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Pan-economy measures such as those are the most effective and equitable way of dealing with insolvency and the issues surrounding it. That is not to say that we will not do anything for the construction industry. As noble Lords will be aware, some £3 billion of capital spending, which was brought forward in the 2008 Pre-Budget Report, and today’s announcements on funding for housing and energy efficiency in buildings are examples of how we are providing assistance. However, that is for another discussion.

On the basis that we do not believe that it is right to create a position where the construction industry is treated differently from other sectors of the economy in the case of insolvency—

Lord O'Neill of Clackmannan: My Lords, before my noble friend leaves that point, perhaps I may intervene. I declared an interest in this matter during the previous debate. I am the president of the Specialist Engineering Contractors’ Group, which takes in the second tier of contractors. My noble friend makes a point about the exceptionalism of the construction industry and says that this insolvency provision would be specific to that industry. Can he give me an example of any other industry where contracts are agreed and are then open to being reneged upon at any stage, even when one gets close to payment? The work is done, a price has been agreed and people are then able to walk away from that price. The construction industry has a degree of exceptionalism which insolvency has nothing to do with. In these amendments, we are trying address issues of force majeure by large contractors against, in the main, other large contractors, although sometimes small contractors are involved. We are trying to address an abuse, and it cannot be swept aside on some kind of superficial argument relating to exceptionalism, because exceptionalism is the nature of the construction industry’s contractual arrangements.

Lord Brett: My Lords, in the sections of Part 8 of the Bill which we discussed in Committee and which are not subject to amendments at this stage, we have sought to strengthen considerably the position of the smaller players. I recall that in that discussion it was pointed out that some 99 per cent of all players active in this sector are small and medium-sized enterprises. Unfortunately, at the moment, incidences of insolvency may be greater in the construction industry than in other industries. The Government are attempting, through stimulus, to ease our way through a very difficult situation. We are seeking, in as short a period as possible, to arrive at the situation where we do not have the degree of insolvencies that we are seeing at the moment in the construction or, indeed, any other industry. Unless we are unduly pessimistic that there will be no change whatever over a very long period, this is not the time to introduce a measure such as this, as it would be bound to give rise to argument in other sectors in terms of seeking government financial support.

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I do not think that the argument is superficial, as my noble friend suggested; I believe it is considerable and pertinent, and therefore I hope that noble Lords will understand why the Government are resisting these amendments.

Lord Borrie: My Lords, I am most grateful for the speech made by my noble friend Lord Berkeley. With his familiarity with the construction industry, I think that his key point is the increasingly lengthy periods of credit that are expected. Of course, the larger contractor can lean on the smaller sub-contractors on the matter of when payment is due. It provides the answer to the point made by the noble Baroness, Lady Hamwee. I can understand her basic gut feeling that it is not really desirable to give by statute a right at any time to demand this or that kind of costly security. I have made the point that the sub-contractor, too, has a great many costs in providing plant, material and equipment and so on out of his own pocket until there is sufficient good will and he receives payment. Therefore, there is a great deal of inequity in the relationships between the contractual parties. To rely on what was originally in the contract without bearing in mind who may have had the greater bargaining strength in making the terms of the contract would be to run against reality.

I am grateful for the intervention of my noble friend Lord O’Neill of Clackmannan. He said an extremely odd thing when dealing with my first amendment, which I moved. He made the point, in defence of the existing law, that it is perfectly okay not to pay someone who has done work for you if your client has become insolvent. That provision is allowed by existing law, yet most of the time my noble friend says that we should not have differences between the construction industry and other industries. In what other industry is it possible to ask for work to be done and for equipment and goods to be supplied but then not pay because one has not been paid by the client?

8.30 pm

There is no general provision of that sort, yet there is a special provision in the Housing Grants, Construction and Regeneration Act 1996. It does not matter that there was a Conservative Government in 1996 and there is a Labour Government now. Whatever type of Government, they have in a number of ways allowed special provision for the construction industry. It is not an adequate answer to any of my amendments that I want special provision for the construction industry. If other industries are suffering then no doubt a case can be made for them. It is probably rude to say that it is a bit rich for my noble friend to criticise my first amendment, which is based on trying to get rid of an anomaly applying to the construction industry, when most of his argument is that we should not make special provision for that industry. Of course, at the end of the day—by which I mean at the end of this day—I will not push my amendment to a vote. However, I hope that I might have some honourable friends elsewhere who will wish to pursue the matter further. I beg leave to withdraw the amendment.



