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The United States is in a similar situation. It has a very stable structure in local government. It has states, cities, municipalities and counties with known powers. It does not keep changing the structures, although it may change the way in which bodies work together, which can be done very easily. It is simply a matter of

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responsible local bodies taking a responsible view of their capacity to deal with problems, alone or co-operatively. Those arrangements are made ad hoc, without regulation.

I have never quite understood why, for the past 40 years, we in this country have had such a passion for structural change. Having sat on the other side of the argument in local government for much of that time, I have concluded that very often those who run our national affairs do not think that they have enough sufficiently serious matters to occupy them, so they tinker with the structure of local government, keeping everyone in a state of ferment so that they cannot properly do what they are supposed to do on behalf of those whom they serve. The real problem behind this so-called need for change is that it is a massive distraction from the proper provision of services to local communities. I say with my hand on my heart that the intellectual effort that goes into dealing with this subject in every authority at every level is beyond anything that is put into service provision. In my view, that is a disgrace and the longer the argument is perpetuated the worse things will become.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My Lords, I echo the opening statement of the noble Baroness about how nice it is to be back dealing with the local government Bill. I welcome everyone back, refreshed, sharpened and focused, to the Report stage.

Some large issues have been raised in the opening statements on this group of amendments. It is probably worth responding first to the noble Lord, Lord Dixon-Smith, who concluded his argument by referring to the matter raised by the noble Baroness, Lady Scott, about why we are doing this. I can absolutely assure the noble Lord that no one is more conscious than the Government are of how much effort goes into restructuring and that the object is and must be about better services. That is exactly where we started from and exactly why we started with a process that is different from the previous process in 1992. The process was driven by an invitation to local authorities to consider moving towards unitary status.

I do not know enough about the French system but I do not think that the French have duplication of functions or confusions over which authority collects waste and which deals with it, or whether there are any two separate mandates held for a single area, which is what we have with the two-tier system. In some areas the system has been made to work well, but we have always known that it has been flawed, because it builds in conflict and duplication of functions.

We started from the presumption that if there were an opportunity to move towards that new system, local authorities would give us their arguments on whether they wanted to, against the criteria that we set very clearly: better leadership, better neighbourhood engagement, better services and all the things that we know make a crucial difference to improving local areas. We looked for a broad range of support on that.

We wanted to open, by invitation rather than imposition, a path to better services; we wanted to do

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it in a way that enabled local government not to embrace change for change’s sake, but to take advantage of what it thought was an opportunity to set out a new way forward. Twenty-six local authorities came forward; 16 were invited to go forward for further consultation and we have ended up with the Secretary of State agreeing to nine proposals.

The process has been open and transparent. The debate has been conducted in every conceivable form of public arena, and that takes time. The noble Baroness says that there is outrage at the speed. She will hear me say again during this debate that the reason why we did what we were asked to do in this way—the invitation was sent out under the common-law powers of the Secretary of State—was that we were urged by everybody not to have a protracted process, but to make progress. We therefore did it in a way that we thought would be democratic, legal and effective, because it was consulted on.

I appreciate what the noble Baroness, Lady Scott, said about local government being where it is. Indeed, it is where it is with our nine proposals. I obviously cannot say much about the judicial review, but we expect a result shortly. I should also say that it is not entirely unpredictable that councils that are disappointed or aggrieved have sought to make legal complaint. In 1992, in the previous reorganisation, there were no fewer than 30 judicial reviews from councils that felt that their interests had been overlooked or ignored on whatever grounds. Change generates disturbance and difficulties. That is where we are.

I hope that that takes us into the narrower debate on the powers of direction. The purpose is very clear, as the noble Baroness said. The amendments would remove the Secretary of State’s power to direct any principal authority to make a proposal under Clause 2, by way of inserting the word “relevant”, so that the Secretary of State may only invite a relevant principal council rather than exercising the power of direction.

