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Lord Alli: My Lords—

Baroness Blatch: My Lords, I shall not give way. I am just finishing. The noble Lord can speak before I sit down. If protection for young people cannot be put in statute to underpin guidance, Clause 28 should be reinstated. To guard against the worst excesses of those who take advantage of young people by peddling inappropriate sex education, parents, and especially children, need the protection of the law.

Lord Alli: My Lords, I apologise to the noble Baroness. In no way did I wish to cause her any offence. If I implied that, I apologise unreservedly. But my point is that she really must recognise that she does not have a monopoly on concern for children. There are people all around this House that believe so. On Tuesday night, she said in this Chamber,

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That is simply not true. We all seek to protect children. We just have a different view. I listen very carefully to what the noble Baroness says. I listen to her arguments all the time. But, please accept that everyone in this Chamber is trying to do the right thing and that no one has a monopoly on the protection of children.

Baroness Blatch: My Lords, I should like to make two points in response. First, if the noble Lord reads on in Hansard he will know that that was brought to my attention. I recognised that everyone in the Chamber was concerned with the protection of children. But I said that I was alone in seeking protection in the particular context in which I was seeking it.

Secondly, the noble Lord said that people who take another view and who "claim" to be concerned about children do not actually concern themselves with the protection of children. I am simply saying that I claim, and I am, concerned about protection for children. That is the only rationale for me speaking in this debate.

7.30 p.m.

Earl Russell: My Lords, to begin with, I cannot resist taking up the question posed by my noble friend Lord Shutt of Greetland on, "When were the halcyon days?". I am inclined to suggest that they were, roughly, from 1460 to 1760, which is quite a while ago. However, there were those even then who thought that they came to an end with the beginning of the power of Thomas Cromwell, who continued to load local authorities with what were described expressively as "stacks of statutes". Having picked them up, I can support the description.

I congratulate the noble Baroness, Lady Blatch, on what she said about the Delegated Powers and Regulatory Reform Committee. The noble Baroness has a long and distinguished record in that respect. Both she and I have often worked together on the committee. I have no doubt that we shall do so again with great pleasure and, sometimes, I am very glad to say, to great effect.

I wish to say a few words about Section 28. I shall not go into a lengthy debate it, because it has been debated a good deal. I just want to show that the flag is flying in this quarter, as well as in other parts of the House. I do not know whether the noble Baroness, Lady Blatch, remembers the occasion when Mr Aneurin Bevan described the Conservative Party as "vermin". She may perhaps agree with me that that was not a helpful contribution to the political process—

Lord Jenkin of Roding: My Lords, perhaps the noble Earl will give way. The words used were, "lower than vermin".

Earl Russell: My Lords, I am most grateful for that correction. In that case, it was an even less helpful contribution to the political process. It was simply common abuse. It was not a political argument that could be answered. If, for example, Mr Bevan had said

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that the Conservative Party "ground the faces of the poor", that would have been a specific assertion that the Conservatives could have set out to refute but you cannot do anything to refute mere abuse. It is not a debating argument; it is not capable of rational discussion. It simply says, "I don't like you". That is no way to conduct political debate.

All of us, both in this House and elsewhere, have our likes and dislikes. We generally find that we conduct our processes in a more civilised way, even if we do not always get up and say so all the time. It seems to me that this is a perfectly fair parallel for Section 28, which forbids local authorities to do something—I genuinely cannot understand what. I do not understand what the word "promote" means in this context. As the legislation has never been taken to court, there is no court case to clarify it. So it forbids local authorities to do something unintelligible, which is genuinely not in their power to do.

The noble Baroness, Lady Blatch, explained that she was responsible for transferring power to the governors. She then quoted a large amount of guidance. I cannot help thinking that she slightly overrates the power of the teaching profession. I know myself that it is very limited indeed. If youngsters were brought up on these guidelines, I suspect that they would come out about the most puritanical grown-ups in the country: they would be bored stiff with it. It is not as easy as the noble Baroness suggests. I do not believe that any of us has these sorts of interests.

