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These clauses do not mean that an outgoing authority has to cease business. The Secretary of State, or the other person specified in the direction as being the person to give consent, may consent to a disposal, to the authority entering into the contract or to the use of reserves. The Secretary of State may specify that consent should be sought from the new authority if, for example, it has already been established as a shadow authority. These clauses do not seek to remove the discretion of local authorities to spend a reasonable amount of reserves to reduce their budget requirement for council tax purposes or any other reason. However, allowing the Secretary of State to restrict the amount of reserves an authority includes in its calculation of its budget requirement, even for the purpose of reducing council tax, is essential to prevent the situation I described.

Amendment No. 58 would open the door to a council using reserves with the following possible effects: reserves that may otherwise have been available to the new authority might no longer be available; it might artificially lower council tax in the area, making it harder for the new authority to equalise council tax across the area as a whole. Those actions potentially undermine a new authority’s financial position both in the cost of restructuring and in the future as it looks to equalise services and service provision. Lastly, an undue use of reserves in a given year places further pressure on the Government’s fiscal rules, as it adversely affects the fiscal aggregate in a given year by increasing spending but not receipts.

This is not about the Government being dictatorial and restricting what authorities can do; it is about prudence and ensuring the financial viability of the new unitary authorities. Therefore, the provisions should remain part of the Bill.

Amendments Nos. 59 and 60 would amend “31 December 2006” in Clause 27 to “the commencement date of this Part”. That would seriously weaken the safeguards against irresponsible decisions. The inclusion of “31 December 2006” means that the value of disposals or any contracts entered into from that date by authorities that are to be abolished count for the purposes of the direction issued under Clause 24. Clause 24 allows the Secretary of State to require an authority that is going to be dissolved to obtain consent before it can dispose of land over £100,000, enter into certain contracts or include an amount of financial reserves when calculating its budget requirement for council tax purposes. In effect, the clause would mean that, for example, if an authority disposed of land worth £60,000 on 2 January 2007, once subject to a direction under Clause 24, if it sought to dispose of a further piece of land worth

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£50,000 after the date of the direction, it would need to seek consent for that further disposal because it will count: the value of both transactions is £110,000, which is over the £100,000 limit. So alteration of the date would mean that councils that are to be abolished would be free to make disposals or enter into contracts until the commencement of the provisions in Clause 24 without any subsequent consequences as to what they could do once the Bill had been implemented. That would obviously weaken the safeguards.

The noble Baroness asked what would happen if a local authority entered into a contract without consent. I am told that if an outgoing local authority which was subject to a direction entered into a contract without consent, the contract would not be enforceable against the successor authority. Clause 28(2) provides for that.

These are technical issues, but they provide further safeguards in what could be an unfortunate process. I think that they are necessary and I hope the noble Baroness will be able to withdraw the amendment.

Baroness Hanham: I thank the Minister for that explanation. Who is the person specified in the direction? Do we know?

Baroness Andrews: I do not know whether it will depend on the nature of the direction or whether there will be a delegated power. I will write to the noble Baroness on that.

Baroness Hanham: I would be grateful for the Minister’s reply on that. I think that it is essential. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24 agreed to.

Clauses 25 and 26 agreed to.

Clause 27 [Consideration to be taken into account for purposes of direction]:

[Amendments Nos. 59 and 60 not moved.]

Clause 27 agreed to.

Clauses 28 and 29 agreed to.

Clause 30 [Definitions for purposes of Chapter 2]:

[Amendment No. 61 not moved.]

Clause 30 agreed to.

Clause 31 agreed to.

Clause 32 [Resolution for whole-council elections]:

Lord Greaves moved Amendment No. 62:

The noble Lord said: We move on to Part 2 of the Bill, galloping through the pages to the ever-exciting issue of elections. We are now debating Chapter 1, on the power of district councils in England to change their systems and specifically their schemes for

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elections, which basically means whether they have elections once every four years, two years or annually with one fallow year—so three years in four. In moving Amendment No. 62, I shall also speak to Amendments Nos. 73 and 84. They are all the same amendment but relate to different circumstances.

I have tabled a number of related groups of amendments, all of which seek to free up the ability of local authorities and councils to decide their own electoral arrangements without undue imposition from the centre. As for electoral arrangements, there clearly has to be quite a lot of controlled supervision of local authorities, more than in many other areas. By the very nature of elections, if authorities are simply allowed to do what they want and how they want in any circumstances, some might behave in somewhat undesirable ways in order to preserve the election and office of those who are there at the moment. I accept that there have to be detailed rules and regulations about elections and safeguards laid down, but many of the restrictions that the Government are proposing, and which already exist in many cases, are too great.

