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In conclusion, in my amendment I have sought to add to the amendment moved by the noble Lord, Lord Wade of Chorlton, that it ought to be discussed here as well as taking the views of the people of Cheshire. I am prepared to withdraw my amendment, and I remind my noble friend that this is not a fatal amendment, but it is an amendment from the heart of the people of Cheshire, who do not want their county disaggregated, but who want more time than the 20 minutes accorded tonight to say, “Think again”, even if it is only to think again about how we produce two unitary authorities. That opportunity should be taken; it should be taken tonight. I beg to move.

Moved, as an amendment to the amendment in the name of Lord Wade of Chorlton, at end to insert “and Parliament has had the opportunity to debate their opinions.”—(Lord Harrison.)

The Lord Bishop of Chester: My Lords, when the Victorian county boundaries were settled, those responsible tried to follow natural boundaries as far as possible. In the case of Cheshire, that was the River Tame, the River Mersey, the Derbyshire hills and the Welsh border in particular. The church followed that, so the Diocese of Chester, when it was formed in its modern size, followed the Victorian county of Cheshire.

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In 1974, there was radical change, with about a third of the diocese, in population terms, moving into the new metropolitan counties of Merseyside and Greater Manchester. Subsequently, there was the formation of Holton and Warrington unitary authorities, spanning either side of the Mersey. So modern Cheshire is about half what it was until 1974. The past 30 years have seen further evolution in the former areas of Cheshire, with the demise of the metropolitan county structure and the emergence of the unitary authorities of the Wirral, Tameside, Stockport and Trafford, which impinge in various ways on the old county.

My diocese now comprises the current county of Cheshire plus the various areas which have been affected by that series of reorganisations. My ministry has been across all those areas for the past 11 years and I have learnt to love, respect and serve them equally. One conclusion that I have drawn is that, when it comes to local government, it must be local and relate to local realities, beliefs, practices, traditions and aspirations. People do not want a sense of local government being imposed against the will of local people, being imposed roughshod.

7.30 pm

On the details of the proposal before us, although all the changes of the past 30 years or so have been happening to the north, the current county of Cheshire, with its county council and six district councils, has generally worked well. I endorse all that the two noble Lords who have just spoken have said about that. The county council in particular can claim a great deal of credit for its consistently excellent performance, which has been acknowledged by successive performance reviews. I imply no criticism of the district councils, with their more limited and local remits, but there has been overwhelming appreciation for the work of local government in Cheshire.

In the performance assessments that have been made, the education service has always been a special beacon of excellence. I can testify to that from my direct experience of visiting very many schools—infant, junior and secondary—as well as the quite exceptional special schools that are such a credit to Cheshire. Current school provision across the county is generally good. I know this from comments of my clergy who move around the diocese with children. I very rarely have any problem with children not settling into new schools. In other parts of the country, a different tale is often told. I was therefore not surprised to see that those who are responsible locally for schools, as we have heard, have made particular and unanimous representations against the current proposals. As we all know, education is a very sensitive subject today in society, and indeed in politics, and rightly so. The unanimity of opposition from those responsible for educational provision to the proposals should be weighed particularly carefully.

If what I have said so far is broadly accurate, we may well ask why we do not leave things as they are and encourage the county and the six districts to deepen and develop their partnerships and joint

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working. As the Minister said at the outset, that was one of the possibilities which the White Paper and the subsequent Bill permitted. If it ain’t broke, don’t fix it. In many ways, reflecting on the discussions of the past year or two, that would have been the wiser course. It is not where we are now. I agree with the noble Lord, Lord Harrison, that the single unitary authority has obvious objective merits, but the path to get to that other than by a process of much better consensus has been stony and difficult.

Having seven different councils can look a little complex and messy, and so to some extent it was and is, but Cheshire is best seen as a fellowship, a family, of quite distinct, yet closely related and competent, communities: from Neston to Macclesfield, from Congleton, Crewe and Nantwich to Chester, from Alderley and Knutsford to Middlewich and Malpas—I could name many others—each with their strong local institutions and civic traditions, their town and district mayors. I have met dozens of them over the years. All of them are a credit to the county, and all aim to serve their people and to be examples of what we have heard of so far.

The present two-tier arrangements may have degrees of inefficiency, but they are honed to work well and are widely appreciated, so where did the impetus for change come from? Inevitably, we would need to delve into the rather murky world of local politics to understand what started this current juggernaut to roll. There was also a belief, which came to be shared more widely, that a real case can be made for unitary local government. I accept that. Indeed, I lived through it in Yorkshire where I was a vicar before I went to Chester when Humberside County Council was dismantled.

