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We have taken our decisions by looking at and weighing the substance of the complex issues before us, seeking to balance a number of factors in each case. These are not simple issues. It is the task of government to look at the matters carefully, to balance the competing arguments, to assess the evidence and the differing claims, and finally to reach a balanced judgment as to what way forward is best for the people of the cities and counties involved. We recognise that the decisions that we have taken are controversial but, after careful consideration of all the issues, we are confident that they are in the best interests of the people of Devon and Norfolk. If we had fought shy of the decisions because of the controversy associated with them, we would be ill serving the people of Exeter and Norwich, and of Devon and Norfolk. The Government have faced up to their responsibilities.

Lord Ryder of Wensum: I would be most grateful if the Minister would answer one question. I declare an interest as a former Norfolk Member of Parliament who represented many suburbs of Norwich. In his evidence to the Merits Committee-item 20 on page 72-a former and most distinguished leader of Norfolk County Council stated:

"Since 2007 I have only been asked to give my views on all-unitary arrangements, but to give them still, on the basis of the agreed criteria. I was therefore completely shocked to hear that, in making his decision for Norfolk, the Secretary of State concurs that these criteria are still not met, but that 'for compelling reasons' he had decided to depart from the rationale and approach for decision-making I was asked to give my views on, and create a unitary Norwich on its current boundaries anyway. The Secretary of State did not communicate this changed approach in advance nor consult on it ... This is surely unlawful".

What are the Minister's views on that?

Lord McKenzie of Luton: That was a long question that I thought the noble Lord would ask later in the debate. The issue of compelling reasons is as I outlined in my introduction. It was always clear in 2009 that, although the then Secretary of State decided to proceed only with proposals that met the criteria, he recognised that that would not necessarily always be the case, and that there should be scope when criteria were not met still to support and bring forward proposals if there were compelling reasons for them; and that when criteria were met, that did not necessarily in itself mean that the proposals should be brought forward if there were at the time compelling reasons for them not to be.

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I outlined the two areas of compelling reasons that caused us to proceed with our decisions, which concerned the benefits arising from Total Place and the supreme importance of generating growth and making sure that we do everything we can to sustain growth in our country, particularly at the moment, given where we are on the issue of the deficit. That seems entirely appropriate. To suggest that somehow we should only ever stick to the criteria is not consistent with what has happened in the past. I beg to move.

Amendment to the Motion

Moved by Lord Tope

Lord Tope: My Lords, I will begin by declaring indirect interests. I was born in Devon, albeit within what are now the boundaries of the Plymouth unitary authority. My father's family has been Devon born and bred for as many centuries as we have been able to trace. Secondly, I have been a London borough councillor for the past 36 years. London boroughs have been unitary authorities for the past 45 years. Therefore, I need no convincing of the advantages of unitary local government. I start from a point of understanding of, and sympathy for, those in Exeter and Norwich, including some in my own party, who are keen to see these orders passed tonight. Indeed, I suspect that if I were a city councillor in Norwich or Essex, I, too, might be keen. Rightly or wrongly, councillors there see it as their last chance to gain unitary status for their cities. However, it should not be unitary status at any cost. What is before us tonight is all that is on offer at this time, and it is not good enough. The boundaries of the two proposed unitary authorities are wrong, and the timing is wrong-just as we head into what we all know will be the most challenging financial climate that local government has ever known.

Even more importantly, we have a responsibility to consider the effects of the draft orders on the wider counties of Devon and Norfolk-not just on the county councils, but on the citizens, businesses and other statutory and community organisations that represent them. Others with greater personal knowledge and experience of that than I have will speak in this debate, so, in the interests of brevity, I shall leave it to them to spell out the concerns of the people of Norfolk and Devon, and indeed of Norwich and Exeter. Instead, I shall concentrate, as did the Minister to a large extent, on the process that has led us to this point. It is a process that seems to unite everyone, regardless of their view about the outcome, in condemning the most appalling mishandling by this Government.

