Baroness Hanham
Main Page: Baroness Hanham (Conservative - Life peer)
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, this is our second attempt at a Second Reading debate on this short, single-issue Local Government Bill. The first was put on hold by the intervention of the noble Lord, Lord Howarth—I understand that he is unable to be in his place today—and the noble Baroness, Lady Hollis. Despite a ruling from the Public Bill Office that the Bill was not prima facie hybrid, and using the fact that they had obtained two opposing legal opinions on the matter, they persuaded the House that there was a case for the Bill to be deemed hybrid.
As a result of the success of that Motion, the Bill was referred to the Examiners for adjudication. This has taken place. I understand that the hearing was very short; no one from the Opposition attended to speak. After a very short deliberation by the Examiners, it was found that the Bill was, as expected, not hybrid. In effect, the Examiners put an end to a somewhat dubious delaying tactic. By their decision, they also vindicated the original decision of the Public Bill Office. That is important, as it is a strong convention that the House accepts the expertise of the Public Bill Office in these matters.
The purpose of the Bill is to give effect to the statement in the coalition agreement that:
“We will stop the restructuring of councils in Norfolk, Suffolk and Devon”.
Noble Lords may be aware that the previous Secretary of State decided, after much debate, to implement unitary councils in Norwich and Exeter. His decision was taken late in the Parliament and made despite the fact that those authorities did not fulfil the five criteria for becoming unitary. The Secretary of State cited “compelling reasons” why those authorities should be an exception to the rules.
The decision was also made against the background of considerable controversy, since there was a general lack of evidence for the “compelling reasons” and a lack of public support. Concerns were raised by noble Lords during debate on the orders about the cost and the lack of support, while questions were asked about the manner in which the decision of the Secretary of State was taken. A Motion of Regret tabled by the noble and learned Baroness, Lady Butler-Sloss, underscoring these concerns, was passed overwhelmingly.
On 24 March, Parliament approved the orders that established unitary councils in Exeter and Norwich. Since then, an appeal against the orders has been made to the High Court, which has recently declared that the then Secretary of State’s decision on the proposals for a unitary Exeter and a unitary Norwich was unlawful and that the Norwich and Exeter structural change orders should be quashed. We expect the court next week—provisionally on 5 July—to decide the precise details of the quashing of the orders, in particular whether the quashing will also end the deferral of elections for one-third of city councillors in Exeter and Norwich from May 2010 to May 2011.
Lastly in this saga, the previous Government took no decision on the proposals to create unitaries in Suffolk, instead proposing a county constitutional convention. This was a pie-in-the-sky invention of the previous Secretary of State, which was meant to bring together the principal authorities in Suffolk and their MPs to reach a consensus on a possible unitary solution within that county. The convention has never met and the proposals, therefore, have not been pursued. The Bill will put an end to any possibility of this matter being taken further.
That brings me to the reasons why we are introducing this legislation. In short, our case for doing so is one of non-compliance with the five criteria and, more generally, lack of any evidence of value for money. The arguments in favour of the restructuring in Devon and Norfolk were, in truth, never made out and should never have been pursued. The surprising thing, given the problems identified, is that they were pursued. It is also of considerable significance that the department’s accounting officer had such concerns about the value for money of the unitary proposals for Exeter and Norwich that he requested that he should receive a written instruction from the then Secretary of State to implement them. Having noted the accounting officer’s concerns, the then Secretary of State still gave a direction to implement these unaffordable unitary proposals. He also made a statutory decision to take no action on the Boundary Committee proposals for unitary authorities in Devon and Norfolk, thereby putting an end to those proposals.
This Bill does more than just put a stop to the structural change orders for Exeter and Norwich. It will put an end to all uncompleted plans for unitary restructuring including Suffolk, thereby giving these councils certainty on their future and a clear position for them to regroup and work with others to structure their services. They will also not have to bear the significant costs of reorganisation, which it has been estimated would have cost their taxpayers in the region of £40 million.