The first amendment is a fairly straightforward, simple one. It says that once a scheme for a particular election—whether it is whole council, by halves or by thirds—has been approved, it will not be changed until there have been two subsequent elections, which seems a reasonable time period. I think that is what the Government are saying in their more complicated elections that refer to particular dates and all the rest of it. If that is what they are saying, they should say it in a nice simple way, which is what I have offered them here. I beg to move.

Lord Hanningfield: We have some sympathy and agree that councils should be able to determine their own cycles or arrangements under proper electoral procedures. Perhaps the noble Lord, Lord Greaves, could clarify whether he was trying to insist that they had to wait two cycles? If they were to be left to their own arrangements and wanted to have an all-out election fairly rapidly, they should be allowed to do so. I was not quite clear when he was moving his amendment whether we should support it. He almost seemed to be prescribing one fixed system, when we all thought that we should allow a local council to decide for itself what it was going to do.

Lord Graham of Edmonton: I still think that there is good sense in this amendment. If after due deliberation it is felt that the system is defective and another one is brought in, it needs to have a reasonable time to bed down. If it is possible after two or four years to say, “This is not working, change it. You are operating a poor system, we will change it”, that could be good, but it could also lead to Tammany Hall politics.

If a party, or an individual with power, decides that a change in the electoral system is beneficial politically and takes advantage of that because it cannot be stopped, that is not good for democracy. Two elections in eight years is a sensible period, during which the cycle can work or not—it stumbles

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along after the first four years and is found to be dissatisfactory after the second. There is some sense in this amendment.

Baroness Morgan of Drefelin: I see this amendment as being rather more prescriptive than the noble Lord’s interpretation. The Government are opposed to Amendments Nos. 62, 73 and 84. District councils that are eligible to change their electoral cycles should not be placed under too many restrictions as to when a resolution may be passed.

When devolving responsibilities to local authorities, we must be prepared to trust them to act responsibly. Preventing a local authority from changing its electoral cycle within eight years of a previous decision to change is too restrictive. The Bill provides for a council to resolve to change its scheme for elections at shorter intervals. It would be up to district councils to decide whether it is sensible to change their scheme after only four years. As set out in the White Paper and as recommended by the Electoral Commission in its January 2004 report, the Government believe that whole-council elections are the most appropriate scheme for an authority to operate.

Our main concern is that the restrictions within the amendments tabled may prevent councils moving to whole-council elections in the first place as they will be stuck on that cycle for eight years. Therefore, they may not be prepared to change their scheme of elections in the first place. The amendment is overly restrictive and will discourage councils from changing to whole-elections. I hope that at this stage the noble Lord will consider withdrawing his amendment.

Baroness Hamwee: Before my noble friend does so, I wonder whether the Government have any comment on a point to which my noble friend alluded, but did not develop. If a local authority makes a change and then rather rapidly makes another and another—because presumably this could go on and on—it must be open to concern about whether it is doing so for party political reasons, not gerrymandering as it is not about boundaries, but thinking that it will get the right result if it changes the system. That would be a bad thing.

5.15 pm

Baroness Morgan of Drefelin: Before the noble Baroness sits down—or even before the noble Lord, Lord Greaves, stands up—perhaps I may continue. The permitted resolution periods under Part 2 will ensure that at least one full electoral cycle is completed under any new scheme. We believe that this is the right approach. Noble Lords should note also—this is the point that the noble Baroness, Lady Hamwee, is trying to draw out of me—that the Bill currently provides for a resolution to be passed by a two-thirds majority which will ensure that changes will be made only when a significant majority of the council supports a change. This is an important safeguard that we believe should

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provide stability and mean that councils will not switch backwards and forwards between different schemes of elections with, for example, every change of political control. With that additional note on the record, I hope that the noble Lord will consider withdrawing the amendment.

Lord Greaves: I am grateful for the Minister’s comments and from other noble Lords who have taken part. I have to say that I thought I was being slightly less restrictive than the Government. I will go back and read very carefully what she said and what the Bill says. Perhaps I misunderstood it. I understand the points made by the noble Lord, Lord Graham, and my noble friend Lady Hamwee. There is a possibility that if the electoral system is changed too frequently, there will be considerable local confusion. One of the points on which I will elaborate shortly is that I do not think that it matters if lots of different councils have lots of different systems; what matters is the system that applies in a particular place and whether local people understand it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 agreed to.

Clause 33 [Resolution for whole-council elections: requirements]:

Lord Greaves moved Amendment No. 63:

The noble Lord said: In moving the amendment, I shall speak to the other amendments in the group, all of which repeat two amendments applied to three different circumstances.