The function of Section 28 is simply to say, like Mr Aneurin Bevan, "We don't like you". That is not a useful comment to make to people whom we regularly meet socially, with whom we do business, and with whom we sit in the House. People cannot help having feelings. Some of them dislike the most unexpected people. But if we do not conduct our business with ordinary good manners, we really cannot get on.

I also believe that it is part of the function of education that one should understand, at least very roughly, the outlooks of the sort of people one will meet socially. I have in mind a very wide range of people, an increasingly wide range of people. In conversation, one ought to know roughly when one is dropping a brick and when one is treading on people's toes. One ought to know what is likely to give offence. I speak from experience. I arrived at Eton, having never knowingly met a Conservative. So when I talk about unintentionally giving offence, I know what I am talking about. I do not think that that sort of ignorance was good for me. Similarly, I do not believe that the sort of ignorance promoted by Section 28 is good for people.

7.35 p.m.

Lord Smith of Leigh: My Lords, I shall try to refocus the attention of the House on the rest of the Bill, so, in the words of my noble friend the Minister, perhaps the eyes can glaze over now. I should, first, declare an interest as the leader of a local authority, and as vice-chairman of another association called SIGOMA, to

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which there was an unfortunate reference last time I declared the interest. I hope that Hansard get it right this time.

In the interests of brevity, I shall try to concentrate on the parts of the Bill with which I have some problems. I apologise to my noble friend the Minister for not supporting much of the Bill on Second Reading. I welcome the thoughts expressed in his introduction about freedoms and flexibilities and the desire for a new approach for local authorities. However, the Bill demonstrates the tensions within government and, in fact, much of it demonstrates exactly the opposite. Part 2 is a clear example of the centralising tendency becoming predominant again.

If I heard him correctly, I believe that my noble friend said that he believes that there is a problem in a few authorities as regards their financial administration, and that the cure for it is the catch-all general legislation that will cover authorities. Good heavens, we may not have thought of budget monitoring, or checking that our reserves are all right, and so on! Of course, we have done so. However, my biggest concern is how all this is to be done. By what process will we check what will happen in local authorities as regards meeting the provisions in Part 2? When shall we receive the volumes of regulations, which, presumably, will tell us how we can decide whether our estimates are robust enough to meet the criteria? Which army of civil servants will be created to come and check us?

What is missing from the whole section—which is surprising because it is in Part 1—is the role of the external auditors. It would seem to me that if we can enhance the role of these people, it would be simpler, more effective, and cheaper. I have a mind a solution that could be sensitive to local conditions. The level of reserves in some authorities may need to be higher than in others. An auditor would understand all that. I ask my noble friend to think about that as an option in these huge catch-all regulations.

I turn to Clauses 78 and 79 on revaluing for council tax. The council tax bills that are going out now are based on valuations that are at least 12 years old. I always wonder about this arcane science that can say for a building that was built last year what its value might have been if it had been built in 1991. It must be wonderful to be able to do that.

I remind your Lordships that in 1991 we did not have a very scientific approach to determining valuations. It was a matter of the famous estate agents going around, making a lot of money out of the previous government, checking on properties, looking at a street and saying "Band C", "Band B" or whatever else they decided. They were largely guesstimates.

With any tax based on a valuation, the longer the period between revaluations, the more discredited the tax becomes. That was one of the problems with the old rating system. It took too long to be revised, and it was replaced by the poll tax—a great idea!

I welcome any revaluation, but I ask my noble friend to consider whether 10 years may be too long for periodic revaluations. These days estate agents tell us what is happening to house prices on a quarterly basis.

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I am sure that it could be done on an annual basis. We could have a running revaluation programme, which would not involve such huge changes at the end of a 10-year period. We could perhaps use the 10-year revaluation to re-establish a base position, and then move forward again. I hope that my noble friend will also consider that.

