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Lord Whitty moved Amendment No. 22:

After Clause 13, insert the following new clause--


(" .--(1) The following shall be substituted for section 139A(1) and (2) of the Social Security Administration Act 1992 (reports on administration of housing benefit and council tax benefit)--
"(1) The Secretary of State may authorise persons to consider and report to him on the administration by authorities of housing benefit and council tax benefit.
(2) The Secretary of State may ask persons authorised under subsection (1) to consider in particular--
(a) authorities' performance in the prevention and detection of fraud relating to housing benefit and council tax benefit;
(b) authorities' compliance with the requirements of Part I of the Local Government Act 1999 (best value).
(2A) A person may be authorised under subsection (1)--
(a) on such terms and for such period as the Secretary of State thinks fit;
(b) to act generally or in relation to a specified authority or authorities;
(c) to report on administration generally or on specified matters."
(2) In section 139C(1) of that Act (reports) for the words from "in particular" to the end there shall be substituted "in particular--
(a) in the prevention and detection of fraud relating to benefit, or
(b) for the purposes of complying with the requirements of Part I of the Local Government Act 1999 (best value)."").

The noble Lord said: My Lords, the amendments in this group are technical and clarify the position. The new clause in government Amendment No. 22 is designed to put the Benefit Fraud Inspectorate's powers on a clear statutory footing. The inspectorate's work on

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the administration of housing benefit and council tax benefit is very much in keeping with the whole ethos of best value. But the existing powers are described in very specific, rather than general, terms. By the new clause we wish to make absolutely sure that this very important area of local authority work is subject to the same best value scrutiny as will exist elsewhere.

Amendment No. 30 provides an opportunity to commence certain provisions promptly where it is sensible or helpful to do so. They will ensure that there can be, if necessary, early commencement of provisions relating to police and fire authorities in both England and Wales.

Amendment No. 33 will ensure that Clause 28(2)(b) correctly identifies those provisions which confer powers which have been reserved to the Secretary of State and which will not be exercisable by the National Assembly for Wales. It therefore adds two new references to Clause 28(2)(b). The first makes provision for inspection and other arrangements in respect of police authorities. The second reflects the new clause included in Amendment No. 22 as regards inspection of council tax benefit administration and housing benefit administration. I beg to move.

On Question, amendment agreed to.

Clause 14 [Secretary of State's powers]:

Lord Whitty moved Amendment No. 23:

Page 10, line 16, leave out paragraph (d).

The noble Lord said: My Lords, in moving this amendment I shall also speak to Amendment No. 24, among others. They have been introduced to make a technical change to Clause 14. They would have the effect of making what was Clause 14(2)(d) a free-standing section. Your Lordships will note that the wording of the new provision remains identical to the original and does not extend the powers of the Secretary of State or the National Assembly for Wales in any way. The amendment has been brought forward simply to clarify the scope of the existing provisions.

Amendment No. 26 is also in this group and it is a slightly more complex matter. I mentioned at Committee stage that we had identified a number of situations where the exercise of Clause 14(5) powers by the Secretary of State or the National Assembly for Wales might cause difficulties in cases where there was a right of recourse to the Secretary of State or where he had an existing role or power in relation to a best value authority.

Amendment No. 26 is designed to clarify the operation of the clause in those situations and addresses this problem by introducing two new subsections to Clause 14.

I would like to emphasise that the circumstances to which this provision would apply are exceedingly rare. We have always maintained that intervention under Clause 14(5), where the Secretary of State takes over responsibility for a function, would be the exception and not the norm and that it would be to address the very worst failure in service delivery. In the handful of cases where a direction is issued under Clause 14(5) we envisage that in most cases the Secretary of State would

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not exercise the function himself but would appoint an independent person to carry out that function. Where a nominee was appointed that nominee would in most cases be considered independent from the Secretary of State and the difficulties outlined above in relation to the Secretary of State's powers would not arise.

However, although the circumstances in which these provisions would be necessary are very rare, this amendment is essential for ensuring the proper functioning of this clause in all circumstances. Amendment No. 26 is not about increasing the powers of the Secretary of State or of the National Assembly. It is about ensuring that existing powers and roles can continue to be exercised in a sensible way. When the Secretary of State takes over a function he is doing so on behalf of local people to ensure that a higher standard of service is delivered. Local people's rights of appeal, therefore, and other such entitlements should not be compromised to enable that to happen.