I shall now briefly discuss what the Bill does. Clause 1 revokes the orders creating unitary structures in Exeter and Norwich. It will also prevent the Secretary of State from making an order to implement a unitary proposal that he received before the coming into force of the Bill and so will put a stop to the implementation of any Suffolk unitary proposals that remain on the table.
Clause 2 makes consequential electoral provisions in relation to the deferral of elections of one-third of councillors in Exeter and Norwich city councils. It may be that after the court hearing next week, when the precise details of what is quashed will be decided, this clause will no longer be needed. If that is the case, consideration will be given to removing it from the Bill by amendment in Committee.
Clause 3 provides for the short title and the commencement of the Bill.
In the gracious Speech, it was emphasised that this parliamentary Session will focus on freedom, fairness and responsibility. This Bill is the embodiment of that message, as it brings freedom from an imposed restructuring; restores fairness by redirecting the councils’ focus to serving communities and the people who elect them; encapsulates financial responsibility by putting a stop to wasteful public spending on restructuring; and opens up opportunities for the councils to seek efficiencies without the distraction of reorganisation. It will prevent the wasting of public money on unnecessary reorganisations. I recognise that it was forecast that reorganisation might have led to savings, in the case of Exeter and Norwich, of some £6.5 million per year, and possibly larger savings from some of the proposals in Suffolk, but there were clear financial risks to those estimates.
The previous Government were determined to impose restructuring, whether viable or not, which was expensive and destructive and would not have served well the cities and communities of Exeter, Norwich or Suffolk. It would have created uncertainty and controversy and, through the acceptance of a flawed case for reorganisation, the authorities’ attention would have been taken away from the needs of rapidly changing service provision.
I recognise that both city councils will be disappointed by this move. Exeter and Norwich are dynamic cities. However, a controversial restructuring of services is not the way to achieve efficient delivery. There are excellent examples of councils of all sizes coming together to benefit from joint working, such as the sharing of chief executives, back-office pooling and co-procurement. Councils are free now to decide on sensible co-operation in the interests of their citizens, without restructuring. I believe that this approach will be made even more beneficial under the Government’s plans, which were announced in the Queen’s Speech on 25 May, to devolve more power to local authorities and fully focus on the power of localism.
I am confident that the council leaders of these authorities will want to commit to sensible co-operation and effective collaborative partnership with all the councils in their county areas. I make it clear that my department will help in any way that it can, while recognising that decisions should be made by local councils at a local level and that the age of centralisation is over.
In conclusion, this Bill puts a stop to all these uncompleted plans. It saves the taxpayer £40 million in restructuring costs. It releases the councils to focus on the services for their communities and the local people who have elected them. Above all, I stress that, with this legislation, Exeter and Norwich will be able to continue to be the powerhouses for their counties. They will be able to continue to be cities whose historical status can be, and always is, truly recognised. They will be able to continue their work without distraction and be impressive economic forces for their cities and the wider counties. I commend the Bill to the House and I beg to move.
Lord Richard
I wonder whether the noble Baroness can help me, because I am a little confused by one or two remarks that she made, particularly that we will find out on 5 July what is going to be quashed. As I understand it, the High Court has made an order quashing the original orders, which were enacted and went through this House. What are the alternatives as far as quashing is concerned? What else is there to quash?
Baroness Hanham
My Lords, the court made a decision only on the first clause—that is, to stop the reorganisation. It did not make a decision on the second clause, which relates to the election of the councillors. One-third of the councillors had their elections postponed until 2011. As things stand, they would have to have their elections immediately if this was not quashed or if we did not make a change in the Bill.
Baroness Hanham
My Lords, I thank all those who have taken part in this debate for their contributions. I have been struck by the fact that we have been discussing different issues. The winding up of the noble Lord, Lord Rosser, has confirmed to me either that we are discussing different issues or that there is some determination to see that those issues are not the same.
We are discussing the decision by the previous Government to agree to applications by two councils for unitary status. Those were made late on in the Parliament. The applications were considered by the Government on at least three occasions. On two of those, Ministers said that the criteria—the criteria that have been quoted around the House today—were not met and that therefore they would not proceed. However, a sort of magical moment took place just before the election. Quite suddenly, a third decision was made, saying that all was well. The Government said that they did not mind that the criteria had not been met and that there were now compelling reasons—not stated—for why the councils should be allowed to go forward for unitary status.
