanding with local government as to the boundaries of local government action.

There was a good deal of tension and disagreement during the 1980s, as your Lordships will remember only too well, about the measures which the Government introduced, and which culminated in the present financial arrangements which involve capping, the national business rate and the introduction of the council tax.

Since then, there has been a genuine attempt--by local government and by central government together--to rediscover the traditional relationship between central and local government which we in the Government, and the great majority of those in local government, too, believe is the right way of proceeding.

The Government intend to do their best to improve relations with local government and to improve the esteem in which local authorities are held. My noble friend Lady Platt of Writtle said that it is not a bad maxim to say, "If it ain't broke, don't fix it". The noble Lord, Lord Borrie, agreed with that. I also agree with that. I hope that he will be able to persuade his noble friends to adopt that maxim when they consider the future of the constitution and of your Lordships' House. The noble Lord, Lord Borrie, said that he visited Mr. Redwood and Mr. Stewart and that it was not a rewarding experience. He went to see them about trading officers. He was told that local authorities should be able to co-operate. The noble Lord, Lord Borrie, never visited me to inquire about that subject when I was at the Department of Trade. That was my misfortune, but those words were familiar because I have used them myself. The Government tend to speak with one voice on these matters. The Government have seen no evidence that the oversight as regards trading standards is any worse following local government reorganisation. It is for local authorities to decide whether and how to co-operate in that field.

My noble friend Lord Beloff made the most astonishing swipe at civil servants which I believe horrified the noble Baroness, Lady David, as well as myself. He said they are

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so occupied tending Ministers--that is a touching thought--that they cannot answer any questions unless they have sought advice beforehand. I have great sympathy with civil servants. Anyone who has had to answer questions in your Lordships' House will be upset if he has not been briefed properly on the questions which are likely to be asked. I thought the noble Lord, Lord Borrie, was going a little far when he talked about trading standards. When he asked me a question about that I could not give him an exact answer at the time but, fortunately, my mental powers are such that I recalled the answer and I have given it to him. My noble friend Lord Beloff cast appalling aspersions on civil servants. In my experience, irrespective of the department concerned, they have always been absolutely superb in knowing the facts and the details and in expressing those articulately to Ministers, one of whom is not always quick to recognise the facts and takes rather longer than his colleagues to do so.

The Government's White Paper sets out a programme of action which has three objectives. The first is to strengthen local democracy; the second is to promote the local leadership role of local authorities; and the third is to improve yet further relations between central and local government. One might ask how local democracy can be strengthened. The respect in which it is held must be increased. Local democracy must be held in high esteem. The programme of action therefore proposes a statement, which is to be agreed between central and local government, on the role and value of local government.

For reasons which I shall mention later, the Government do not feel that we can accept the committee's recommendation that the United Kingdom should adopt the European Charter of Local Self Government. Indeed, we propose a statement instead. We view the proposed statement as addressing one of the main principles which underlies the committee's recommendation, which is that the Government should give a signal that they recognise the value of local government. The statement will do that.

The Government also wish to see local democracy strengthened by increasing public participation in local government. Your Lordships' committee has identified a number of measures which might achieve that, to one of which the noble Baroness, Lady David, referred; namely, allowing individual authorities the option of moving to a different electoral system for local elections. The noble Earl, Lord Kintore, thought we were going down the path of voting by proportional representation. Of course the noble Lord, Lord Tope, could not resist the opportunity of again banging the drum of proportional representation. I am sorry to have to disappoint them. Before decisions are taken about which methods might be used, there has to be a proper analysis of the issues and the difficulties which are being encountered. The Government's programme of action therefore involves joint research and analysis with the new Local Government Association on the level of local participation in local government. Then, and only then, will we be in a position to decide whether, and if so what, new measures and arrangements are necessary or desirable.

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The noble Lord, Lord Dubs, referred to the management of local authorities, and in particular elected mayors. The Government intend to bring forward in the next Parliament legislation to enable local authorities to experiment with their internal management arrangements. However, as regards elected mayors, it is worth noting that during consultation by my department in 1991, of over 600 responses only four favoured elected mayors. The main objection was that there would be conflict and confused accountability between the elected mayor and the other councillors on the council.