Briefly and I hope for the last time, I shall run through the key provisions that will enable this to happen. It is a devolutionary structure, as I have explained. The provisions in Part 1 replace the structural and boundary change provisions in the Local Government Act 1992. Clauses 1 to 7 make provision about the invitation process for effecting structural change; Clauses 8 to 10 provide for boundary changes, which are wholly separate from the current round of restructuring; and Clauses 11 to 30 provide for the implementation of both forms of change and the necessary supplementary provision. They enable the Government to invite—or, until 25 January 2008, as clearly stated in Clause 3, direct—proposals from local authorities for structural change. Consider the change from the 1992 Act, when the Electoral Commission was asked to direct the Boundary Committee to consider whether there should be a move to unitary structures and to make recommendations. We are a million miles from that. Yes, it is indeed a process of invitation. The logic is followed by what I will say—which I think will meet the concerns of the noble Viscount, Lord Eccles—about the circumstances under which we would hypothetically have to seek a direction.

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Noble Lords are no doubt asking why, if this is so devolutionary, we need a power to direct at all. That is the crucial question. The answer is that the limited power of direction in the Bill is necessary to ensure that we are able to bring the present round of restructuring to an orderly conclusion. The idea that we are somehow going to extend this or rush through a power of direction rather than an invitation in the next few months, as the noble Baroness suggested, is rather a fantasy. We were aware of concerns about the original power. We worked with the LGA to limit the scope so that it cannot be used beyond 25 January 2008.

3.30 pm

It might help the House if I give a short example of a hypothetical situation where it might be necessary to use the power. I am not saying that it is necessary at all; I hope that noble Lords will understand, when I come to the end of this description, why it would not be necessary. In July, we said that we were minded to implement the unitary proposal for Bedford borough on the basis that there was a satisfactory unitary proposal for the rest of the area. We announced that we would be inviting Bedfordshire County Council, Mid Bedfordshire District Council and the South Bedfordshire District Council to put forward a unitary proposal for the remaining area of Bedfordshire, excluding Bedford borough. I should emphasise that we intend to invite these councils to make a proposal. However, if the Secretary of State were to feel that she would be unlikely to receive a proposal in response to this invitation, she may decide to direct a proposal from the local authorities concerned.

We are on record as saying—and I can again give the commitment—that this is a very limited power, which would be used only where it is necessary to deal with a residual area in order to make sense of a unitary proposal that is currently proceeding towards implementation. It does not force any particular new structure on an area—quite the contrary. It requires the councils in an area to decide the new structure that they want. I admit that it leads to the area having to move towards unitary status, but it is interesting that in the responses that we have had to these proposals the principle of unitary status has not been challenged. People want unitary status, where they have come forward. However, we have been clear that we will use this power only where it is necessary to round off a unitary proposal that we have already received and accepted. In other words, we would require councils to make a move to unitary structures only where it is necessary for other councils to be able to implement the unitary proposal that they have chosen to put forward. It is surely better to give a council the opportunity to do that rather than going straight to advice from the Boundary Committee.

In the case of Bedfordshire, would it be right that Bedford borough could not adopt the unitary structure that makes good sense for the people of Bedford simply because the other councils in Bedfordshire were unwilling to consider a unitary future? However, that is a pessimistic scenario; from the evidence that we have in the case of Bedfordshire, we firmly expect all the councils concerned to respond, perhaps with some enthusiasm, to the invitation that we propose to issue shortly.

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I reiterate that this is a limited power for specific circumstances. It follows from, and is independent of, the invitation. I hope that noble Lords will feel reassured that the limits on the way in which it might be used do not open the door to anything more.

Baroness Hanham: My Lords, we have had an interesting opening debate on this issue. I am grateful to all noble Lords who spoke and for the support—maybe limited support—from the noble Baroness, Lady Scott.

The fact that a sunset clause was put into the Bill in the House of Commons indicates how much concern there was that this power would go on interminably. As it is, unless we can get this matter changed, it will go on interminably by invitation because at the moment there is nothing to stop that.