From a combination of political boxing and coxing, on which I would rather not speculate, and from a sense that in an ideal world the unitary structure probably was best, two clear proposals emerged: for a single unitary authority based on the current county boundaries; and for two unitary authorities based on an east-west split. The problem with the east-west split is that there is no natural geographical, social, cultural or business north-south boundary in Cheshire; it is a purely arbitrary line that is drawn to separate east and west in the way that is proposed.

Unsurprisingly, given the strong traditions and many very able people involved in local government in the area, both these proposals were recognised as meeting at least most of the criteria which the Government had set down—for affordability, strategic leadership, empowerment of neighbourhoods, and value for money in public services—although the evidence that I have seen suggested that the bid for a single unitary authority would produce better value for money. It is much less clear to me that either proposal has support across a broad cross-section of partners and stakeholders. Indeed, in one sense it is a little illogical to pretend that both can, because in one sense they are mutually exclusive. This seems to be recognised in paragraphs 7.12 and 7.13 of the Explanatory Memorandum to the order. Paragraph 7.12 says:

“In all areas, a wide range of views was expressed”.

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That is, there was a lack of consensus right across the views that were expressed. Indeed, if you were to distil the consensus, as has been said, it would be for the single unitary authority.

On proposals to restructure this House, the Government are on record as saying that consensus is by far the best way to proceed. There is no consensus in Cheshire for either of the present unitary proposals, not least for the Government’s present proposal. It does seem that the process has gone badly wrong somewhere along the line to get us to where we are this evening. If we need a clear demonstration of the lack of consensus, we need only look at page 9 of the summary of responses in the stakeholder consultation. I will not go through them—the noble Lord, Lord Harrison, has already done that very effectively—but it is difficult to read them and pretend that there is consensus for the proposal for two unitary authorities. One is left wondering why the Government have decided on the other option of two unitary authorities. It certainly does not seem to have been decided on the merits of the case, certainly not to the people of Cheshire. That is why I shall support the amendments.

Let me emphasise that I, and everyone in Cheshire whom I know, will work hard to make work whatever is put into effect, however hard that will be. There is the good will and desire at the end of the day to make things work, but it is very difficult, speaking on behalf of the community in which I minister, to realise that we are starting from such an unsatisfactory proposal. In the short term, there will be much disruption, despite the good will with which the transition will be attempted. In the longer term, I fear especially for the educational provision, which has justly received beacon status and which is so important to the communities themselves. The Government say that achieving a broad cross-section of support does not mean doing a head count of those who support what is being proposed, but that what is being proposed is in the best interests of the people of Cheshire. I can tell the House that people want good schools and good education. They have it. They want a director of education, not a director of adult and children’s services all combined together. That is one of the ways in which the two unitary authorities proposal is made to be affordable: by lumping too many things together.

Let me draw my remarks to a close with a more general point. Those who favour the two-unitary solution have tended to do so on the basis that, whereas west Cheshire relates to Liverpool, east Cheshire relates to Manchester. The summary of responses speaks of city regional strategies in this regard, and the Secretary of State’s letter giving her decision contains similar hints. I do not believe that the people of Cheshire think of themselves as outlying citizens of city regions. There is simply very little evidence that they think in that way. They think first and foremost with pride of the deep historic links in Cheshire itself. Perhaps those in the areas that were detached in 1974 have come to think of themselves as relating primarily to Manchester and Liverpool, but not those in modern Cheshire, which has many

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thriving rural and semi-rural areas along with urban areas such as Crewe. The essential unity of Cheshire as such has emerged quite clearly once again during the recent recession in agriculture. One of the things I fear is that, if government agendas are driven so much by city and urban agendas, rural policy will not be given its own integrity and proper consideration. That is one of the consequences of driving a wedge through what is clearly the integrated agricultural county of Cheshire itself. So I hope that there is yet time for the Government to think again, hard though that may be to contemplate, to consult the people of Cheshire more fully and to ponder the right way forward before continuing on the present hasty path.