I very much support the Government in wishing not only to carry out such a revaluation, but also to revise council tax bands. Some research that I have seen recently shows an unintended consequence of a simple revaluation: the lowest tax bands in all regions do least well out of a revaluation. Even in the areas in the South East that would face an increase in valuation, the lowest levels would pay much more proportionately in increased tax. The lowest levels of tax bands on the whole reflect people's income and ability to pay. We should examine the matter carefully. Even a simple revision of tax bands, by splitting Bands A and H, would eliminate much of this problem.

I wish to speak to Clauses 100 and 101, as leader not only of a council, but of an excellent authority. The noble Baroness, Lady Hanham, was very modest in not saying that hers is also an excellent authority.

Looking at the clauses, one would think that the localist tendency is in the ascendancy and that we are gaining the ability to have more freedoms and flexibility. But looking at it from another perspective one can see that they are very slow to materialise. They are not supported in all parts of government, even in parts of my noble friend's department.

I should like to quote from a letter—it is not about Wigan, so I can quote it—which reads:

    "The Office of the Deputy Prime Minister will take this opportunity to congratulate your authority for its efforts in becoming an excellent authority. Though we acknowledge the flexibility under this scheme, we wish to express to excellent authorities that the purpose for which the grant was awarded should not be ignored".

That is a reference to ignoring ring-fencing of grants. If it does not suit government departments, they are not allowing it. If we can have a simple principle—"Invest in the best"—we can move forward the Government's desire to improve public service and provide a model for all local authorities.

Finally, I ask my noble friend to consider an additional clause in the catch-all Part 8. Unlike most organisations, and notably private sector firms, local authorities have no right to sue as corporate bodies, even when they are defamed. I can give an example from my own authority—and my noble friend will understand where it comes from. We are repeatedly accused in writing of moving council tenants to house asylum seekers. Not only is it not true, but it is a highly politically sensitive issue. We have no right—other than trying to correct it in the press—to stop the organisation that continually repeats this untruth. I would not, of course, want a power to limit reasonable criticism of publicly accountable bodies; but there may be occasions when it is necessary to have recourse to the law in the interests of truth. I hope that my noble friend will consider remedying the matter in an additional clause.

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7.44 p.m.

Lord Sawyer: My Lords, I welcome the Bill and want to speak on staff issues. I am a member of UNISON, which is an interest in this respect. I want to comment in particular on Clauses 102 and 103. For many years, I have been deeply concerned about the effect which some of the privatisations and contracting out have had on the lowest paid and most vulnerable of local authority employers. I have previously spoken about that in this Chamber. I have urged Members who have listened to my words, or read them in Hansard, to read Polly Toynbee's publication, Hard Work: Life in Low-Pay Britain. That is an excellent documentation of what it is like to be a low-paid worker, providing basic local authority services; cleaning, cooking and care services. Those people have had to suffer dreadful reductions in pay and conditions.

I have also stated that I am ashamed that my Government have introduced many of those changes, but we need to move on. In recent times, discussions between the representatives of low-paid workers and the Government have made improvements. We know that when local authority staff are contracted to a new employer, their local authority terms and conditions of employment transfer with them under TUPE. However, I could give experience of staff, for example, in Northern Ireland suffering a 60 per cent cut in their basic pay—a low rate of pay—and a reduction in holiday and sick leave. Concrete examples of that show that the TUPE regulations can provide only temporary protection of terms and conditions, sometimes over a short period of time, depending on how often the contract moves on and how different employers come to provide that service.

Local authority terms and conditions are therefore eroded and are replaced with worse terms and conditions for those involved. Therefore, as the Bill progresses I shall be seeking to persuade the Government and local authorities to secure in their contractual agreements with contractors that the terms and conditions of transferring employees are "the same as" or "no less favourable than" those enjoyed as an employee of the authority. In addition, and most importantly, this contractual clause should apply for the life of the contract and apply to any subsequent employer who takes over the contract. These measures should be specified on the face of the Bill rather than being left to statutory guidance or directions from the Secretary of State.

