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Lord Bruce of Donington: My Lords, I should like to be informed as to whether at this stage of our proceedings it is possible to express agreement with or dissent from the various Motions to be moved en bloc.

Noble Lords: They have been moved already.

On Question, Motion agreed to.

Local Government Bill [H.L.]

3.10 p.m.

Lord Whitty: My Lords, I beg to move that this Bill be now read a second time.

The Local Government Bill is intended to revitalise local democracy, to change the way in which local communities govern themselves and how they shape their future. The Bill gives new powers to local authorities to promote the economic, social and environmental well-being of their communities. It creates new executive arrangements for councils, involving separate executive and scrutiny structures with powerful roles for all councils. It introduces a new ethical framework for councillors and for council offices. It provides for more frequent local elections to improve councils' accountability to their electorates. It enables local authorities to fund support services for vulnerable groups via a new single budget, and it repeals what is commonly known as Section 28.

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Your Lordships will be aware that Parts II and III of the Bill were scrutinised in draft during the summer by a Joint Committee of both Houses. The Government published their formal response to the committee's report last week. We have considered the committee's recommendations and accepted a significant number of them. I take the opportunity to apologise to noble Lords for the relative lateness of that response. Nevertheless, I thought it important to ensure that that response was put before your Lordships before we moved to Second Reading of the Bill.

The draft Bill was published as part of the policy document, Local Leadership, Local Choice, for debate and discussion in local authorities and local communities, as well as for consideration by the Joint Committee. We have found the exercise of publishing a draft Bill and having informed dialogue early in the parliamentary process extremely valuable, particularly when considering the proposals for the new constitutions of local authorities and for the new ethical framework. Indeed, it is one from which I believe this House and another place can learn.

I am particularly grateful to the noble Lord, Lord Bowness, for chairing the Joint Committee. I regret that the noble Lord is unable to be here today and I know how much he regrets that. However, I pay tribute to his role in the Joint Committee. I also pay tribute to all the other noble Lords, particularly the noble Baroness, Lady Hamwee, and Members of the other place who played a full part in the committee. I recognise that their report was produced to a tight timetable. Yet it sets out a coherent and valuable set of recommendations for improvements to the draft Bill. I welcome the interest demonstrated by all members of the committee in ensuring that we have an effective, modern system of local government for the 21st century.

As I said, last week the Government published their response to the report of the Joint Committee. That response sets out how the Government propose to improve the Bill to deliver their policies most effectively in the light of the committee's recommendations. It also sets out how we plan to proceed in this House. Among other things, that means that we intend to bring forward amendments to the Bill. Most of them are in response to the significant number of committee recommendations with which we largely agree. We shall do so in time for debate in Committee in this House. By Committee stage we shall also bring forward further amendments to better reflect the policy set out in Local Leadership, Local Choice, and we shall produce as early as possible drafts of key regulations and guidance which we intend to make under the Bill. We hope and believe that by proceeding in this way we shall assist the House in its consideration of the legislation now before us.

In that context in particular, we shall bring forward amendments to the new executive arrangements to develop and clarify the following important policy issues: first, the options available should there be a defeat for a referendum on the establishment of a mayor; secondly, on access to information; thirdly, on

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payment of allowances and pensionable remuneration to councillors; and, fourthly, more flexible structures such as area committees and joint arrangements with other authorities.

In order to reflect some of the Joint Committee's other recommendations, a number of changes are also required to the provisions which establish the new ethical framework. Therefore, we plan to introduce amendments which will, among other things, clarify the role of the monitoring officer in relation to conduct issues, set out arrangements for handling misconduct in parish councils, and refine the requirements for standards committees and their functions. We also intend to amend the Bill to provide more detail of how the new ethical framework will be implemented in Wales. Those amendments will reinforce the basic approach to council decision-making already set out in the Bill and ensure that it will be more accountable, efficient and transparent.

The Bill will give local authorities the powers they need to respond to community concerns. It will give them the ability to work in partnership with other bodies and opportunities to build broad coalitions within the community and with local service providers to improve the quality of people's lives. At the same time, it will also provide for local diversity in the way in which councils function; it will reform the way in which local government makes decisions and is held accountable for them; and it will give local people more of a say in how their council is run, as well as what it delivers. Therefore, the Local Government Bill means that local communities will have more choice and a bigger say in their communities.