5.30 pm

Although the Government will be accused of rushing through these orders tonight within days of the dissolution of Parliament, I agree with the Minister that this has

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in fact been going on and on for more than three years, characterised by much legal dispute and the expenditure of huge sums of public money. As the Minister said, in 2006 the Government invited local authorities to submit proposals for unitary status. They stated that all such proposals would have to meet each of five strict criteria, which the Minister listed: affordability, a broad cross-section of support, strategic leadership, neighbourhood empowerment and value-for-money services. So far as I am aware, every unitary authority established since that time has been judged by the Government to meet each of those five criteria. Can the Minister tell us of any that did not meet any of those criteria at the time they were proposed?

The Minister has outlined the sad history since that time and I shall not go over it again in any detail. But I want to say, most importantly, that in December 2007 the then Secretary of State announced that she did not think that either Exeter's or Norwich's bid for unitary status would meet the Government's criteria, particularly on financial grounds. The Minister has already told us that. The Secretary of State therefore referred both bids to the Boundary Committee for advice.

For reasons probably known to many here, it took two years for that advice to be deliverable, but in December last year the Boundary Committee for England published its proposals. It recommended single county-wide unitary councils for Devon and Norfolk. It also made proposals for Suffolk, which are not the subject for debate tonight. Most significantly for tonight's debate, it recommended against separate unitary councils for Norwich and Exeter on the grounds that they would not meet the Government's affordability criteria.

In February, the Government announced that they rejected all the Boundary Committee's recommendations and proposed instead to create unitary authorities for the cities of Exeter and Norwich, even though they agreed with the Boundary Committee that such proposals would not meet their own affordability criteria. The Permanent Secretary at the Department for Communities and Local Government, in his role as accounting officer, was so concerned about this that he wrote to the Secretary of State seeking a political direction because he did not believe that the proposals represented value for money. His letter is published in full on pages 29 and 30 of the Merits Committee report. We have just had an exchange on this and the Government have said, rightly, that his action in doing so was "perfectly proper" as accounting officer-no one questions that-but that Ministers had a wider role. Indeed they do. Therefore, while his actions were certainly perfectly proper, they were also unprecedented.

As the noble Lord on the Opposition Front Bench asked in his interjection, has there been any other occasion when that has happened? Now that he has notice of the question, can the Minister say whether there has been any other occasion, either within the Department for Communities and Local Government or any of its predecessor departments, when the accounting officer has felt the need to seek a political direction? I ask the question, as often is the case, in the pretty certain knowledge that the answer is no and that this is indeed unprecedented. Therefore, it may be proper, and it may be, as the Minister understandably

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sought to downplay, a routine part of government, but this is the first time that it has occurred. It is unprecedented and something that we should all take very seriously.

Next I turn to the report of the Merits of Statutory Instruments Committee, to which reference has also been made. It examined the draft orders in some detail. It sought further information from the department. I am sure that the report will be much quoted in tonight's debate, so I shall confine myself to quoting the conclusion. In paragraph 35, the Merits Committee concludes that,

Faced with that conclusion, we might reasonably expect the Minister to give us the evidence which the DCLG failed to give to the Merits Committee's satisfaction, on which it based its belief that there are compelling reasons. The Minister has repeated the Government's belief, but has again failed to give hard, factual evidence to support that belief. Tonight we are asked to accept that this is an article of faith from the Government.

Devon and Norfolk county councils are challenging these decisions in the High Court on 28 and 29 April. In his letter to the Secretary of State, the Permanent Secretary said that he had "clear legal advice"-I suggest that clear legal advice is a little unusual in itself-that the risk of being successfully challenged in judicial review hearings is "very high". It is not 50:50 or 60:40, but very high.

Last Thursday, the Joint Committee on Statutory Instruments published its report on these draft orders. It concluded that, if approved and made,

The "unexpected use of the power conferred by the enabling Act", to which the Joint Committee refers, is the cancelling of the city council elections due to be held on 6 May. As the committee points out:

"If the court decides that the decisions to implement the unitary proposals were flawed"-

the Government has "clear legal advice" that they are-

So tonight we are asked to pass orders which the Government accept do not meet their own strict criteria on affordability; which the accounting officer believes do not represent value for money; which the Merits Committee, in its measured tones, believes may imperfectly achieve their policy objective; which the department has "clear legal advice" are of doubtful legality; the Joint Committee on Statutory Instruments has drawn to the "special attention" of each House; and which may be unlawful. We will also be cancelling elections 45 days before they are due to take place, with no time to restore them if that proves to have been unlawful.