These standard terms and conditions include pay, annual leave, sick leave, sick pay, maternity leave and maternity pay. I want to make it clear that that would not prevent, or seek to prevent, employers from carrying out reorganisation of work, changing working practices or improving productivity or efficiency.

Clause 103 deals with pensions and is even more difficult. It is a positive step towards statutory protection for pension rights of contracted-out employees. The clause would require local authorities to secure that transferring employees have pension benefits and rights which are,

    "the same as, or . . . broadly comparable to or better than"

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those they had as an employee of the authority. It is intended to apply to subsequent contractors as well, which is to be welcomed.

However, as one would expect knowing the difficulties as regards pensions, the evidence and experience of contracted-out staff shows that "broadly comparable" pensions in practice can often mean inferior pensions. For a local authority worker, that is 3,800 a year—not a princely sum and we are certainly not talking about the fat-cat syndrome here. It will be difficult to find a way forward, but moving from broadly comparable pensions to pensions which are "no less favourable than" might be a way of ensuring that such staff do not ultimately receive inferior pensions, which can lead to poverty in later life.

In practice, employers do not achieve the bulk transfer of past service from their local authority pensions, as they are led to expect. They often receive a money-purchase scheme rather than a final salary scheme. Changes to the pension scheme detrimental to the transferred employees are often made during the contract. "Broadly comparable" pension schemes are often capped.

I have raised only three issues. The time is late and there is a great deal of detail to examine as regards terms and conditions. I do not want to do so today. I recognise that in particular on pensions the debate will be difficult, but I want to open up a dialogue and ask the Minister to consider how improvements might be made in those two areas.

7.49 p.m.

Baroness Maddock: My Lords, looking around the Chamber, I see that we have a wealth of experience in people who have served in local government. Some of them still do so and some are about to give up. I particularly enjoyed the contribution of my noble friend Lord Shutt of Greetland on its history, which was added to by my noble friend Lord Russell. My noble friend Lady Hamwee outlined the views of those on these Benches, and in principle we support the Bill. It takes us in the right direction, as many noble Lords have commented.

There are three important reasons why we support the Bill. First, it introduces a new prudential capital regime; secondly, it introduces—this awful word—BIDs; and, thirdly, it introduces council tax reforms. I shall refer to these matters in more detail later.

Like other noble Lords, we are not without reservations. Interestingly, the noble Lord, Lord Smith of Leigh, who sits on the government Benches, appears to have more reservations than most noble Lords. We are disappointed that the Government have been rather timid in giving freedom to local councils. They have reserved powers to themselves in regard to capping, borrowing and minimum reserves. Other noble Lords, including my noble friends Lord Shutt and Lady Hamwee, also referred to this issue. Of particular concern is the fact that, despite being sold as containing less regulation, the Bill gives to central government almost 40 new regulatory powers.

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As a party, we have promoted the concept of BIDs for a considerable period of time. I was interested in the contribution of the noble Lord, Lord Jenkin of Roding. It will be interesting to pursue some of the points he has made when we come to later stages of the Bill.

I received a map showing the location in Britain of the 22 pilot BIDs. As someone who now lives in the North East of England, I was disappointed that I could not see a single pilot north of Hull. It is to be hoped that that will change if the Bill goes ahead because the economy of the North East needs help.

Like others, we support in principle the changes to the council tax, but we do not agree with some of the detail. In his opening, the Minister pointed out that a draft Bill was published and that there was a great deal of consultation. We welcome that. We sincerely hope that the views expressed during those consultations will find their way into the Bill during its passage through the House.

Like the noble Baroness, Lady Blatch, and my noble friend Lord Russell, I am concerned that the Government should look carefully at the recommendations of the Delegated Powers and Regulatory Reform Committee. The opening comments of the Minister were very promising in this regard.

