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Baroness Hamwee: My Lords, before the Minister sits down, I should like to take him back to the beginning of his response. I may have misheard him, but when he was talking about the Secretary of State being required to act reasonably I thought that he referred to Section 12, which relates to Audit Commission Fees. I hope that I misheard him.

Lord Whitty: My Lords, I may have referred to subsection (12) in passing, which requires reasons to be

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given. That will not apply to the totality of the procedure, but in all cases the Secretary of State will have to act reasonably and will have to give reasons for his action.

Baroness Hamwee: My Lords, I am grateful to the Minister for his response. He has answered my point that attention needs to be given to the circumstances in which the fast-track procedure can be followed. That should be part of the exercise in drawing up the draft protocol and deciding whether it should last for all time or should be subject to change. I take his point about the change in circumstances. I thank him for his comments and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 4:

After Clause 29, insert the following new clause--


(" .--(1) The Secretary of State shall, every three years after this Part comes into force in accordance with section 27, undertake a review of the working of this Part.
(2) The review shall--
(a) examine, quantify and report on any savings and other benefits that have resulted from the implementation of this Part;
(b) examine, quantify and report on any additional costs that have arisen in best value authorities as a result of the implementation of this Part; and
(c) determine whether the efficiency factors used in the calculation of the Revenue Support Grant each year are still appropriate or require adjustment.
(3) Reports under this section shall be placed in the Libraries of both Houses of Parliament.")

The noble Lord said: My Lords, I invite the Minister to consider the amendment with great care. Even if I have not come up with the required form of words, perhaps he will at least accept the principle, which could still be subsumed into the Bill as it goes through the remainder of its parliamentary stages.

The Minister will recall that early in our proceedings my noble friend Lord Bowness tabled a Question for Written Answer about the costs to be borne by local authorities as a result of the passage of the Bill. He was particularly concerned about how those costs should be met. Best value planning and the auditing consequences that flow from it will impose a considerable administrative and audit load on local authorities, although we know that the Audit Commission will be reimbursed for its share of the additional costs.

In his reply to my noble friend Lord Bowness, the Minister said that the Government were not unduly concerned about the costs because they were confident--and I have no reason to doubt that they were right--that the savings arising as a result of the introduction of best value procedures would be greater than the costs imposed. He went on to say that they were sufficiently confident of that to build a 2 per cent

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efficiency factor into the revenue support grant calculations. All of that might be perfectly reasonable and one cannot quarrel with it.

The Bill imposes incentives and procedures on local authorities. Paradoxically--unless I have missed something in the Bill, although I have been through it several times fairly thoroughly--the Bill provides no means of quantifying what happens in total at national level and how that is reported back. That is why I have tabled the amendment.

After the Bill is passed local authorities will begin to implement it. Any additional costs that arise will be easy to see. Once they have been put in place we shall have a stable situation. We do not know what economies and benefits there will be. We can be confident that the easy economies will be found first. Authorities that are currently less well managed will find it easier to gain considerable advantages as a result of the passage of the Bill. However, that is only the start. Two or three years down the road the picture may be different. If the system works well it will become increasingly difficult to continue to find economies. More importantly, efficient and innovative authorities will inevitably find it increasingly difficult to continue to hit the 2 per cent target that we all blithely assume is appropriate.

The Minister may respond that if that is so the calculations will be adjusted. Parliament has an interest in the outcome of the Bill. Having had a lifelong interest in local government, I have an interest in what will happen. We propose that the Secretary of State should report to Parliament every three years on the consequences of the Bill--the costs that have fallen on local government and the benefits that have accrued to society. That would be a good procedure to include in the Bill and I invite the Minister to consider it carefully. I beg to move.

6.15 p.m.

Lord Whitty: My Lords, the amendment would place a requirement on the Secretary of State to produce a review of the workings of best value every three years. It refers mainly to costs and savings. As the noble Lord, Lord Dixon-Smith, said when referring to my correspondence with the noble Lord, Lord Bowness, we are confident of savings. Best value is about more than just financial issues. It is also about improving the quality of services that residents receive. Like the noble Lord, we have a substantial interest in the outcome of the Bill and the incorporation of the best value regime into local government.

However, we already have in place what the noble Lord seeks. The Government are already committed to reporting on the efficiency savings achieved by best value authorities and we expect those savings to outweigh the costs by far. That is recorded in our public service agreement as set out in the document, Public Services for the Future: Modernisation, Reform, Accountability. The indicators that we are committed to go well beyond a narrow consideration of efficiency. They take into account quality indicators and the full range of issues covered by the best value suite of performance measures as well as the measures that are behind the amendment.

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Indeed, we shall go further than the amendment by reporting on such matters to Parliament and to the public annually rather than every three years. We shall report on all our targets as set out in our public service agreement. Considerations of efficiency measures will also be reflected in future calculations of revenue support grant. I should correct the implication in subsection (2)(c) of the amendment that the Government intend to continue the previous practice of announcing SSA and RSG figures one year at a time.

As noble Lords will recall, this Government have carried out the first ever Comprehensive Spending Review. The results, announced in July 1998, cover a three-year period. Future spending reviews will also cover three-year periods. During those reviews, as in the first one, we shall certainly take account of the efficiency improvements that we think it reasonable to expect local authorities to achieve. That will also reflect the wider best-value experience. So there is a second arena in which the objectives of the amendment will be met.

Furthermore, a major review of revenue grant distribution is currently underway, in partnership with local government. The procedure laid down in the amendment could pre-empt the procedures that would be appropriate to the outcome of that review. Nevertheless, that is not my main point. My main point is that we already provide a substantial degree of reportage in two contexts and that more than meets the amendment tabled by the noble Lord. Therefore, I ask him to withdraw the amendment.

Lord Dixon-Smith: My Lords, before the Minister sits down, I apologise for saying "annual" when I should have said "triennial". Old habits die hard. My mind slipped out of gear for a moment.

More importantly, while I accept that there is an amount of reporting that will happen, particularly under the public service agreements, and that to an extent the points that I have raised will be covered by those reports which will appear annually, I would not have tabled the amendment had it not been for that efficiency factor.

A problem arises specifically in relation to costs and savings. If the costs are imposed--we know that they are bound to rise to a degree--and the savings do not arise, but none the less the efficiency factor is still there, local government will find itself in a financial squeeze. However, we hope that local government will have the freedom to respond to that situation in the future. If those costs are genuine and have to be met, but they are not met by the national taxpayers, ultimately, they will be met by the council taxpayers. That is the equation.

I believe that it is necessary to bring those factors out so that they can be related to each other. Perhaps the Minister can assure me that those figures will be sufficiently identifiable for the relevant comparisons to be made.

Lord Whitty: My Lords, I can assure the noble Lord that in the PSA context, the efficiency factors will be identified and reported on. They will be reported on

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explicitly during the course of the RSG process. If the noble Lord is concerned that we have a notional efficiency factor against which we shall never be able to judge reality, I believe our existing reporting systems will give him some comfort that they will be clearly identified in that process. If that efficiency factor is out by much, certain calculations will have to be adjusted.

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