This is not an argument about the value or the virtue of unitary government: it is about the mismanagement and mishandling of two applications for unitary government. That is why we are here today. We are here today because there was much opposition to what was going on. There was opposition not only on the basis of unitary authorities being formed, but on the basis of how the decision was being made. So concerned was this House, that the orders put forward were voted down on a Motion tabled by the noble and learned Baroness, Lady Butler-Sloss. The issue was taken up by the political parties before the election, and my party said that in the light of the orders being agreed we would stop them going ahead.
That was a manifesto commitment. When the coalition Government was formed, we agreed that it would be fulfilled. As the noble Lord, Lord Tope, has so carefully reminded us, it was abundantly clear that the Liberal Party was also against this, witnessed in the fatal Motion that he moved to stop these orders. Let us settle down and be sure what we are talking about here. We are talking about why the previous Government made their decision and the background against which it was made.
My Government are not against unitary authorities—plenty of them are working extremely well. There may be some that are not so good, but the existence of such authorities is recognised. However, we are against them being invoked and formed when the criteria that every other authority has had to satisfy have not been met.
There was also the issue of the last-minute compelling reasons, which were never laid out. Here, the noble Lord, Lord Rosser, finds himself in a very difficult position. He has got around the situation about as well as he could have done, but it is not comfortable. He was chairman of the Merits Committee when it produced one of the most withering reports that I have read on the process for these unitary authorities. The report drew attention to the compelling reasons and asked what they were. It never, as far as I know, had a reply and nor did anyone else. It drew attention to the fact that the criteria were not being met. It drew the House’s attention to the fact that these orders were progressing and being put forward on a false basis. I am sorry for the noble Lord, Lord Rosser, and believe that he took a very brave stand when he was chairman of the Merits Committee because he spoke strongly against his own Government. However, I think that today he has failed to back up that brave stand. We are therefore moving forward on the basis of the criteria not being met.
Baroness Hollis of Heigham
My Lords, before she went on to the issue of the Merits Committee, the noble Baroness was clear that she in particular, and the Government and the coalition more generally, were not opposed to unitary authorities as such. Her main criticism was of the process by which decisions were arrived at by the previous Secretary of State. Given that, as my noble friend Lord McKenzie said, Part 1 of the 2007 Act, which, as I understand it, permits future bids for unitary status to come forward, has not been repealed, may I have an assurance from the noble Baroness today, in the light of what she has just said, that any future bids from Norwich, Ipswich or Exeter will be properly considered in the light of that Act. If she says no, the Bill is hybrid.
Baroness Hanham
My Lords, if the noble Baroness had continued to sit for a bit longer, she would have heard me get to her point. It is correct that the Bill does not repeal the Local Government and Public Involvement in Health Act 2007, but it would also be fair to say that the Government have no plans to issue further invitations for unitary authorities and, if there were applications, they would be viewed against the serious economic situation we are in at the moment and consideration would be given to whether they offered any value for money whatever, which these applications have proved not to have. I should have thought that any local government worth its salt would think twice about putting forward an application under those circumstances.
Lord Rosser
The noble Baroness raised the issue of the Merits Committee report. I stand by what I said in response to the intervention from the noble Earl, Lord Cathcart. The report states:
“The Committee emphasises that it is not our role to reach a view on whether some form of unitary status is right in these circumstances, but to draw to the special attention of the House issues which it may wish to take into account when reaching its decision on the specific proposals in these Orders”.
That is the role of the Merits Committee. As the report states, it is not the role of the Merits Committee to reach a view on whether some form of unitary status is right in these particular circumstances.
Baroness Hanham
My Lords, I am sure the noble Lord will forgive me for saying that I did not say that the Merits Committee report supported or not unitary status. I said precisely what he said: that the Merits Committee drew the attention of the House to certain aspects with which it was deeply unhappy. I am certain that that is what I said; it is certainly what I meant to say; I do not believe that the noble Lord can draw any inference from what I said that I thought that the Merits Committee was either supporting or not supporting unitary authority status.