The Minister referred to the issue of help for small businesses. There is wide concern in the Chamber that that help may not be as great as he indicated. We shall need to pursue that issue.

In his opening remarks, the Minister was fairly straightforward in regard to Clause 28. We have had reasonable debates in the House on this issue. I sincerely hope that, as the Bill passes through its other stages, we shall be able to deal with it in a rational and reasonable way. I have always believed that this is a very controversial issue which appears to have been dealt with in an unnecessary and unworkable way. I do not dismiss people's concerns, but its time has come. We need to look at other ways of dealing with the concerns of people. We should certainly not deal with them through Clause 28.

In her opening remarks the noble Baroness, Lady Hanham, posed a very interesting question. She asked the Minister whether anything further would be added to the Bill as it passed through the House. We shall be interested to see what happens in that regard.

I shall need to go into more detail as regards housing finance, but I agree with some of the points made by the noble Baroness, Lady Hanham, in relation to that issue.

The noble Baroness referred to council tax, as did many other noble Lords, including my noble friend Lord Shutt of Greetland. The real problem with council tax is that it is not related to ability to pay. For a number of years it has been possible for successive Governments to manipulate it in ways which suit whichever party is in power, and its finances. The sooner we can get away from that, the better it will be for all of us.

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The right reverend Prelate the Bishop of Guildford talked in his opening comments about the importance of local government for a healthy democratic society. I strongly believe in that, as I have said several times since I have been in this House. I found it particularly interesting to hear, although many of us know it already, about the role of the Church in dealing with many of the issues in the Bill, especially Section 28.

I wish to highlight some of our concerns on housing matters. I declare an interest as vice-president of the National Housing Federation; I am also a patron of the Empty Homes Agency. I wish to dwell for a moment on empty homes. The agency and I welcome the proposals in the Bill to allow councils to change the way they charge for empty properties. However, councils are allowed to use council tax data. Before we get further with the Bill, will the Minister look at that? The Empty Homes Agency is finding worrying evidence that despite the Government's intention that councils should be able to use the data to help them with their empty property strategies they are still coming up against problems. I ask the Government to do a little more work in this area and respond at a later stage of the Bill.

I am also concerned that the money that will be raised from empty homes will not go to the local authorities. If they are to have good empty property strategies, they need finance for it. What will the Government do with the money that is not going to local authorities?

To a certain extent, I am worried about the provisions on discounts for second homes. The noble Baroness, Lady Gale, talked about this. There will be money from this and the Government have said that they intend to plough it back into affordable housing. I would like to hear from them quite how that will happen.

On housing capital receipts, I shall be briefer than I intended because other people have already talked about this, and I associate myself and my colleagues with their comments. We believe that the principle that the Government can remove capital receipts from local authorities and redistribute resources from one authority to another sets a very dangerous precedent. It weakens local accountability and undermines local authorities' ability to manage their assets.

This part of the Bill seems contrary to the intention to provide more flexibility and freedom for local authorities and to reduce central control. We believe that local authorities should have the freedom to develop locally appropriate policies and solutions. This issue is clearly of great importance in Guildford. The right reverend Prelate the Bishop of Guildford talked about this, and my honourable friend the Member for Guildford raised it in another place. It is a serious concern. Although the Government's intention is to find more money for really deprived areas, it has been pointed out that many authorities, which appear to be quite well off still have acute problems with housing, homelessness and, as the right reverend Prelate said, with people who are still in bed-and-breakfast accommodation, which the Government say they want to do away with. I am sure we will return to that issue in Committee.

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Clauses 40 and 41 introduce new powers to enable the Secretary of State to reduce or extinguish local authority debt and to pay some or all of the premiums that arise from early redemption. We shall go into that matter in more detail at later stages.

There seemed to be some confusion in another place as to whether the Government intended to encourage local councils to transfer their council housing to registered social landlords. Already the Government are spending much money on overhanging debt yet the projected costs for 2002–03 are 500 million. For the following year the projected cost is something like 800 million. When one considers other sums that are being spent on housing that does not seem a sensible way to proceed if we are concerned about housing. There will be other opportunities to discuss that matter in more detail at later stages.