Part I of the Bill deals with the issue of well-being in community planning. The Bill gives local authorities a broad new power to promote or improve the economic, social or environmental well-being of their area and its inhabitants. It will enable them to take new action to support their communities and to build new partnerships with other local bodies to deliver real improvements in local conditions. And, crucially, it will provide the certainty that those other bodies may need in order to be incentivised to participate in joint initiatives.

Modern councils have a vital role to play if we are to meet the challenging objectives of tackling social exclusion and regenerating our most deprived neighbourhoods. The future well-being of their community should be the most important issue for councils. No one is better placed to give clear direction to their communities or to ensure that action is co-ordinated and responds to locally identified needs. That is what real community leadership is about. If local authorities are to fulfil that role, they must have the powers they need to respond to all sections of the local community and to work with them to improve local quality of life. Part I of the Bill will give local authorities the powers that they need.

Your Lordships will recognise that leading a community is a slightly different job from leading a council. Local authorities which work alone cannot tackle every problem. Community leadership means

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generating support for change and working with others to deliver that change; it means managing, negotiating differences, co-ordinating and facilitating action by others. In some cases, it also means giving up direct power in order to gain a wider influence.

Community strategies should play a vital part in that process and set out a shared vision for the community. We want to see local strategic partnerships bringing together councils, other public service agencies, local businesses, voluntary organisations and local communities. Those partnerships need to produce inclusive strategies that reflect local aspirations and concerns.

The powers in Part I of the Bill will make a real difference. However, we also recognise that the world does not stand still. As modernised local authorities begin to develop new approaches to tackling local problems, along with their partners, there is little doubt that some of the existing statutory regulations or limitations will be found to be inhibiting or preventing sensible initiatives to promote community well-being.

We do not want a legislative framework that cannot keep pace with best practice in local government. We need the maximum opportunity for responsiveness and for flexibility. Where experience shows that existing regulations or existing limitations are placing an unnecessary brake on the promotion of community well-being, Parliament should be able to remove or amend them. The Bill provides the powers to do so. The measures in the Bill will bring new life to local democracy and establish the vital role of councils in improving quality of life for all members of the community.

Part II deals with the new constitutions and needs to be seen together with Part IV, which deals with elections. Part II lays the foundations for more efficient, transparent and accountable government: efficient, because decisions will be taken quickly, responsively and accurately to meet the needs of the community; transparent, because it will be clear what the decisions are, who has taken them and for what reasons; accountable, because those who take decisions will have to answer for them and they will be measured against the policies and plans on which they were elected.

Many noble Lords will recall the Bill in the last Session brought forward by the noble Lord, Lord Hunt of Tanworth, who I am glad to see is to speak later in the debate. In many respects, Part II is a development of the noble Lord's Bill. Under this Bill, councils will adopt new constitutions based on either a directly-elected mayor with a cabinet, or a cabinet with a leader, or a directly-elected mayor with a council manager.

Within those broad options, there is still considerable scope for local choice and diversity and almost all the options proposed in the Bill sponsored by the noble Lord, Lord Hunt, can be achieved.

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All the new forms of constitution stipulated in the Bill include a separate executive responsible for most of the council's functions and held to account by overview and scrutiny committees. If other workable forms of constitution with a separate executive emerge, the Secretary of State or the National Assembly for Wales will be able to make those available too.

Executives will be able to meet in private. Politicians need time for reflection away from the public glare. Without that, discussion will be driven back to unrecorded group meetings. But the executive must be accountable. Decisions must be recorded with the reasons for those decisions and the advice received from officers. Overview and scrutiny committees will hold the executive to account in public and may investigate any aspect of the council's policy or other matters of local interest.

All councils must bring forward the options among those set out in the Bill for a new constitution. Which option and the details will be matters for local choice. This Government are committed to giving local people a real say in the way in which they are governed. Councils must consult local people and other interested parties on their proposals.

In a situation in which a council opts for a directly-elected mayor, first, it will be necessary to obtain the consent of local people and that will be done through a binding referendum. A referendum for an elected mayor will also be triggered by a petition signed by at least 5 per cent of the local electorate. The Secretary of State will also be able to require individual authorities to hold a referendum on any of the forms of constitution under the Bill.

