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Lord Dixon-Smith moved Amendment No. 7:

Page 3, line 31, leave out ("different")

The noble Lord said: My Lords, this amendment is grouped with Amendments Nos. 8, 9 and 15. With the leave of the House, I shall speak to Amendments Nos. 7, 8 and 9 together. I shall then speak to Amendment No. 15 as although it addresses a related point it is slightly separate.

We have now reached a rather fundamental issue in the Bill, small though these amendments may appear to be. Whatever the errors of my party when it was in government--before noble Lords opposite begin to crow about the possible errors that my party may have committed while in government, they would do well to remember that it will only be a matter of time before much that they do is likely to be seen as erroneous--there are now clear signs that my party is moving towards a situation in which it begins to treat local authorities as grown up and responsible rather than as babes to be wrapped in the swaddling clothes of regulation. That is a rather important point of principle.

Clause 4 as drafted gives the Secretary of State immense power over individual local authorities at any and all times. We are not here discussing whether the Secretary of State should have power to intervene in emergency situations, or where services might be perceived to be breaking down, or indeed where there has been some tragic disaster perhaps in the social services field--the kind of thing which we have heard so often. Clause 4 of the Bill gives the Secretary of State power, by order, to specify performance indicators and, more significantly, performance standards for local authorities; different performance indicators or standards for different functions for different authorities to apply at different times. If the Secretary of State chooses to exercise the power, he can set a performance standard for an individual authority to apply tomorrow morning. The Minister may say that he would never do

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such a thing and of course it is wholly unreasonable, but it is not impossible under the Bill. I know that the Secretary of State will act under conventions. However, even the most reasonable people sometimes behave unreasonably for what appear to them to be good reasons.

Amendments Nos. 7, 8 and 9 set out simply to restrict somewhat--it is only to restrict somewhat--the power of the Secretary of State to specify different performance indicators and standards for different functions and so on. If the amendment were accepted, individual local authorities would have less to fear from the possibility of irrational action from, say, a Secretary of State who happened to get out of bed on the wrong side one morning. That concept may be completely foreign to government but in my experience we are all human and occasionally we are susceptible to error.

Amendment No. 15 seeks to give an individual local authority the right to appeal against the application of a standard if it feels that the standard as specified by the Secretary of State in an order is unreasonable in its particular circumstances. This amendment is slightly different from the other three amendments in the group. I ask the Minister to consider this matter extremely carefully. It would of course be a gross exaggeration to say that a local authority's circumstances were infinitely variable. When all is said and done there are some 400 local authorities and there are probably another 400 authorities that might be considered to be best value authorities of one kind or another. The numbers are not significant in themselves and therefore to claim infinite variability would be, as I say, a gross exaggeration.

However, their circumstances are all different; their histories are different; their locations are different; their development over the years has been different; their patterns of investment in infrastructure, in buildings, in schools and so on are different; and so their financial circumstances are different. While I have a great deal of confidence in Secretaries of State, they are not omniscient and they cannot know every circumstance. I can conceive of circumstances in which a local authority feels that the application of a particular standard is unjust, even though the standard was set in good faith and in the light of the best information that the Secretary of State's civil servants could produce for him. I see that some of them are sitting in the Box; it is good to see them there. Amendment No. 15 seeks to give a local authority which finds itself in that situation the opportunity to go to the Secretary of State and say, "Please, in our particular circumstances this is unreasonable. Can we do something about it?" I beg to move.

Baroness Hamwee: My Lords, we explored in Grand Committee the question of different responses for different authorities. I had been concerned initially about the provisions in the Bill and I was very glad to have the Minister's assurance that the Secretary of State does not retain powers to discriminate. He specifically said that the Secretary of State does not have the open-ended power to pick and choose. As I say, although we were initially bothered about that matter, we were pleased to have that assurance.