Had this been a Liberal Democrat Local Government Bill, we would have moved further in freeing up local government and making clear that local government receives its democratic legitimacy and autonomy through the ballot box and not through the gift of central government. We should like to see councils' rights and duties included in a constitutional settlement. We should like to stop central government chipping away at local government powers. We should like to see local authorities made more accountable by giving them more control over their affairs, particularly their ability to raise funds locally. We would replace council tax with a local income tax. That is a fair tax, levied according to ability to pay. Massive savings would be made in collecting it.

At the end of the day we believe that local councils are accountable to the communities which elect them. It is up to local people to decide whether a council is performing well or badly. Central government—I believe that this point was raised earlier and I have raised it before in this Chamber—have a poor record of delivering services. No external body sets their performance standards or is able to intervene when they fail. People will say that it is up to the electorate to make their views known by the way they vote at a general election. Why should not the same principles apply to local government, which has no less a democratic legitimacy than central government?

As I said, the measure is a long way from our vision but nevertheless it moves towards it. I am sure that we shall discuss the issues in the spirit of this House. I am sure that the Bill will emerge from this House a better Bill. We intend to help to improve it.

8.2 p.m.

Lord Hanningfield: My Lords, it is a privilege to speak at the end of such a stimulating and wide-ranging debate. I should declare an interest. Most noble Lords are probably aware that I am leader of Essex County Council. I speak in support of my noble friend Lady Hanham.

The Bill before us today has well over 100 clauses. It is a long Bill, but it is a Bill that is short on vision and imagination. Will this Bill encourage people to go out and vote in local elections? Will it encourage a new generation of young people to enter politics to

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represent their local communities? Will it attract entrepreneurial and dynamic individuals into careers in local government? I fear that the answer to all those questions is no.

Although the Bill has some provisions to commend it, which we shall discuss at later stages, it is basically a timid Bill. It is a strings attached Bill. Nothing in this Bill comes free. Virtually every responsibility given to local government in the Bill is hemmed in with caveats, qualifications and constraints.

The Royal Institution of Chartered Surveyors in its evidence to the Select Committee noted that the Bill introduces over 50 regulation or order-making powers for the Secretary of State. In 70 pages of legislation there are 79 references to the Secretary of State's powers. If that is what the Government understand as devolution, they must have their own special dictionary in Whitehall. That point was very much reinforced by several noble Lords, in particular by my noble friend Lady Blatch, the noble Earl, Lord Russell, and the noble Baroness, Lady Maddock. I hope that the Minister will say more about how the Government intend to respond.

The Select Committee report, published in July last year, made the point sharply when it stated:

    "The Government promised to redress the imbalance between central and local government. This Bill fails to achieve that. It makes some small steps in the right direction, but at the same time increases the power of the Secretary of State. Central Government seems to be terrified of trusting local authorities and allowing their independence".

I cannot understand that culture of fear. A wide body of evidence now attests to the quality and capacity of local government.

Sir Andrew Foster, the outgoing controller of the Audit Commission, stated in a recent interview for the Local Government Chronicle that perhaps local government should be saying to central government:

    "How well do we run things? How well do you run things? Maybe we could run some of the things you don't run so well".

I shall touch on comprehensive performance assessments later, but, as several noble Lords have pointed out, it would be interesting if the Government were to put their own departments through some comprehensive performance testing. We should take note of statements of this kind. If anyone is in a position to judge objectively the current strengths and weaknesses of local government, it is the controller of the Audit Commission.

There is much ground to cover in the Bill. I shall touch on some of the key issues. I apologise in advance if anything I say has already been covered by noble Lords in the debate.

We welcome the scrapping of credit approvals and the freedom to borrow for capital investment, provided that the debt can be serviced. That is a new freedom to be granted to local authorities. But, as is typical of the Bill, what the Government give with one hand, they take with the other.