Lord Grantchester: My Lords, I shall speak to my amendment on the Order Paper. It is true to say that debate over local government reorganisation in Cheshire has raged between the local authorities for more than a year. The decision has gone to replays and extra time, and many are now of the view that we must get behind the Government’s decision. However, this is not the preferred option of Cheshire residents generally and I support all the comments made by my noble friend Lord Harrison and the noble Lord, Lord Wade. Indeed, we three Cheshire Peers have been agreed together, as with the business community and the majority of stakeholder responses, in supporting the county council’s proposal for a single unitary authority. Throughout the debate I have been very encouraged by the Minister. She has listened and has taken forward several reports and submissions that I have introduced to her and to her colleagues in another place. It is very disappointing that all three Cheshire Peers have struggled to get audiences with Ministers on their case.

The Government have judged the two submissions for unitary authorities on five criteria; namely, affordability, strategic leadership, stakeholder support, empowering local people and communities, and the quality of public services. The submission for a single unitary authority wins on every one, and in the most comprehensive fashion on the affordability criteria.

The affordability case put forward in the submission for two unitary authorities has been the subject of several challenges. Throughout the review process, the county has expressed deep reservations about the financial robustness of the two-unitary option. Indeed, there has been a constant shifting of the figures. The final figures submitted on 1 October 2007 have served only to intensify this concern. The transition costs have increased from £16.6 million to £23.7 million, with the ongoing savings reducing from £30 million to £23.5 million. The Government are less than confident on those figures and have admitted that the objective of creating two new unitary authorities cannot be achieved within the cost and savings envelope set out in the original proposal. The Government called in the IPF. This is highlighted in the Explanatory Memorandum to the order, which imposes new expectations of costs and savings on the shadow authorities. This has been done on the basis of advice received from the IPF, which has not been made public.

The county council was assured of transparency in the assessment process and the conclusion that can be

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drawn is that the Government have perhaps less confidence in the IPF report than they claim. The new figures change the whole basis of the implementation process. They call into question any conclusions of Deloitte, which was appointed to carry out a risk assessment on behalf of the district councils.

Surely, the ratepayers of Cheshire should be able to assess the assumptions, the assessments and the working figures of the IPF report which it used to reach its conclusion. This is the basis on which I put forward my amendment in the absence of this report being made fully available. It is now clear however that no matter whether we look at the independent review from Local Government Futures—the assessment done on behalf of the county—or the assessments done by the department, the impact of this reorganisation will be costly. The county will be divided into two. Both unitaries will be faced with direct economic problems and they will both lose money.

The Local Government Futures review investigated the potential impact of any local government reorganisation in April 2009 on the allocation of the formula grant within the county. Under the current needs-based national methodology, the report concluded that the west Cheshire unitary would be entitled to £82.7 million for formula grant and the east £54.1 million. However, the proposed two-unitary model allocates only £76.4 million to the west and £60.4 million to the east. This local agreement deprives the west of £6.3 million of formula grant per annum for each of the next three years—the equivalent of almost 2.5 per cent on council tax. Effectively, this funding has been permanently lost in the form of a financial subsidy to the east, as in three years’ time the national grant distribution formula will be applied to the two unitaries using their locally agreed allocation as the base. The latest information from the Department for Communities and Local Government would seem to confirm the intention to recalculate the formula grant in this way.

It is unrealistic to assume that one authority will agree to provide a substantial financial subsidy to the other; it could be in breach of an authority’s fiduciary duties to its council tax payers. For the new unitary in the west, there would be genuine concern that the richer east, as defined through the objective needs-based formula, is being subsidised to the tune of more than £6 million per annum on a permanent basis. It is difficult to see how this would be acceptable to the council tax payers of Cheshire West and Chester who would be paying this subsidy through higher council taxes and/or reduced services. For the new unitary in the east, the concern would be the unenforceable nature of this local agreement. Clearly, if the national formula is used instead, this would result in the east losing out by £6 million compared to the current submission by the districts. That would only add to concerns over the financial viability of the districts’ submission for the east.

It is vital that a full, independent financial assessment is undertaken when the county council’s view points to a frightening scenario. Reserves are overstated and would be insufficient to meet the cash flow requirements of reorganisation. The two new unitaries would in

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effect be expected to run out of money in the first year of operation. Far from achieving the required five-year payback, the proposed solution would now cost some £103 million and, therefore, fails to meet the affordability criteria. Both new authorities will begin life with inadequate finances to sustain existing service levels and are highly dependent on quick transformation. The objectives of the reorganisation and of the order are unlikely to be achieved.