The noble Lord, Lord Tope, was concerned about what the White Paper meant by local government matters which could be overseen by a parliamentary committee. I can assure him there is nothing sinister in that. It simply means the matters to which the committee refers in paragraph 2.70 of its report; in other words, the matters which it suggests should be looked at by a parliamentary committee. One might ask then how we can better promote the leadership of local authorities. The noble Lord, Lord Sewel, wants us to move away from central government dominance over local government. Of course these are difficult balances to maintain but local authorities need the ability to innovate. To do that, the committee has recommended a general power of local competence. Local authorities, of course, already have a general power in Section 137 of the Local Government Act 1972. The Government accept the spirit of the committee's recommendation. Our programme of action also proposes a review of Section 137 in order to assess the scope which it gives for leadership action and to see whether a wider general power is either practical or advisable.

The Government also accept the committee's recommendation about experimenting with different models for the internal management of local authorities. We shall bring forward legislation in the next Parliament to enable local authorities to do so. All these measures will help to improve yet further the relationship between central and local government. The Government also accept the committee's recommendation concerning the existing guidelines for central and local relations. We propose to consider, with the new Local Government Association, how the existing guidelines can be developed yet further. The Government also accept the committee's recommendation concerning Whitehall arrangements for considering local government issues which involve more than one department. We shall carry out a review of their effectiveness.

I believe that this programme of action is based on the Government's belief--which I am glad to say the Select Committee shares--that democratically elected authorities have important roles in the world of local governance today, in particular that of being the leader of the community in which they serve. As your Lordships' committee recognised, local authorities are not, and never have been and never will be, the sole monolithic providers of all services in a given geographical area. Nor can they ever operate wholly apart from the powers of central intervention. Our programme will prove to be a significant chapter in the

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continuing development of local government. That is a development which we aim to continue in a spirit of partnership and of collaboration with local government.

The noble Lord, Lord Borrie, referred to regional assemblies. The Government see no case for setting up new bodies to provide regional government. That would simply add an unwanted and unnecessary tier of bureaucracy. As regards partnerships for regeneration, we share his view of the importance of partnerships and of local authorities' role in this. Of the partnerships which won bids for the single regeneration budget, 80 per cent had local authority involvement and about 50 per cent had been led by local authorities.

However, I am afraid there are some recommendations of the committee which the Government do not feel able to accept. I refer to the recommendation that we should adopt the European Charter of Local Self Government. That was a source of disappointment to the noble Lord, Lord Prys-Davies, a source of shock to the noble Baroness, Lady Farrington, and a source of scurrilous speculation to the noble Lord, Lord Tope. The Government have always held the view on the charter that while we support the principles of local government which are established in the charter--and which are reflected in the United Kingdom's system of local government--we do not consider that it is necessary for the United Kingdom to enter now into a binding international agreement which covers domestic local government arrangements. We have a long tradition of effective local government--a tradition which is founded on, and which is given practical expression by, the legislative decisions of your Lordships' House and of another place. We do not need a European convention to bolster those traditions or to show that we carry them out.

However, the Government accept the committee's view that it would be worth while for central government to send a clear signal that they recognise the value of local government. We therefore propose to agree with the new Local Government Association a statement covering much the same ground as the charter which will set out the role and status of local government in this country. The committee also recommended the establishment of a permanent parliamentary committee. It is clearly a matter for the House and for Parliament, and one that Parliament must decide.

My noble friend Lady Platt of Writtle was sorry that the Government did not view the prospect of a permanent committee with enthusiasm. It is the Government's belief that a permanent committee would be very difficult to justify when there is already an existing structure of departmentally based committees in another place to which can be added other arrangements such as the ad hoc inquiries which were undertaken by your Lordships' committee.

The committee also questioned whether there was still a need to retain the compulsory element of compulsory competitive tendering, and whether compulsory competitive tendering itself could be made less detailed and prescriptive. The committee felt that local authorities have now well embraced the tendering

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philosophy and that they can be relied upon to continue tendering without the compulsory element. A number of noble Lords felt that to be the case, including the noble Lord, Lord Prys-Davies, and the noble Baroness, Lady Farrington. They wanted the compulsory element removed.