First, borrowing levels will have to comply with a "prudential" code drawn up by CIPFA. That is sensible and something with which we can agree. What

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we cannot understand is why, having established the mechanism, the Government feel that it will still be necessary to retain powers to control borrowing by an individual authority. Surely that is the purpose of the code. It would be helpful if the Minister could clarify why this separate power is needed.

Secondly, the Government can control the level of borrowing by individual authorities by imposing an aggregate limit on total local authority borrowing. That power should also be removed from the Bill. The result would be to provide local authorities with a genuine freedom, one that would be moderated by sensible and proportionate statutory controls through the CIPFA code. On that, I believe all noble Lords agree.

As the noble Lord, Lord Smith of Leigh, pointed out, the heavy hand of central government can also be felt in the provisions to do with financial administration. Clause 26 provides the Secretary of State with the power to specify minimum levels of reserves for individual authorities. This power puts local authorities under a degree of legal prescription not applied to any other public body. If it is necessary for the Secretary to intervene in local authorities on the issue, why is it not necessary for similar powers to be exercised in relation to primary care trusts, many of which have larger budgets than local authorities? Similarly, why not target also the host of other non-accountable quangos that deliver services at the local level?

At Second Reading in another place, the Minister, Nick Raynsford, made it clear that this provision was necessary in order to tackle a small number of poorly performing authorities. On 7th January 2003 he stated that,

    "a small number of badly managed and poorly performing authorities tarnish the good reputation of local government. It is in everyone's interests that those authorities turn around their performance and strive to match the standard of the best".—[Official Report, Commons, 7/1/03; col. 51.]

He went on to say, at the same column,

    "that is why we make no apology for including the part 2 provisions in the Bill".

There are two points of issue here. The first concerns whether adopting sweeping powers for an intervention covering all local authorities is really a proportionate or sensible way of addressing a problem that affects only a tiny minority of authorities. The second is whether such powers will have the effect ascribed to them by the Minister. That was certainly not the view of the Select Committee. The report comments on this matter by saying:

    "We did not receive any evidence that, had these particular measures been in place, they could have prevented financial imprudence".

CIPFA has also expressed doubts about the power. It has described the setting of balances as,

    "a very local decision and judgement".

I ask the Minister to tell the House how he thinks that the Secretary of State can reach a better judgment about the appropriate level of balances in a local authority than the chief financial officer of that authority, whose duty it is to report on the adequacy of reserves.

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Much has been said about the business improvement districts, which I think we can call the sons of my noble friend Lord Jenkin. I would not wish to repeat all the arguments on them, but I ask the Minister to note some of our concerns, which I am sure we are going to discuss in Committee.

Regarding the powers on council tax bands, we support the need for regular revaluation of properties. However, I am told that if the Government go ahead with the revaluation, it will be the first carried out since the war in local government by a Labour government. Every post-war revaluation has been carried out by a Conservative government, so we shall wait and see. We generally welcome it and also the power to change the discount on second homes. But we have reservations about the power to change the number of valuation bands.

In a county such as mine, where average property prices are surging way ahead of rises of income, it will be families of modest resources who will be hit hardest by the introduction of an additional band between G and H. On top of rises in national insurance contributions and the new grant distribution formula that redistributes grant from the South East to the Midlands and the North—we have discussed it several times before—it could be seen as another stealth tax imposed on the south-east of the country.

Clauses 100 and 101 deal with the comprehensive performance assessment. For noble Lords who are not familiar with the process, it may be helpful if I provide some background. Local authorities are already subject to heavy regulation by external inspectorates such as Ofsted for education and the Social Services Inspectorate for social services. We conduct best value reviews which are subject to external scrutiny through the Audit Commission, and the soundness of our finances and corporate governance arrangements is reviewed by external auditors. That is the framework, but I assure noble Lords that there is a great deal more to it. For an authority such as Essex County Council, it adds up to approximately 170 days of inspection every year.