I know that this House is always reluctant to support fatal Motions, but if ever there was a strong case for doing so, surely this must be it. Surely, we have a duty

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to all these bodies to say, "We've heard what you say and we will act on it". Faced with all this evidence and more, can we simply say, "Oh dear, we really do regret that, but there is nothing we can do"? If ever there was a strong case to vote against orders, this must be it.

If these orders are passed tonight, it may be that they will be overturned in the courts at the end of next month. It may be that another Government will be elected the following month. It may be that that new Government will give high priority in their first 100 days to reversing these orders before implementation. Any or all of those things may happen, but they may not.

The one certainty of passing these orders tonight is that the city council elections will be cancelled only 45 days before they are due to be held. We will be denying the citizens of Exeter and Norwich their democratic right to express their view in an election. That is a very serious step to take at such short notice and one that your Lordships should consider very carefully before taking. Tonight we can simply "regret" all of this, but let it happen anyway; or we can say, "This is wrong!" and stop it happening. The decision is ours. I beg to move.

Amendment to the Motion

Moved by Baroness Butler-Sloss

Baroness Butler-Sloss: My Lords, I shall speak to the amendments I have tabled. I shall, in due course, ask the House to support me if the amendments moved by the noble Lord, Lord Tope, do not meet with the approval of the House. I feel the wording of my amendments perhaps more appropriately reflects the spirit of this House than the fatal amendments about which you have just heard, and I propose therefore to abstain on the amendments tabled by noble Lord, Lord Tope. I hope very much that the House will support me in due course on the amendments to which I am about to speak.

I declare an interest as a member of the Merits Committee, but I made a point of not attending on the occasion when it considered these two orders in order to feel that I can speak entirely freely. I live 10 miles outside Exeter and my parents and grandparents and all my family on my maternal and paternal sides come from Norwich, so I know and love both cities. However I feel strongly that it is the duty of a Cross-Bencher, as a Peer independent of all political parties, to speak out if the Government of the day, of whichever political persuasion, seek to pass legislation that is seriously flawed, and that is what I propose to do today, even though it is unusual for a Cross-Bencher to do so.

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Noble Lords have already heard a great deal from the noble Lord, Lord Tope, about the background to this, the issues that arise on the orders and the reasons why they are objectionable. These two orders are different from earlier unitary authority orders that came before this House. Indeed, they must be unique in the way in which the government department is presenting them. They therefore require the special attention of this House, as the noble Lord, Lord Tope, said. The Merits Committee pointed out:

"Both these proposals differ geographically from the seven previous orders, because they intend to convert only the central part of the defined area to unitary status, leaving it surrounded by a 'doughnut'-

a lovely word-and that,

and therefore to the cost implications.

I shall concentrate upon the other points made in the report by the Merits Committee and then summarise the points upon which I rely in support of the two amendments in my name. It is inevitable that I will tread a little over the ground already trodden by the noble Lord, Lord Tope, and I hope the House will forgive me. The noble Lord, Lord Tope, has already set out the conclusion of the Merits Committee. In coming to that conclusion, the committee received a considerable volume of written evidence that it considered and dissected. It raised questions on the unsatisfactory nature of draft orders. The main points made by the committee were that the proposed implementation of bids did not conform to all five criteria and that the introduction of additional reasons for selection would therefore appear to be contrary to previous practice-it had not happened before these draft orders.

The Merits Committee stated that it would have expected the department to set out in more detail the basis for setting aside the Boundary Committee's recommendation. It pointed out the lack of evidence for the two compelling reasons, and when it asked the DCLG, as it tends to do, how the change of status was likely to overcome the cost disadvantages in this area, the department simply repeated the Written Statement and did not estimate any cost savings or efficiency gains.