The Government's researches do not support the view that removal would be beneficial. They show that local authorities as a whole cannot be relied upon to provide open and fair competition in tendering. For the time being at least, we believe that the compulsory element ought to remain. It may, however, be possible in the longer term to consider a more flexible regime. Our recent experience does not lead us to believe that a voluntary framework would provide for local residents the benefits and improvements that are obtainable under compulsory competitive tendering.

As the noble Lord, Lord Hunt, reminded us, the committee made a series of recommendations directed at removing the influence of central government over local government finance. It suggested that central government should relax their control over the amount of local authority expenditure that is financed locally--sometimes referred to by the ghastly acronym "LASFE"; that in essence the present arrangements for the capping of council tax should be abolished; and that non-domestic rates should be returned to the control of the local authorities.

The Government introduced a national business rate because they believed that businesses ought to be able to plan properly without major annual tax variations, and that businesses should pay the same rate wherever in the country they happen to locate themselves. We still maintain that view.

The noble Lords, Lord Hunt and Lord Williams, the noble Baroness, Lady David, and my noble friend Lord Gray of Contin, referred to the matter of capping. My noble friend Lady Platt also referred to it and said that Whitehall does not always know best. That is perfectly true. However, the Government are elected to look after national economic priorities and the overall level of local spending, including local authority self-financed expenditure, as it affects the national economy. The government of the day therefore have a legitimate interest in influencing it. Capping, although controversial, has proved effective in controlling the overall level of local authority budgets and in protecting the local taxpayer from excessive tax rises.

The noble Lord, Lord Williams, and the noble Baronesses, Lady David and Lady Farrington of Ribbleton, referred to standard spending assessments. I am bound to say that I have a certain sympathy with the points made. The Government share the committee's aim. We would dearly like to simplify them if possible. Such action is very close to my own heart, since I have personally tried to simplify and understand the SSAs and regrettably, as noble Lords might imagine, both because of the nature of the problem and the quality of the erstwhile reformer, I failed desperately on both counts. The fact is, if one finds SSAs unfair and tries to simplify them, they

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become more unfair; if one tries to "refine" them, they then become more bureaucratic. However, that does not mean that efforts should not continue to be made to simplify them. After all, formulae ought to be designed to be the servant of the people, not their master.

The Government accept the committee's assessment of the present state of the relationship between central and local government and we agree that considerable effort has to be expended to improve further that relationship and to enable local authorities the better to be able to fulfil their role as leaders of the community.

On that basis, as well as having regard to wider economic and policy objectives, the Government have considered the committee's recommendations. We believe that the measures we propose to take will improve the current state of relations. We believe that they can open up a new chapter in our relationships with local government and will contribute to the development of local democracy and local government into the next century.

7.5 p.m.

Lord Hunt of Tanworth: My Lords, I thank the Minister for that reply, and I thank all noble Lords who took part in this interesting debate. Despite the criticisms that some of us made of the Government's decisions on finance questions, the debate has also been an encouraging one. No one is now saying that there is not a problem. No one says that the problem can be solved by a quick fix, whether by making local government simply a branch office of central government or by some new constitutional arrangement. Everyone seems to be saying that what is needed is a rebuilding of trust and of an attitude of partnership, of working together, with the essential acceptance by the Government of the recommendation that the guidelines should be developed into a more formal concordat that would send a signal to local government as to its place in the system. But the rebuilding of trust has to be earned, and by both sides. I am sure that people will reflect on that.

Some very kind remarks were made about me. However, I remind the House that this was not an issue on which a manipulative chairman could secure unanimous agreement. It was a hard, difficult issue. The committee was composed of senior Members with different political views and different experience of local government. Over a period of nine months we listened, read, argued and talked; and at the end we found that we had reached a consensus. I hope that the debate will continue, in Parliament and in the media, as to how local democracy best finds its place in our constitutional systems.

On Question, Motion agreed to.

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