The clauses introduce another scheme of inspection. Under the CPA, the Audit Commission pulls together the information from the various inspectorates to reach a view as to the overall quality of services delivered by an authority. It then comes to the authority to look at the quality of its corporate management—to make a judgment on its corporate capacity. Those two dimensions are married up, put into a black box, and marks out of 48 are produced. I do not need to highlight to noble Lords the painful absurdity of marking out of 48 a democratically elected tier of government such as Essex, serving a population of 1.3 million people and with a budget of 1.2 billion a year.

The corporate capacity element of that exercise is a new part of the inspection process. Last year, when we had our CPA inspection, the team was based in Essex for two weeks. I personally spent 17 hours during that period with the inspectors. The time of senior officers that went into preparing and managing the inspection ran into thousands of hours. I have no doubt that

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when the inspectors left they were in a pretty good position to judge the strengths and weaknesses of the council, but that is really not the issue. The issue is whether that is the best use of public money, given the limits on resources to which we are all subject.

I would be interested to know why the Minister thinks that the quality of public services delivered by a local authority and attested to by external regulation should not be used as a proxy for judging corporate capacity. He will no doubt say that the CPA will lead to a reduction of inspections. That is something we could welcome. It would be helpful if he explained why the level of reduction for each category of authority is not in the Bill, and also whether the reduction in inspection activity will relate to all inspectorates—to Ofsted and the SSI as well as to the Audit Commission.

We welcome the power set out in Clause 117 to enable local authorities to hold advisory polls. I would be grateful for the Minister's views as to whether he would consider it appropriate to conduct a poll of the people of Essex about whether the county council should invest its resources in preparing for inspections or the delivery of public services. I should be interested to hear his views.

There are, without question, parts of the Bill that can be welcomed. The new clause introduced by the Government on Report to enable local authorities to retain some of the growth in its business rate revenue in our areas is a proposal that we can broadly welcome. We will obviously scrutinise it well in Committee, as my noble friend Lady Hanham said. We also broadly welcome the new powers to charge and trade.

There are a large number of detailed issues that we will explore in Committee. I should like to discuss housing receipts, which received considerable comment from the right reverend Prelate the Bishop of Guildford and the noble Baroness, Lady Maddock. We will explore that in Committee.

In a relatively short debate, we have had three major contributions on one small clause, Clause 121, which involves Section 28. We shall no doubt debate that at considerable length at other stages of the Bill.

Central government say that they are committed to local government. They want to provide local authorities with more freedoms and flexibilities. They want to do that, presumably, because they recognise that step changes in the delivery of public services can be made only by releasing local authorities to respond creatively and dynamically to local needs. They cannot do that if they are fettered at every turn and tied up in red tape.

However, anyone who works in local government will tell you that that attitude towards local government certainly does not permeate the whole of Whitehall. A couple of weeks ago, I received, in my capacity as leader of Essex County Council, a letter from the Secretary of State for Education. He said:

    "I am very disappointed at the level of your proposed schools budget and I have no doubt that the authority's schools will take a similar view. The proposed budget implies that the authority proposes to pass on only 99 per cent of the increase in schools funding".

I particularly like the phrase, "only 99 per cent".

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In our grant settlement from government, we received an increase of only 28 million—the lowest of any county. The amount we were required to pass on to schools was 35 million; that is, 7 million more than our total increase in grant. In other words, simply to fulfil that government exhortation, we had to use all our additional grant—ignoring pressures on social services, roads, waste disposal and other services—and put council tax up by 2 per cent to fund that single requirement.

I do not believe that the Secretary of State for Education and Skills could have understood that when he wrote his letter. A democratically elected body, responsible to local people, would be absolutely deficient in its responsibilities if it did not look hard at whether it could fulfil that sort of requirement at a cost that local people could afford. We hear all sorts of noise about the levels of council tax; this is the sort of thing that causes that. We see the freedoms on one side and the control on the other.

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