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As far as concerns Amendment No. 8, we support it in principle. I have more difficulty with Amendment No. 9, which would leave out paragraphs (a), (b) and (c) of Clause 4(2). The subsection would then simply remain,

    "An order may specify different performance indicators or standards".

As far as concerns Amendment No. 15, quite apart from the practicalities, we would rather keep the Secretary of State out of the workings of local authorities. We would not want to bring him in by way of appeal. We cannot support the noble Lord on Amendment No. 15.

8.15 p.m.

Lord Whitty: My Lords, the noble Lord, Lord Dixon-Smith, will know that I do not hold him personally responsible for any of the policies of the previous regime. I am not one to crow over sinners that repenteth. The problem with his enunciation of the current position of the Conservative Party is that it has repented a little too much; it has moved away from the kind of Napoleonic centralisation of the previous regime to outflanking the Liberal Democrats in terms of local authority autonomy. Several noble Lords on this side of the House find that bewildering.

The Secretary of State needs subtle powers for the reason, in a sense, to which the noble Lord referred. Some mistakes will be made; we need therefore the powers to put such mistakes right. There will be some broad categorisations which will prove to be inappropriate; we will need to judge that. Hopefully we can judge it in advance, but if we do not have the flexibility to adjust we will not be able to tailor the whole framework to the delivery of best value. We need the powers and we need the flexibility.

These distinctions are not arbitrary. Distinctions could be made between authorities by different category--unitary authorities, district authorities and so on; by the various functional activities of the local authorities; or by different circumstances, such as sparse populations, island authorities and so on. Perhaps I should say to the noble Baroness, Lady Hamwee, that this is not discrimination or cherry picking but sensible flexibility. It is important to help the Secretary of State tailor the performance measurement to the needs of best value authorities and their electorates. Taken as a whole, the amendments would completely remove the Secretary of State's ability to tailor a performance framework to take account of those different situations. They would take a major subtlety out of the best value regime we are trying to introduce.

I appreciate that the Conservative Party in its new mode would rather not have the powers at all. However, we consider that we need the powers, which should be operated with a degree of sophistication which past financial regimes of all parties have not had.

Amendment No. 15 refers to a formal appeals process, which, so far as I am aware, has not existed under any prior financial regime. It would bring the Secretary of State into making judgements in areas where that may not always be appropriate. It would give

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him a quasi-judicial function in what is supposed to be an administrative system. Moreover, the iteration between the individual authorities, plus the flexibility of the powers, means that the Secretary of State has the flexibility to recognise particular situations. He is required under Clause 4(3) to consult before specifying performance indicators. That regime should give best value authorities and others the opportunity to comment before the proposed standard is laid down.

With that kind of partnership between the Government and local authorities, I do not believe that we need a formal appeals procedure. Allied to this, the flexibility provided under Clause 4(2)(a), (b) and (c), would mean that in exceptional circumstances the Secretary of State could specify a standard for only certain types of authority. That would meet the exceptional circumstances with which the appeal procedure was intended to deal. Introducing a formal appeal system into the Bill as distinct from an on-going partnership between local authorities and central government is unnecessarily bureaucratic and legalistic in an area where we are trying to introduce a new ethos. I hope that the noble Lord will not press his amendments.

Lord Dixon-Smith: My Lords, I am grateful to the Minister for his reply. I will study it with considerable care. I think he has probably answered me in a way which will satisfy me. The House will be pleased to hear that I may not therefore bring the matter back at Third Reading.

The Minister should beware that he is appearing now to be the Conservative in this matter. Time and thinking are moving on. Earlier today or yesterday there was a question on the Floor of the House in which the subject of subsidiarity arose. As is usually the case, it arose in relation to Scotland and Wales, but subsidiarity was always a relevant issue between Brussels and London. The noble Baroness, Lady Farrington, will recognise that a very long, unending and never satisfied debate existed between Westminster and local government. It was to address that particular subsidiarity that I brought forward the amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendments Nos. 8 to 15 not moved.]

Clause 5 [Best value reviews]:

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