I propose that there should be adequate consultation before a local authority takes a decision to change electoral arrangements. The Government are proposing that the council should have,

I want to make absolutely certain that local electors are among those consulted. Secondly, I propose that the minimum requirement for consultation of local electors and others is a notice in at least one local newspaper and a notice on the council’s website.

These are important matters. The Government may say, “Well, they will do that anyway, won’t they?”, and a good, sensible council would take those steps. However, again this comes back to the point that changing electoral systems is a sensitive matter, because people’s motives for doing it may, on the one hand, be entirely virtuous, or, on the other, somewhat selfish in that they may think that a new electoral system will be to their advantage.

Electoral systems are sensitive in that way and it is important that councils take proper steps to consult people reasonably and that, having consulted, they consider the representations made before making decisions. We all know of councils that are models of consultation and consider the responses. We also know of councils that are not so good. It is a fundamental point. I beg to move.

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Lord Hanningfield: We agree with the general thrust of these amendments: the electors of an area should be consulted. Therefore, one has much sympathy with the amendments of the noble Lord, Lord Greaves, but the Minister made a valid point about the need for a two-thirds majority. I have already had discussions with several district councils which would like to change, but think that they are most unlikely to get the two-thirds majority. It has been suggested that people might want to switch backwards and forwards because of political necessity; this will not happen because of the two-thirds majority. Indeed, the two-thirds majority might be too restrictive in getting enough to change.

Elections every four years are much the best way of enabling a mandate to get things done. We have three-year finance plans, et cetera. It is ridiculous when authorities change political control year by year. It is not good for the people in that area. I am a little concerned that the two-thirds majority will stop some of the district councils going to four-yearly elections, when the majority of people there would like to do so. Some of the fears expressed are unfounded, but we support consultation of the electorate.

Lord Graham of Edmonton: We seem to be in some difficulty about how prescriptive we should be. As presently worded, the Bill would allow the local authority to determine the extent of the consultation. Any general council will have members from all political parties and none, and I would like to believe that we can trust it to make sure that its corner is respected. I hesitate to believe that any local authority will not be minded to ensure that it cannot be attacked on the grounds of bias, or in any other way, if it is seeking to consult with the populace as to what should change, and when and how. The amendment, to make sure that certain things happen, is unnecessary in this situation.

Lord Bruce-Lockhart: I understand the motivation behind the amendments, but I agree with my noble friend Lord Hanningfield. I speak today for the first time not as chairman of the Local Government Association, having ceased to be that yesterday. My experience, going around the country, shows that it is in the interests of good local government to have elections every four years. The kind of strategic, long-term decisions that need to be made must be taken with a four-year view. These include financial decisions, the decisions that Michael Lyons concentrated on around the place-making issue, the regeneration of towns and work with partners. Local government is expected to work in strategic partnership with local area agreement boards today. You simply cannot change the council representatives every year. It is absolutely imperative that we do all we can to encourage councils to go for whole-elections every four years.

Baroness Morgan of Drefelin: I thank the noble Lord for tabling his amendment and giving us the opportunity for this brief but important discussion

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on publicising changes to the electoral cycle. I fully appreciate his concerns about the need to ensure that local authorities publicise any changes as widely and as appropriately as possible. Again, I fear that I must return to the point about the amendment being far too prescriptive. As I have said, these amendments are all concerned with the level of consultation to be undertaken by a district council that proposes to change its scheme for elections.

The Government do not believe that it is necessary to specify exactly who the district council should take reasonable steps to consult, other than to say that it should be anyone whom the council thinks it appropriate to consult on the change. This is part of devolution and we need to trust local authorities, democratically elected and accountable to their electorate, to consult those people whom one might reasonably expect to be consulted on such matters, including local government electors. We therefore do not believe that including specific provision in the Bill is necessary. The amendments go against the devolutionary spirit of the Bill.

At Second Reading, when I had what I would not quite call the pleasure of making the Second Reading speech for my noble friend Lady Andrews, the point that struck me in the debate that followed was the consensus on the encouraging devolutionary nature of the Bill. I hope that we do not feel it necessary to include in the Bill the need to place advertisements in local papers, and so on, and I hope that the noble Lord will consider withdrawing his amendment.

Lord Greaves: I thank the Minister and everyone else for their comments. As we go through the Bill, many of us will be arguing strongly for devolution and for the freeing of local authorities on all manner of things. The point that I made earlier was that electoral matters are different in kind from many other things because they affect the very existence or membership of the authority. However, having listened to the discussion, I will reply to some of the points made when we discuss the next amendment and, for the time being, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 64 not moved.]

Lord Greaves moved Amendment No. 65:

The noble Lord said: This group and the following group are more substantial and come to the heart of the question of whether the Government are really willing to give local authorities more freedom—to let go, to use the phrase used by the Minister this morning.

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