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Baroness Hamwee: My Lords, is the Minister able to answer my precise question about vires, which I also raised at the previous stage?

Lord Bassam of Brighton: My Lords, I apologise to the noble Baroness. I should have had an answer for her at the Dispatch Box, but I have not. I shall undertake to ensure that she receives a more precise answer than I can honestly give her today. It would be wrong of me to answer her now as the noble Baroness deserves a more precise response.

Lord Hanningfield: My Lords, I thank the Minister for his comments. This is a very difficult area. As noble Lords are aware, I have considerable practice and involvement in this area at this moment. In Committee stage I mentioned, and I shall mention it now, an archaeological team working in Colchester, Essex, one of the oldest towns in the country, which is covered in archaeological sites. Every time a new building is built another site is found. The county council is in danger of having to give up its service in that regard because it is a discretionary service and the priority is care of the elderly, children's services, schools and so on. If one could use those services one would probably keep them.

Although I have listened carefully to what the Minister has said, he did not give us enough encouragement in the area of work that local authorities carry out very well, and local authorities are in danger of having to give up that work because

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of the pressure on finances. We need to look at the wording again, because the Minister suggested that the wording left enough flexibility for local authorities to perhaps receive enough back from those services to continue them. I shall look at that wording again. I beg leave to withdraw the amendment, but reserve the right to return to it at Third Reading.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

11.30 a.m.

Clause 95 [Power to disapply section 94(1)]:

Baroness Hamwee moved Amendment No. 3:

    Page 52, line 7, leave out sub-paragraphs (ii) and (iii).

The noble Baroness said: My Lords, Clause 95 allows the "appropriate person"—I imagine the Secretary of State or the National Assembly—to disapply Section 94(1) either for "particular descriptions" of authority or with regard to a particular service by all best value authorities; or by particular best value authorities or particular descriptions of best value authorities. I seek to remove the second and third of those from the Bill.

The noble Lord, Lord Bassam, said in Grand Committee that he was sure that I would acknowledge that the power to disapply, which I do acknowledge is a reserve power that the Government hope will not be used, was needed in case the power to charge for discretionary services, under Clause 94, was misused or abused. I then asked why it was necessary to have the power to disapply if Clause 94(3), which we have just debated, was retained in the Bill. That has clear restrictions. I tabled the amendment, hoping that the Government could answer why it is necessary to have a discriminatory power to disapply—albeit a discretionary one—but which allows them to discriminate between best authorities if the power is limited in the way that Clause 94(3) requires. I beg to move.

Lord Bassam of Brighton: My Lords, I understand the spirit behind the moving of this amendment and I shall try to explain further why it is unacceptable. The power in Clause 95 is a reserve power and one that we expect to use only in exceptional circumstances. It means that the Government could take action if a single authority or a number of authorities were to misuse the power to charge, and the power to disapply could be applied to one particular discretionary service or to all discretionary services of one or more authorities.

I explained in Committee on 17th June in Hansard, col. GC 264, that Clause 95 might be of use where it became clear that an authority was not complying with the duty in Clause 94 to ensure that,

    "taking one financial year with another, the income from charges . . . does not exceed the costs of provision".

If the result was that the authority was effectively undertaking unauthorised trading activities, Clause 95 would enable the general power to charge to be

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withdrawn from that particular authority. But if we were to accept the amendment we would only be able to withdraw the power to charge in relation to all discretionary services of that authority, or in relation to a particular discretionary service provided by all authorities.

We want to ensure that best value authorities have the freedom and flexibility to charge for discretionary services if they choose to do so, but we need some flexibility and that is why we have proposed this power for exceptional cases. It would enable us to be very selective so as not to penalise other authorities that were playing by the rules—and indeed other parts of the offending authority which were using the new power properly. It is therefore a precise tool which can be brought to bear if one small part on an authority with a particular discretionary service is not playing the game. It is right that we have that power. The noble Baroness would probably accept that if, in an area where there were competing local authorities, an authority decided that it wanted to exploit the opportunity provided by the marketplace to provide a service, and then did not play by the rules, one would have to accept that that would be wrong. We would want the power to make a critical intervention where an authority was stepping out of line.

However, we wish overall to allow best value authorities, and the way in which they provide those services, to operate with the maximum freedom and flexibility. We shall use this power with great care and caution.

Baroness Hamwee: My Lords, I am grateful to the Minister for that explanation. At earlier stages of the Bill there were a number of provisions which began to be described as hackneyed provisions, and this is perhaps another example. It raises an interesting point. We are told that in order to ensure that another provision of the Bill is not violated, the Government need this power to disapply that provision. It opens up questions as to what all the other parts of the Bill which cannot be disapplied might mean, what the sanctions might be and what the force of those provisions might be. The Government are saying that the only—or perhaps, to be fair, the best—way that they can ensure that a provision of the very same piece of legislation is observed is by disapplying it. That is a major issue, which perhaps I am not qualified to expand on, and one that is certainly not appropriate to examine now, although the matter is serious. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 4:

    After Clause 100, insert the following new clause—

"FREEDOM AND FLEXIBILITY (1) The powers in this Act shall be exercised by the Secretary of State in accordance with a general duty to increase the freedom and flexibility of operation of any local authority that has been assessed as "excellent" or "good" in its most recent comprehensive performance assessment.