Secondly, we are dealing in an Alice in Wonderland world because the legislation before us is being implemented as we speak. As the Minister said, the Secretary of State has already indicated to nine authorities that she is minded to approve their becoming unitaries. I think that agreement has been given to six authorities and further information on the financial aspects has been required from another three. To try to pretend that this is going through in a peaceful and calm way in those nine authorities is not Alice in Wonderland but cloud-cuckoo-land, because where the invitation has been accepted and schemes have been put forward it would be hard to say that the tip of the iceberg is calm; what the hell is going on underneath is very big and people are quite upset about it. Even with these nine authorities, this is not peaceful and non-controversial. It is very controversial. The decision about these will be made by affirmative order, so presumably we will have an opportunity to see these cases again—I hope that we will see them again individually. The Minister nods. I take that as acceptance that each order will be laid individually. That will give us an opportunity—

Baroness Andrews: My Lords, I cannot be absolutely sure about that. Certainly the House will have an opportunity to debate the orders. It is possible that similar ones could be grouped. We do not know yet. At this point I would not like to give a categorical assurance that they will all be separate.

Baroness Hanham: My Lords, I accept the Minister’s limited nodding as a limited response on that. I stick to my point that this is not uncontroversial; it is controversial. The direction, although limited, is still in the Bill. It should come out of the Bill. It is not required; it clearly has not been required in these stages. We also want to be absolutely clear that this process will not carry on at various authorities in bits and pieces. This is not about reorganisation or restructuring in general; it is about restructuring for very particular reasons in very particular local areas where nobody, or very few people, actually agree with it. Therefore, I think that we should remove this direction. I am not going to press the matter to a vote today, but I make it clear that our view is that the direction should not be included. I thank the Minister for her reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness Hanham moved Amendment No. 2:

The noble Baroness said: My Lords, I rise to speak to Amendments Nos. 2, 3, 4, 5, 7 and 25. The noble Baroness, Lady Scott, has Amendment No. 21 in the group. This group of amendments performs one simple function; it rules out the possibility of type C proposals, or those proposals that would create a new local authority, the boundary of which would spill across county boundaries, forcing people to be counted as part of a different county from the one with which they identify. It would make sure that the provision is removed from the Bill.

Ancient boundaries and identities hundreds of years old could face extinction under the type C powers. As the Minister said, tidying up is the byword for these powers to ensure that local authorities can be constructed in the way the Government feel would be included in the interests of the local area. The Minister justified the reasonableness of including type C proposals just because other types of proposal were also included: it was a wholesale batch of ideas.

We do not think that anything justifies the need for these type C proposals. They have not come about even by the invitations that have been issued so far, although I dare say it is possible that if conclusions were reached on some of those bodies making applications it could come about, and we believe that it should not.

There has been no mention of these proposals in the Government’s policy proposal document Councils’ Proposal for Unitary Local Government: An Approach to Implementation, in the Minister’s response in Committee, or in the Minister’s letter sent over the summer. In the complete absence of any substantive justification for the inclusion of type C proposals, I hope that the Minister will see the sense of accepting our amendments. I beg to move.

Baroness Scott of Needham Market: My Lords, my Amendment No. 21 seeks to do the same thing as the amendments tabled by the noble Baroness. I am coming at this from a slightly different angle. I do not in principle have any objection to the idea that two local authorities may want to merge and that they may be across a border. Not all existing borders are ancient and not all command that sort of loyalty, so I can see where a case might be made. My confusion about this provision is simply that we were given assurances in another place and in Committee that this legislation was really intended only to apply to those local authorities which were currently in the frame for reorganisation. As none of those includes a proposal that extends across borders—none of them is a type C authority—not one of them will, even when you look at the knock-on effects, involve any cross-border reorganisation. I therefore cannot see why the provision is in the Bill and why it needs to remain, unless the Bill is intended to create the framework for further restructuring, in which case the assurances that we have been given so far are pretty meaningless.