7.45 pm

Baroness Walmsley: My Lords, not for the first time, Members of your Lordships' House, including myself, have received a lot of letters and telephone calls from individuals and organisations who feel that their voice has not been heard and that they have not been given the opportunity to express their views. I am delighted to have the opportunity to give voice to some of those views, as have other noble Lords.

Those individuals and organisations believe that this is a carve-up which has been steamrollered through another place; which the Government intend to steamroller through to implementation; and would steamroller it through your Lordships’ House had they not found such a lot of opposition tonight. I agree with them. They also believe that the Government’s refusal to reveal the financial basis of the decision is also a cover-up, with which I also agree.

I oppose the order and I support the amendments for four reasons. First, some of the assumptions are flawed. I shall give three from a letter to the chief executive of Cheshire County Council, which states:

“Cheshire would be too big for a unitary county council. There was a natural line dividing east from west ... cities provided the best form of local government”,

for Cheshire. Those assumptions are completely flawed. First, there are 12 counties and unitaries that are bigger than Cheshire on any criteria that one might like to look at. Are they to be split as well? Secondly, on the natural dividing line, the right reverend Prelate the Bishop of Chester has made it clear that there is no such natural dividing line. As a long-time resident of Cheshire, I very much agree with that. Thirdly, the idea that the cities of Liverpool and Manchester provide the focus for local government for rural Cheshire is completely ludicrous. The needs of a shire county are very different from those of a city.

My second reason is that I believe that there is the tiniest amount of public support and organisational support for this proposal. It is delusional of the Government to think that there is “sufficient support”. There is not. I shall not go through all the figures quoted by the noble Lord, Lord Harrison, but they speak for themselves. It is nonsense to say that we want to consult local people and then not ask them properly, and certainly not listen to them. In another place the Minister listed seven organisations which support the proposals we are debating tonight, but the noble Lord, Lord Harrison, and I have a list of 19 organisations that are against it.

My third reason is one that noble Lords would expect from me. I am very concerned about schools and children’s services. Many noble Lords will have received letters from every single head of organisation

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in Cheshire and every single one expressed severe concerns. I have also heard from the Cheshire branch of the NUT. I shall give just two reasons out of the many cited. At present, we have a director of children’s services who has overall responsibility for the implementation of the very ambitious Every Child Matters agenda. Now it is proposed that we have one director of children’s and adult’s services. That is simply not good enough; the agenda is too big and the magnitude of the task too great for one person, and I fear that children’s services will suffer. The second reason given is school budgets. This Government sensibly announce school budgets three years ahead so that schools have stability and can plan properly. Because we have no continuing authorities under these proposals, schools will not be able to do that.

Finally, the timescale is completely mad. We have here an unprecedented reorganisation, the third for Cheshire in 15 years. I do wish governments would leave Cheshire alone to get on with it. Cheshire provides a very high quality education, and always has. I used to be a member of a school governing body in Cheshire, so I know that from my personal experience. To suggest that you can go through a change such as this one, a change that is totally unprecedented, in the same timescale as some of the other reorganisations that have been proposed is quite barmy.

Lord Slynn of Hadley: My Lords, I rise simply to express my full support for Amendment No. 1. The arguments put forward by the noble Lord, Lord Wade of Chorlton, in support of his amendment are compelling and I do not think it is either necessary or helpful for me to repeat them. Whether in the end the decision is adhered to and the Government’s proposal is accepted, the arguments in favour of a fuller and further inquiry, as proposed by the noble Lord, Lord Wade, seem to be incontrovertible. If they are not incontrovertible, at least there is a strongly arguable case for what the noble Lord has proposed. I strongly support him. If his amendment is accepted, it would follow that the amendment tabled by the noble Lord, Lord Harrison, also has great strength and merit. I would support it as well.

I hope that occasionally in this House brevity can be forgiven, but I do not think it would help to repeat anything said by the noble Lord, Lord Wade.

Lord Soulsby of Swaffham Prior: My Lords, I have listened to the debate with great interest and three questions have come to mind. The first is the question of the release of any independent financial assessment. Another was touched on by the right reverend Prelate: will these proposals meet the needs of local people, especially the rural population? The third is that, unless I misheard her, I thought the Minister said that some of the data were equivocal. If all those questions arise, it seems to me that the Government should think again, particularly with respect to the second question about the needs of local people. Moreover, the equivocal nature of the data is an important aspect. I do not wish to extend the debate with my comments but I strongly support the amendment of my noble friend Lord Wade.

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