(2) When issuing any regulations or directions under this Act or the Local Government Act 1988 (c. 9) or the Local Government Finance Act 1992 (c. 14) that he intends to apply to a local

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authority or local authorities that have been placed in the top two tiers of classification in accordance with the provisions set out in section 100 of this Act, the Secretary of State shall at the same time publish a statement explaining how the regulation or direction concerned will increase the freedom and flexibility of such authorities and in what way it will devolve decision-making to local level. (3) In exercising powers to make an order under section 101 the Secretary of State must have regard to subsections (1) and (2) above.

    (4) The Secretary of State shall, in accordance with the classifications provided for in section 100, ensure that the following reductions in inspection activity for all inspectorates are made so that—

(a) for authorities in the top tier of classification there shall be no external inspections during the period of the order made in section 100(4), and
(b) for authorities in the next tier of classification there shall be a reduction in inspections of at least 50 per cent during the period of the order made in section 100(4). (5) Regulations made under Sections 11 and 26 of this Act shall not apply to any authority that has been placed in the top two tiers of classification in accordance with the provisions set out in section 100, except with the prior agreement of the local authority concerned.

    (6) In section 11 of the Local Government Act 2000 (c. 22) (local authority executives), after subsection (5) there is inserted—

(5A) The duty under this section does not apply to authorities that are classified under section 100 of the Local Government Act 2003 in the top two tiers of performance."

The noble Lord said: My Lords, in introducing this new clause, we are trying to establish in the Bill where the comprehensive performance assessment should stand given that it is a major plank of the Government's local government policy.

When the Government introduced the comprehensive performance assessment they said that it—I shall call it the CPA—would be the vehicle for delivering freedoms and flexibilities to local authorities. When they introduced local public service agreements they said that PSAs would be the vehicles for delivering freedoms and flexibilities to local authorities. When the Government introduced the beacon councils scheme, they said that they would be the vehicle for introducing freedoms and flexibilities for local authorities.

If there is scepticism on this side of the House about the Government's promises of freedoms and flexibilities, it is the product of experience rather than ideology. If distinguishing between service providers on the basis of their ability to deliver the goods is a central plank of the Government's policy for public services—as seems to be the case—then the introduction of a clear statutory commitment on freedoms and flexibilities for local authorities should be an important component of that strategy. It would be welcomed in local government as a statement of the Government's good intentions.

In addition to the general principle set out in the amendment that would give real flesh to the Government's public utterances on freedoms and flexibilities, I have suggested a number of areas on which a freedoms and flexibilities clause could bite. First, we should remember that the Government first introduced the CPA on the back of a promise that it would lead to an overall reduction in inspection activity. It is on that basis that local authorities have engaged with the

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process. However, there are some worrying reports that although the Audit Commission may be willing to play ball, other inspectors—Ofsted, SSI—are perhaps less willing to reduce their inspection activity.

That may or may not be true. The key point is that there should be a statutory agreement on the level of reduction in inspection activity for each class of authority. That would send a powerful signal from the Government to the local authority community that they really do mean business and will compel inspectors to comply with their targets.

Setting statutory targets for reductions in inspection activity does not mean a less flexible system. It would still be possible to tailor individual inspection programmes to the needs of individual authorities. It does mean, however, that authorities will know in advance exactly how much inspection activity they can expect in the medium term. That would aid the budgetary stability and forward planning processes for local authorities and would be welcomed.

Secondly, the amendment would remove the power of the Secretary of State to make regulations binding good and excellent authorities on the use of capital receipts and on minimal levels of reserves. As other amendments will demonstrate, we are opposed to these provisions on principle, but find them particularly objectionable in relation to authorities that have been classified as good or excellent.

Thirdly, the amendment would allow those authorities that have been classified as good or excellent to determine for themselves whether they want to continue to operate under the new executive structures set out in the Local Government Act 2000. If they choose not to be bound by those provisions, then they would be subject to the laws governing executive structures that existed prior to the 2000 Act.

The purpose of the provision is not to suggest that one form of executive structure is better than another. It is not about turning the clock back. The amendment is about choice. It is about providing good or excellent authorities with the power to determine for themselves their internal governance structures.

Why might the Government resist choice? I do not want to put words into Ministers' mouths, but I foresee that the Government might claim that it is not helpful for authorities to revisit their executive structures; that this might cause unnecessary upheaval when an authority should be concentrating on service delivery. Funnily enough, that is precisely why we are opposed to the creation of elected regional assemblies and the reconstitution of the whole local government structure beneath the region. So I do not disagree with the Minister on that.

The authorities themselves, it might be argued, have benefited axiomatically from these executive structures—after all, they are good or excellent. Why then change a winning formula? I would not disagree with that. I would simply say that it is for good and excellent authorities to judge these things for themselves. They are in a position genuinely to consider the costs and benefits of changing their executive structures. The point is whether the Government trust local government. Do they trust local

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government to judge for itself whether its current executive structure or a committee-based structure is the right way forward?

I think that the Government, with their belief in freedoms and flexibilities, must welcome this helpful amendment that gives flesh to so many of the things they have promised over the past few years. I hope Ministers will look favourably on the amendment. I beg to move.

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