Baroness Andrews: My Lords, we have returned to a question that was raised in Committee. I can advance the argument a little further, for reasons that will

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become clear. Let me briefly explain why the requirement is needed. On the progressive point made by the noble Baroness about the future, the amendments would certainly limit the kind of unitary proposals that councils would be able to make in response to invitations. Specifically, were the amendments to be accepted, councils would only have the option of submitting a proposal that was contained within a county area, whether a county unitary based on the existing county boundary or a sub-county unitary for part of the area. They would not be able to propose a unitary council that crossed existing county boundaries.

We have made it clear on countless occasions that we are not telling councils what to do. Councils will have to submit their own proposals and they are best placed to propose a model that works for their local area. So we have to provide the maximum flexibility to invite and implement structures that make the greatest sense for local areas.

The noble Baroness is right: we have said and continue to say that we do not believe that there is a case for restricting the options open to councils in that way. That is the overriding principle. The only proviso is that any new unitary should use existing district boundaries as the building blocks.

The Bill will allow local authorities a wide range of options to put forward proposals for unitary local government. Crucially, they will not be constrained in considering how best to administer local government functions in their areas. At previous stages, noble Lords were concerned that people identify with shire counties and that cross-unitary proposals would be unlikely to command public support. Noble Lords said that there is still confusion where some of the shire counties became London boroughs. I remember the noble Lord, Lord Hanningfield, who is not in his place today, making a powerful statement to that effect. However, as the noble Baroness says, not all boundaries are old anyway. As I have stated, because this is devolutionary, it is not for us to restrict proposals but to allow sufficient choice because that may be the best solution for an area.

Noble Lords are right that no cross-unitary proposals are currently proceeding toward implementation. Significantly, although it did not proceed towards implementation, we received a cross-county boundary proposal from East Riding, proposing a unitary authority comprising East Riding and Selby District Council, part of the county of North Yorkshire. So it is not beyond the bounds of possibility. In addition, if an area has undergone significant population and housing growth that results in the unitary boundary for that area no longer making sense, we might need to issue an invitation to enable councils to propose a new unitary area that crossed existing boundaries—again, a type C proposal. That is a potential eventuality.

When we debate the invitation itself, I shall explain at more length that there are no proposals for major rounds of invitations, but we recognise that, in exceptional situations, there may be appetite for change where it would be right to respond to a focused and targeted invitation. I will talk about that when we debate later amendments.

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For the moment, on these amendments and in this situation, I hope noble Lords will accept that all we are doing is providing for a choice, which was validated because in the end we had a proposal in the final washout.

3.45 pm

Baroness Hanham: My Lords, it is interesting to know from the Minister what happened to the areas not included in the proposals. One of the effects of crossing boundaries—to which the noble Baroness has referred in the past—will be that the Boundary Committee will do the tidying up. There could be a great deal of tidying-up if county council boundaries were breached. I should be very interested to know the remaining proposals from that part of the country which would enable the proposal put forward. Perhaps it has not gone ahead because it was too complicated.

Let us be clear—these proposals are ad hoc and not a generalised restructuring across the country. As I said before, a small number of proposals are being put forward, not even for the same parts of the country—they are just spattered across the country. Where there are breaches in one area and on one border, precedents for others begin to be set up. If invitations continue to be put out, there is potential for this to happen more and more.

I was very interested in what the Minister said about Yorkshire and the fact that my noble friend Lord Eccles, who is in his place, did not leap in at the mere mention of Yorkshire. I omitted to thank him for his contribution on the previous amendment. I thank the Minister for her reply. For today’s purposes, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 3 to 8 not moved.]

Clause 3 [Invitations, directions and proposals: supplementary]:

[Amendment No. 9 not moved.]

Baroness Hanham moved Amendment No. 10:

The noble Baroness said: My Lords, I have introduced Amendment No. 10 at this stage in order to do what I have been hinting at during the previous two amendments; that is, to have this whole part of the Bill limited to completion by January 2008. The running on of these proposals will cause concern within local authorities, instability and insecurity. The Government have probably done enough harm with these proposals without them going on for any longer.

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