5.45 pm

The Merits Committee commented that it would be helpful to the House if the DCLG made a much more explicit analysis, which I do not believe we have yet received, of how much economic growth each city, as distinct from each county, is expected to generate as a result of becoming a unitary authority. As I understand it, the likely growth is expected to be outside the boundaries of each city. This is true particularly of Exeter; Cranbrook is a new village that is about to be built, and there is to be a Skypark and various other things that will grow very dramatically but not within the city boundary.

The Merits Committee asked why the department relied on the Total Place approach as a compelling reason. It suggested that the House might wish to seek a clearer explanation from the Minister as to why this approach was considered a compelling reason for granting the city unitary-authority status. I may not have listened as carefully as I hope I did, but I do not think that I

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got a very good answer on that. The committee pointed out the lack of consultation-there has been a great deal of consultation, but not on the two so-called compelling reasons-and, in view of the very strong opinions for and against the Government's proposals, questioned the extent to which these unitary proposals, which rely on collaborative working, were now feasible. The committee made a very practical point here.

The Merits Committee also supported the point made by the Permanent Secretary in his letter that,

It suggested that the choice between preserving the status quo and creating new unitary authorities,

The Merits Committee also suggested:

"The House may wish to consider whether or not sufficient evidence that the course proposed in the Orders will solve the problems identified without creating unacceptable consequences elsewhere, has been provided".

I suggest that it certainly has not been. The committee questioned whether there had been a consistent decision-making process, and asked whether it was right to depart from the published procedure during the same tranche of applications, particularly without further consultation. Were the compelling reasons persuasive or was sufficient evidence published elsewhere to reassure the House? The answer is clearly no. The committee also questioned the timing of these orders when there are to be council elections, about which the noble Lord, Lord Tope, has already spoken.

I will now summarise the points that demonstrate clearly that these orders should not be supported by this House without further consultation and without the Government reconsidering them much further. First, neither Norwich nor Exeter meets the Government's own criteria of affordability and, in the case of Norwich, value for money. Secondly, in December 2007, the Secretary of State rejected the Norwich and Exeter proposals. Thirdly, the Secretary of State asked the Boundary Committee for its advice, and on 7 December 2009 it advised that the Norwich and Exeter proposals should not be implemented as the Secretary of State's previous concerns had not been displaced by any evidence received by the committee during its review. Fourthly, on 8 February, the Secretary of State received a letter from the Permanent Secretary, to which the noble Lord, Lord Tope, has referred, which said:

"The approach you are currently proposing makes it difficult for me to meet the standards expected of me as Accounting Officer".

Those are extremely strong words. On 10 February of this year, the Secretary of State accepted that the criteria were not met, but found compelling reasons without any supporting evidence and without the consultation on the compelling reasons.

The Merits Committee reported that the orders may imperfectly achieve the policy objective. The cost implications have not been properly considered, nor the impact on truncating each county and the effect on some district councils, nor the consideration of unforeseen consequences. Perhaps most damning is the report of the Joint Committee on Statutory Instruments as recently as last week. It drew the special attention of both

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Houses to each of the draft orders on the grounds that if they are approved and made, there will be a doubt as to whether they will be lawfully made.

The JCSI went on to say that,

That seems to me to be the most extraordinary situation which this House faces today.

Will the Minister explain why this legislation has to be pushed forward at this time? What is the urgency for it? Why do we need it now, particularly in the light of the warning of the Permanent Secretary that the judicial review may well be successful-it has a high chance of success-the issue of lawfulness as raised by the report of the Joint Committee, and the impact of the cancellation of the May local elections? I am saddened that the Government do not seem to think that these are matters which weigh with them. I would urge the Minister again to consider withdrawing these orders and to reconsider the overall plans for the counties of Norfolk and Devon, and the cities of Norwich and Exeter.

Lord MacGregor of Pulham Market: My Lords, I want to speak only about the Norwich and Norfolk order. I declare an interest as a former Member of Parliament for south Norfolk for 27 years. I live in the county and I am much involved in many organisations in the county, a lot of which are completely non-political. I have received many representations on this issue. Indeed, I was speaking as president of the Norfolk Association of Village Halls this weekend about this very subject, because there was great concern about the impact for parish and district councils.

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