Lord MacGregor of Pulham Market
Is it not the case that the Merits Committee raised an enormous number of questions about whether the evidence was satisfactory and left the House to decide? I have never known a Merits Committee raise so many questions and doubts about a statutory instrument, and the House took a very clear view.
Baroness Hanham
I thank my noble friend for his intervention. He is correct. A large number of questions were raised. As I said at the beginning, it was one of the most withering reports that I have read. I think that we should let it rest at that for the moment.
The question of judicial review was originally raised as a possibility by the Permanent Secretary when he was demanding categoric instructions to allow the unitaries to go forward. Judicial review became possible because they were orders, so it was a judgment not on a parliamentary decision, but on secondary legislation that arose from primary legislation. The judge was quite clear in what he said and has quashed the first article of the orders. The second article, which relates to the elections, has yet to be decided, and presumably will be so decided at the next hearing of the court on 5 July. How much of the Bill proceeds depends on what happens there, and we will move amendments accordingly.
Lord Lloyd of Berwick
Do I understand that the Minister accepts that if the orders are quashed, Clause 1(3), which revokes the orders, will be otiose? It may also be that Clause 2 will not be required, so one wonders how the Bill will have any real impact.
Baroness Hanham
The noble and learned Lord has raised a point that I knew I ought to have cleared up before. There is one aspect of Clause 1 that would still proceed. Clause 2 would become otiose and we would have to see how much was left to proceed with. I have been advised that, whatever happens, the Bill will have to proceed to the end now that it has started.
Lord McKenzie of Luton
I know that we are getting into detail that is probably Committee stuff, but if Clause 2 effectively falls, does that not create a problem with what the Bill provides for the changes in electoral arrangements? As it lays them out, they are predicated on somebody immediately before the commencement of the Bill remaining in office under an article of something that would have been quashed.
Baroness Hanham
My Lords, that was the bit I had forgotten. Clause 2 moves the elections from 2010 to 2011. If it is quashed, we go back to 2010 being the defining moment for the elections. In that case, by-elections would have to take place within the next six weeks, and it may be decided that it would be more helpful to move them on.
I have been asked a number of questions. I have probably answered those asked by the noble Lord, Lord McKenzie, but I shall make one point. I am not surprised that the noble Baroness, Lady Hollis, made a very passionate speech, as it is clear that this is something that she feels very strongly about. However, I am just a little bit perturbed by the fact that she said that once the judgment appeared to be taken against the councils, that was the reason why they did not pursue or give evidence to the Examiners on hybridity. This action to challenge hybridity caused a lot of difficulties and trouble and brought into question the decision of the Public Bill Office of this House. It was a well argued trap the last time—
Baroness Hollis of Heigham
It was not a trap. It took place in the full presence of the House at prime time. A trap is something that happens as an ambush late at night. It was very clear to a number of people, including former MPs who are much more experienced in matters such as this, that there was an arguable case that the Bill was hybrid. The Speaker of the House of Commons had ruled that if there was any possibility that a Bill was hybrid, it should be referred. That was the decision. It was a very low hurdle, and the House agreed that that low-hurdle test had been met. There was very substantial support from the Cross Benches. There was no trap. If the Government had wanted to avoid that situation, they might have been better advised to have produced a more watertight Bill.
Baroness Hanham
Trap or not, we ended up with an examination to which no further evidence was given. The two memorials were laid. They were withdrawn, but because they had been there, they were considered. Effectively, the hearing took place without the arguments that had been put forward by the noble Baroness. We are where we are. We know the Bill is not hybrid. We are proceeding with it and will carry it through as far as we can to the end.
The noble Baroness also asked questions about the impact assessment. We should not forget that the unitary proposals for Exeter and Norwich failed to meet the affordability criterion and that the previous Government accepted that. The independent financial consultants supported that view. In short, the proposals were not value for money. The impact assessment reflects that, as it can be interpreted.
I thought that I might have one or two further questions to answer, but I believe that I have finished what I need to say. I am grateful for the contributions made by Members of the House. I beg to move.