Amendment No. 35 is also in this group. It is a technical amendment to ensure that the new regulatory powers we have proposed to introduce at subsection 14(5A)(a) can be used effectively in Wales. Amendment No. 31 is another technical amendment. Subsection 27(2) lists those order-making and regulatory powers which, in England, should be subject to the negative resolution procedure in either House of Parliament. Amendment No. 31 adds the new regulatory power in Amendment No. 26 to the list about which I have just spoken. I beg to move.

On Question, amendment agreed to.

Lord Whitty moved Amendment No. 24:

Page 10, line 25, at end insert--
("( ) Where this section applies in relation to an authority the Secretary of State may direct the authority to take any action which he considers necessary or expedient to secure its compliance with the requirements of this Part.").

On Question, amendment agreed to.

Baroness Hamwee moved Amendment No. 25:

Page 10, line 26, leave out subsection (5).

The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendment No. 27. These amendments deal with the powers of intervention of the Secretary of State in Clause 14. We made no secret at Committee of our distaste for that and particular elements of it.

The first of the amendments leaves out subsection (5), which is the provision allowing the Secretary of State to put in a nominee to exercise certain functions or to take them over himself, which I guess is a less likely scenario. If that were so, trying to get the Secretary of State on the telephone would become well nigh impossible. It also provides that the authority will comply with the Secretary of State's instructions or those of his nominee, in relation to the exercise of certain functions.

We protested about that provision at Committee stage and it is appropriate to do so on the Floor of the House. We were told then by the Minister that the powers would be exercised sparingly, but that in a sense this

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provision is the teeth of the Bill because of its deterrent powers. We protest again because of the principle of democratic accountability. We deplore the trend which became increasingly apparent under the previous government--sadly, we see similar tendencies now--to centralise or at any rate to provide very substantial reserve powers to central government to the detriment of the powers and autonomy of democratically elected local authorities.

We accept that there may be some very particular occasions when things go so badly wrong at local level that on any view matters need to be taken out of the hands of the local authority. An example is when abuse comes to light in a children's home. I believe that such matters are dealt with by other legislation particularly by criminal legislation.

Clause 14(1) applies this provision when the Secretary of State is satisfied that the best value authority is failing to comply with the Act. Reference was made at the previous stage to the protocol. I do not know whether there is a draft of it as yet which does so, but it will set out the step by step application of increasingly vigorous measures to deal with an authority. It will begin with the not so tough measures before moving up to direct intervention. As I say, I do not believe there is a draft yet providing a hierarchy. The Minister may correct me on that.

The draft protocol has been published. Its appendix provides for failure of process and of substance, which are examples of triggers which would allow intervention powers. It seems to us that the failures which are listed are capable of being so minor that for the Bill to allow them to be triggered with such major powers seems quite unbalanced. I shall refer to just a couple in the failures of substance. There is the failure to improve service standards or deterioration. Failure to improve could be a very minor failure and barely deserve such a term in normal parlance. Under the list of failures of process, there is the failure to set performance targets which, in the opinion of the external auditor, are sufficiently challenging. It seems inappropriate to permit these extreme powers. Clearly, there will be differences of opinion as to whether the performance targets are sufficiently challenging. One may say that the degree of challenge within the targets is outside legislation.

We believe that it is for the electorate to respond to an authority not being quite as good as it should be--which is what some of the failures amount to. The Government have proposals for annual elections. Those opportunities for the electorate to express its views may leave some of us feeling that we have barely recovered from one election before being faced with the next. In summary, that is our objection to Clause 14(5).

Amendment No. 27 deals with the urgency provisions. Under Clause 14(8) the Secretary of State is able to give directions without complying with the provisions which require him to give the authority opportunities to make representations. There is no requirement to have regard to an authority's statement if he considers the direction is "sufficiently urgent." We are concerned about the lack of criteria on the face of the Bill and in the draft protocol as drafted as to what constitutes urgency.