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Amendment 169AA withdrawn.

Clause 139 : Notices relating to payment

Amendment 169B not moved.

Clause 140 : Requirement to pay notified sum

Amendments 169C and 169CA not moved.

Clause 141 : Suspension of performance for non-payment

Amendments 169D and 169E not moved.

Clause 142 : Repeals

Amendment 170

Moved by Baroness Andrews

170: Clause 142, page 86, line 16, leave out paragraph (a)

Amendment 170 agreed.

Schedule 7 : Repeals

Amendment 170ZA

Moved by Baroness Andrews

170ZA: Schedule 7, page 133, leave out lines 3 to 15

Amendment 170ZA agreed.

Clause 144 : Commencement: general

Amendment 170A

Moved by Baroness Hamwee

170A: Clause 144, page 86, line 36, after “2” insert “other than section 16”

Baroness Hamwee: My Lords, I shall also speak to Amendment 170B. These amendments are to the commencement clause of the Bill but they deal with Clause 16 and apply preconditions before what will then be Section 16 can be brought into effect. Clause 16 is in the part of the Bill dealing with petitions and allows for a petition requiring an officer to be called to account by a local authority at a public meeting; in other words, it allows for a public petition requiring a council officer to be called to account. We debated Clause 16 in Committee and I can do no better than to quote from the speech of the noble Lord, Lord Hanningfield, on 28 January. He said that he supported my proposal to leave out Clause 16 and added:

“Officers are appointed to serve the whole council; they are not there to second-guess the political will of either the administration or anybody else. This is very dangerous territory”.

He then told us of an occasion when council officers had hung an effigy from the roof of the council chamber, the officer having said things that he should not have about the waste programme. He continued:

“I endorse what has been said: it is the members who take the decisions, obviously with officer guidance—but it is exactly the same as in Parliament. We are getting into very dangerous territory here”.—[Official Report, 18/1/09; col. GC 128.]



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I can do no better than cite that, but I will do a little more. After Committee, I was contacted by SOLACE, the Society of Local Authority Chief Executives. It used what I thought was a very apt phrase, saying that,

I hope that I can remember that phrase to use on other occasions, because it is very telling. The society stated that the process,

Following Committee, my noble friends and I tabled a number of Questions for Written Answer on the subject of such petitions. I must pay tribute to Tim Oliver in our Whips’ Office, who came up with more questions to illustrate the complex issues raised than I would have thought possible—and, perhaps, than the noble Baroness would have thought she would ever have to answer on a single subject.

I shall not go through the dozens of Answers, but just pick out three points. I asked about the total number of officers whom the Government expect to be covered by the clause. The Minister answered that the relevant officers—the term used in the clause—would depend on local authorities’ own administrative arrangements and decisions. I absolutely accept that, but in response to another Question the Minister said that the Government did not expect that authorities would choose to specify that junior staff were relevant officers. She was of course not able to say that junior staff would not be relevant officers.

I asked whether officers who were subject to such a petition might be accompanied or represented by an adviser—a trade union representative or anyone else. The answer was that the clause builds on existing practice, whereby overview and scrutiny committees can require officers to attend a meeting of the committee to give evidence. What is provided in the clause seems entirely different. The answer was that authorities’ existing procedures in relation to officers’ attendance at overview and scrutiny meetings will therefore apply, but how can they? That is not about a petition about an issue that an O&S committee is considering; it is about an individual. That is an entirely different situation.

Finally, my noble friend Lord Tope asked whether the provision would constitute a change in the employment contract of relevant officials. The answer was that the provisions in the clause merely involve the O&S committee exercising its existing powers at the request of members of the public. The term in the clause is not “request”; we are talking about a requirement on the authority, so it is not an equivalent situation.

