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Baroness Hamwee: Some useful points have been made, particularly on the generality of the power. As regards trading, I will read carefully what the Minister has said. He understands that I am not here seeking a general power on the part of authorities to be able to trade, but merely to raise income which will assist them better to carry out functions which they already have. It will certainly alleviate the cost of exercising functions which may be fairly narrowly directed in terms of the beneficiaries of those functions and where there is a major question mark as to whether the whole of the taxpaying base should bear the cost.

I thank the Minister for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 71 to 75 not moved.]

Clause 15 agreed to.

Clause 16 [Orders under section 15: procedure]:

[Amendments Nos. 76 and 77 not moved.]

Clause 16 agreed to.

Clause 17 agreed to.

Clause 18 [Contracts: exclusion of non-commercial considerations]:

Baroness Hamwee moved Amendment No. 78:

Page 12, line 42, at end insert--
("( ) The first order under this section shall provide for environmental considerations to cease to be a non-commercial matter.")

The noble Baroness said: This amendment deals with the exclusion of non-commercial considerations from contracts. Perhaps cheekily, but nonetheless seriously, my amendment proposes that:

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    I hope that the Minister will be able to give us some assurances about the Government's approach to environmental considerations in this context. The clause permits the Secretary of State, by order, to change the list of non-commercial considerations that a local authority can take into account when putting a contract out to tender. In other words, the basis for the award of the contract can be more than narrow financial considerations. I understand that reference has been made in another place to the need to include various social matters in the list of considerations such as quality training, health and safety, disability, racial equality, equal pay and gender equality.

A number of environmental performance matters could, and should, be included in such a list. For instance, it could include a history of prosecution under environmental legislation for pollution or other environmental damage. It might also include a reference to whether the organisation concerned is registered as having approved environmental management systems. I refer to the Eco-Management Audit Scheme (EMAS), which is the voluntary scheme for individual industrial sites in local authorities where companies and authorities have established a programme of positive action to protect the environment and to seek continuously to improve performance. Another such system is the international industry standard for environmental management (ISO-14001). I hope that the Minister will be able to give assurances about environmental considerations rapidly leaping up the list of considerations that are to be taken into account. I beg to move.

Lord Harris of Haringey: I am sure this amendment is well-meaning, but I wonder whether it is appropriate to specify in this way that one particular set of issues should have priority over all others. It is important that, in progressing this matter, there is wide discussion between all those who might be affected, and that there is some consensus as to the legitimate non-commercial considerations that are to be excluded from the regime in this way.

My understanding is that there have been substantial discussions between the Local Government Association, the Confederation of British Industry and the TUC. They have examined a range of issues, and have identified a number of matters as non-commercial considerations which local authorities should legitimately take into account when awarding contracts. They include: the quality of training offered; the pay and conditions of employees; health and safety circumstances and the reassurances that are given; and matters to do with equal opportunities.

I do not suggest that environmental issues are not important; I fully agree with the noble Baroness that they are extremely important. All I am saying is that the matters currently under discussion as possibly providing a basis for exemptions under this clause are also extremely important, and I should be sorry to see them pushed back under the terms of the amendment, however well-meaning the intention.

Baroness Maddock: I shall be brief. I was rather disappointed to hear the previous comments of the noble

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Lord, Lord Harris of Haringey. The problem with environmental matters is that too many people believe that they are well-meaning--which is why we have failed in this country to make the progress that other countries have made in environmental matters. I say that on the basis of a recent visit to Germany. Every time I go there I am impressed by the progress Germany has made environmentally, not only in the field of transport but in all other areas. As long as we continue to believe that people who care about the environment are well-meaning, and that these matters are well-meaning, we shall fail to put them at the heart of our legislation and ensure that we take them on board properly.

Lord Harris of Haringey: Before the noble Baroness sits down, what I attempted to put across was not that environmental issues were well-meaning, or indeed that the noble Baroness herself was well-meaning--although I am sure she is--but that the intention behind this proposal was well-meaning in its attempt to put these considerations at the centre of the proposal. My point is that there are a number of matters which should legitimately be at the centre, and which should be achieved by a process of consensus rather than simply writing them into the Bill at this stage, possibly before that consensus is created. The important point is to create that consensus around environmental issues. It will not be created by simply writing it into legislation.

Baroness Farrington of Ribbleton: Amendment No. 78 would require the first order made under Clause 18 to provide for environmental considerations to cease to be a non-commercial matter. The amendment would place an unhelpful constraint on the exercise of that power. It is important to note that the list relates to matters that are not permitted, not the other way around. Everything that is not included in the list can be taken into account, provided that other legislation does not prevent it.

Environmental considerations as such are not explicitly defined as a non-commercial matter at Section 17 of the Local Government Act 1988. Therefore, I can only assume that the noble Baroness, Lady Hamwee, is bringing forward this amendment on the understanding that such considerations could be included within the existing definitions, although having listened to this short debate, I am not quite clear about that.

Our purpose in Clause 18 is to provide for the updating of Section 17 of the 1988 Act, which regulates the contracting functions of local authorities. Regulation is achieved by prohibiting local authorities from having regard to certain specified non-commercial matters in the contractual process. The comments of my noble friend Lord Harris of Haringey on the current consultation that is taking place in this area are extremely important.

The problem with the 1988 Act is that it makes no distinction between matters which may be relevant to the performance of the contract and those which are truly non-commercial. That is the problem that we seek to address. Clause 18 therefore provides a power to remove or modify by order the so-called non-commercial considerations. To the extent that

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environmental considerations could be caught by the existing constraints contained in the 1988 Act, the Clause 18 power would allow us to tackle any problem so long as changes are consistent with government and EC policy.

I assure the noble Baroness, Lady Hamwee, that we have considered carefully whether any such changes are necessary. However, our main priority is to deal with workforce matters. I say that in the context of the widest meaning of "workforce matters". I do not believe it is sensible to place unnecessary conditions on the Clause 18 power. I hope that in the light of those remarks the noble Baroness will feel able to withdraw the amendment.

Baroness Hamwee: I do not dissent from the notion that there should be a consensus as to the matters that would be the subject of such an order. I have no objections to the first order, including the list that the noble Lord, Lord Harris of Haringey, suggested to the Committee. They are all important points. But as my noble friend Lady Maddock said, environmental considerations tend to be regarded as add-ons, or as some sort of optional extra. In this place we are rather far behind people outside who recognise--the Government have expressed this themselves--that it is necessary to take into account sustainable development in order to sustain all our futures. Our social futures, our economic futures and so on are all bound up together. To treat environmental considerations as some sort of optional extra is to fail to understand the importance of the issue. Having said that, the Minister has indicated that workplace matters in the wider sense, as she put it, are likely to comprise the initial focus. Can she indicate to the Committee any timetable and who will be consulted as regards the laying of any order under this clause?

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