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When we discussed the matter in Grand Committee, the Minister was not satisfied that the amendment was appropriate. It referred to immediate danger of substantial harm or substantial financial loss. He made the point that financial loss could be long term. He believed that the provision was over rigid and wanted to be more flexible. I take issue on that. If the Secretary of State can set aside the provisions in Clause 14(6) and (7), it suggests to me and my noble friends that the criteria should not be flexible. To suggest that they could be flexible or variable is wrong.

For their own reputation, as well as for other more principled matters, the Government must spell out "sufficiently urgent." To leave the matter to the Secretary of State's discretion without the words being put on paper to describe what is sufficiently urgent does not achieve what the Government and those of us who provide constructive criticism of this part of the Bill should achieve. To that extent, I align myself with the Government because, if we have to have this provision, I want to get it right. I beg to move.

9 p.m.

Lord Whitty: My Lords, I appreciate the way in which the noble Baroness proposes the amendment. However, there is a fundamental disagreement between us on the first part. We believe that the full effect of the best value regime will be available only if there are ultimately some deterrent powers. The noble Baroness refers to my colleague's earlier commitments that those powers will be used only in proportion to the failure established and that the more extreme powers will be used only after attempting to deal with it in a different way and only in the very worst circumstances. The powers would rarely be used and only after other options had been fully explored.

There is a difficulty. The noble Baroness does not accept that we need these powers. However, we believe that we do. There may be evidence in future of serious and long term systemic failure where an authority has conspicuously failed to act despite having been given several opportunities to do so and following other forms of intervention. I am sure that the ultimate power would be relevant to only a handful of cases, but if we do not have it those cases may persistently obstruct other forms of assistance. In those cases, we shall need to take the difficult decision, including the decision to intervene with the direct provision of that service. However, as our White Paper indicated, in those circumstances we should need to have the power for,

    "responsibility to be transferred to another authority or third party".

The provisions contained in Clause 14(5) may never be necessary. I hope that they will never need to be used. However, to remove them from the face of the Bill would undermine the best value concept and take away the ultimate means of ensuring that it is enforced in all cases. I believe that in practice the Secretary of State or the National Assembly for Wales would have a range of options available to it before it reached that stage. It is to be hoped that the local authorities would respond to those other interventions. But at the end of the day the

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Secretary of State and the National Assembly for Wales have to have these powers. I cannot, therefore, accept the amendment and I ask the noble Baroness to withdraw it.

Amendment No. 27 deals with intervention powers in cases of urgency. The noble Baroness recognises that there may be such situations and we need some provision to deal with these wholly exceptional circumstances. As she indicated, we are in the process of producing a protocol on intervention in conjunction with the LGA which will set out the principles underpinning intervention and the broad procedures to be followed. It will clarify the provisions contained in the Bill and will contain, as the noble Baroness asks, an agreed definition of the circumstances in which we envisage the fast track procedures would be used. We consider that it is better to lay out what she has said is desirable in terms of definition of circumstances in a protocol because we are in a rapidly changing situation and in a new form of regime. We do not believe it is necessary, or indeed that we are able, to lay that out on the face of the Bill which introduces that regime. The protocol will state clearly that the fast-track procedures would be used only in exceptional circumstances where the severity, the urgency or the persistency of failure or the continuing risk of harm or financial loss show that urgent intervention is necessary.

It is noteworthy that the wording of the noble Baronesses' amendment does not include the whole of the wording that is in the protocol. It would exclude the situation where the Secretary of State could use the fast-track procedures to address persistent and systemic failure where the local authority has failed to take action. I would not regard that as a helpful restriction on what we have already agreed, or almost agreed, with the Local Government Association in the protocol context. I think it takes away a power to intervene in continuous defiance of the whole objectives of "best value" from the Secretary of State or from the national assembly.

Therefore I would hope that the noble Baroness would recognise the desirability of proceeding via the protocol, an approach which meets many of the objectives she has spelt out in relation to the fast-track procedure, rather than attempting to lay down provisions on the face of the Bill. She should also recognise that the exact words she is suggesting do not meet the range of circumstances which are already envisaged, in partnership with the local authorities, as being included in the protocol still in draft.

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