The conditions in the amendment, which would have to be met before Clause 16 came into force, are intended to highlight our central concerns. First, local authorities should be consulted on the detailed operation of the provisions—the detail will be extremely important.

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Secondly, representatives of officers who may come under the clause should also be consulted on the detailed operation of the provisions and their impact. I am not aware that there has been any discussion with council officers or their representatives about what in my experience would be a novel arrangement. Thirdly, representatives of members of the Civil Service should be consulted. It has occurred to us that they may be seconded to a local authority and become subject to this—I am hearing confirmation behind me that that is precisely what happens. It is good that there is secondment—movement—between the sectors, but I wonder whether the Government have actually thought about the implications of this for their own civil servants. Finally, the clause should not come into force until,

If I say goose and gander, that may make the point. I know that the Minister’s instinct is to agree that it is for politicians to carry the can. She said as much in response to a point made by my noble friend Lord Greaves. Her instinct was to defend her own officials, which is an entirely proper and admirable instinct.

The Bill has been about democracy, the term used in the title, and we have said on many occasions that it is not democracy, or representative democracy, as we understand it. The Minister has said that Clause 16 is not an attempt to subvert officers or to place them in the front line in matters that are properly for councillors, but that is what the clause does; it blurs lines of accountability and plays to the tabloid agenda of “all council officers bad”. That is not an agenda to which we on these Benches subscribe. There may be occasions when officers do not live up to the standards that the council expects of them, but calling them to account at the behest of members of the public in the way in which the clause anticipates is not a healthy or proper way in which to continue to improve council services. I beg to move.

8.45 pm

Baroness Warsi: My Lords, we made it clear in Grand Committee that we have reservations about Clause 16. The noble Baroness, Lady Hamwee, quite rightly expressed those concerns again today. We said then, and we say now, that officers are appointed to serve the whole council. They are not there to second-guess the will of the administration. It remains our view that the Government did not think through the implications of the clause carefully enough before bringing the Bill to the House.

We had a full discussion of this clause in Grand Committee and the Minister has written a helpful letter to her noble friend Lord Graham of Edmonton. My noble friend Lord Hanningfield and I subsequently added our names to the Government’s Amendment 170, which improved the clause. I am afraid that I must signal my unease at Amendments 170A and 170B, in the name of the noble Baroness, Lady Hamwee, which would make Clause 16 practically unworkable.



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As I say, we have reservations about the clause, but we cannot support an amendment that would make the operation of the Bill conditional on new primary legislation as proposed in new paragraph (iv) in Amendment 170B. The paragraph, should it ever come about, appears to be more about tit-for-tat point-scoring than anything else. I have great sympathy with the noble Baroness’s arguments against Clause 16, but it would not be responsible of us to support the amendment.

Baroness Andrews: My Lords, we are revisiting Clause 16 thanks to the ingenuity of the noble Baroness, Lady Hamwee. I am very happy to say again, very briefly, why this is an important clause. Amendments 170A and 170B in effect seek to remove it from the Bill by making the commencement contingent on a range of factors, including, most notably and unusually, a further Act of Parliament. We had an extensive debate on the clause, and I absolutely respect the noble Baroness’s concern that it may blur lines of accountability between the members and officers of local authorities. We are certain that it does not, and I am glad to have the support of the noble Baroness, Lady Warsi, on that. But I do understand that we disagree on the matter and I recognise that her views are sincerely and properly held. If I thought that she was right, I would be supportive of them because these are important issues.

I am happy to place on the record why I do not believe that it is the case. Officers will continue to be accountable to members as the employers. Members will be democratically accountable to the public. Officers will not be directly accountable to members of the public. Direct accountability is a matter for elected members. To be clear, this clause is about members of the public having a direct influence to call for officers to provide evidence at an overview and scrutiny committee which is open to the public. It does not give members of the public any rights or powers over the officers concerned—it does not interfere in lines of responsibilities. The noble Baroness said that this matter was about individuals. However, I disagree: it is about issues. Petitions are about issues. We expect that a petition will call for an issue to be debated and an officer to be invited to come and explain why certain decisions have been taken. It does not give members of the public direct access or the right of direct access to officers. Officers remain accountable to elected members.

Let me state again that these provisions build on existing practice. Principal local authorities have overview and scrutiny committees, made up of members, who hold the authorities’ decision makers to account. Those committees already meet in public. Under Section 21(13) of the Local Government Act 2000, any officer of the authority can already be required to give evidence at a meeting of the overview and scrutiny committee, to inform their scrutiny of the council’s decisions and performance. Clause 16 provides that for certain officers, if enough people sign a petition—and that threshold will be set by the council itself; we are not telling councils where the bar should be placed—the overview and scrutiny committee will have to exercise its power to require an officer to give evidence. Clause 16 provides that authorities should specify in their petition scheme, so that everyone knows, which officers could be required

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to give evidence by a petition, but that the list must include the senior officers specified in Clause 16(5). We know that in practice, overview and scrutiny committees already call senior officers to give evidence, so we do not expect authorities to specify that junior officers should be among those defined as “relevant” under Clause 16(4).

Although that does not completely answer the point that the noble Baroness raised in her Written Question to me, I hope that it is sufficient to place on the record that we would not expect that to happen. Clause 16 is entirely in line with the principle that local government should be as transparent as possible, and that officers are accountable to elected members. The noble Baroness quoted SOLACE, and there was nothing in that quotation that I felt I could disagree with. SOLACE said that we must not create an open season on officers and that we must avoid over-formalising requirements and other matters that, were I to read Hansard tomorrow morning I would certainly agree with.

In its response to our consultation paper on improving accountability, SOLACE noted that senior officers regularly attend public meetings to explain council decisions and to answer questions from the public. That is what we mean by established practice: by allowing members of the local community to make use of petitions to influence the way in which scrutiny takes place. For the first time, citizens will be able to call in their petitions for O and S committees to consider the issues that are important to them and to ask for evidence on those issues from key officers to inform their examination. Petitions signed by the public will be able to trigger a meeting where elected members on the O and S committees examine evidence provided by officers who are accountable to those members as their employers. As meetings of the O and S committees are held in public, it will be open to anyone with an interest in the issue to attend and hear what an officer has to say.

We have also built in necessary and important conditions and safeguards. First, local authorities are obviously best placed to consider the detail of how these provisions should work in the broader context, taking into account local circumstances and the petition scheme. Subsection (3), as I have said, provides that the authority’s petition scheme must specify how many signatures will be needed to require an officer to attend a public hearing. Secondly, it will be for authorities to determine which of their officers are liable to be called to give evidence in this way. A further question to which the noble Baroness drew attention was whether Clause 16 would allow for anyone called to be represented by a legal adviser or trade union representative. The clause builds on existing practice and therefore principal local authorities’ existing procedures in relation to officers’ attendance at O and S committees would apply. These may entitle the officer to be accompanied or represented by a legal adviser, trade union representative, member of the local authority or other person. I propose to put all these questions and responses, which have been scattered through Hansard over the past four weeks or so, into a bundle and then place them in the Library so that Members can consult them all together.



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Clause 16 requires as a minimum that petition schemes provide that the head of the paid service—the chief executive—and the most senior officers can be required to provide information on their activities at public meetings of an O and S committee, but it must be fair. This is exactly where I agree with SOLACE. The procedure must be fair so that officers are not exposed to inappropriate public scrutiny of their private lives. This must not be a kangaroo court and they must not be exposed to harassment or bullying. There is a paramount requirement that any petition, including one calling for an officer to give evidence, that is vexatious, abusive or otherwise inappropriate will be excluded from the process anyway by Clause 14(1)(b), and from the requirement for the local authority to respond in the first place. Any petition that looks as if it is an opportunity for personal abuse or attack would never get near an O and S committee. To further safeguard officers, Clause 16(2)(d) provides that grounds for attendance at an O and S committee must relate to their specific job and cannot relate to personal circumstances or character. Guidance under the Local Government Act 2000 is already in place to cover the way in which O and S committees should conduct themselves when questioning an officer so that they are not put under undue pressure or the scope is too wide.


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