The Bill also includes powers for the Secretary of State to make regulations governing the timing and conduct of elections for mayor and the conduct of referendums.

Your Lordships will appreciate that modern councils need modern systems of remuneration. We shall also be bringing forward amendments to abolish attendance allowances and, behind that, the whole "attendance culture". Many members of the executive will face increasing demands on their time. We hope to attract high-quality members to councils and it is right that they should receive a fair reward in those roles.

However, I remind your Lordships that we wish to ensure that local government can be efficient, transparent and accountable. Our proposals for pensionable remuneration for some members of the executive will therefore provide for that to be based on recommendations from an independent panel.

Part III deals with the ethical framework. Effective democratic government is based upon the bond of trust between communities and those who represent them, either locally, centrally or regionally. Restoring and strengthening that bond is vital. No case of unethical behaviour in local government is acceptable. In the few cases where that does occur in our local government system, we need to make sure that strong sanctions are available. Part III provides a clear framework for setting the standards that we expect of

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councillors and penalising those who fall short of those standards. That is an integral part of our plans to bring new life to local democracy.

The arrangements for that new framework include introducing new statutory codes of conduct to which all members of local authorities must sign; establishing standards committees within most councils to uphold standards within them; disseminating good practice so that members are clear about their roles and responsibilities; setting up a new, independent body--a standards board--which will have the task of investigating all allegations of misconduct by councillors; and providing the ability to impose suitable penalties ranging from censure through to disqualification from standing as a councillor for up to five years where allegations are upheld.

Alongside those arrangements, Part V includes the necessary provisions to repeal the surcharge. That is in line with the recommendations of the Nolan Committee and, more recently, of the Joint Committee.

Part IV deals with more frequent local elections. It deals with enhancing accountability through the ballot box. It contains enabling provisions to allow local authority elections to be held more often, allowing greater accountability through the ballot box. Local democracy and service delivery will be enhanced by giving local electors greater opportunity to give their verdict on the council's policy and performance. That will encourage councils to be more open and receptive and will reinforce the link between councils and their electorates.

The provisions on welfare services in the Bill are a small but important part of delivery of local services. They recognise the vital role which support services play in the lives of many of the most vulnerable of our citizens. The measures in the Bill aim to ensure, first, that vulnerable people will be able to have the services they need to be able to live independently in the community. Secondly, such people will be given immediate low-level help, which often prevents a future situation developing where they are in more acute need.

Those provisions are good news for the support services sector because, for the first time, we are giving support services a secure, transparent and sustainable funding framework. Provisions create a new grant which will be paid out to local authorities for support services for vulnerable people. Local authorities can then have the flexibility to direct that funding to high quality services for vulnerable people.

Local authorities will be able to take an important leadership role in the planning and commissioning of services for their communities. They will be able to plan support services effectively to address the needs of the community; they will be able to plan in partnership with other agencies and in step with local strategies; and they will be able to take account of the full range of people who are dependent on those services and the full range of their needs.

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Most important for those in need of support--the people at which the new arrangements are aimed--the legislation will mean that their needs and preferences will be put first. That policy promotes choice and recognises people's changing aspirations. The funding framework will help to ensure that support services are tailored to the needs of individuals. That is why 80 per cent of responses to our consultation paper Supporting People welcomed the recommendations and principles of the new framework.

That policy means that vulnerable people can live independently in the community and means that they will no longer be forced to move house. For example, funding for support will no longer be tied to a particular housing scheme or landlord. Instead, those people will be able to receive the support they need wherever they choose to live. That is particularly important for some of our older people. Research has shown that older people prefer to remain at home and receive support rather than having to move to a special scheme. Maintaining independence and control over their lives are central to the well-being of older people. This legislation provides the framework for meeting that need.

Finally, I turn to the repeal of what is known as Section 28 but which is, more strictly, Section 2A of the Local Government Act 1986. This Government are absolutely determined to tackle the reasons that certain groups of people are marginalised or excluded from society. As I said earlier, we want a society in which everyone is valued and in which everybody has the opportunity to participate, regardless of their race, their sex and also regardless of their sexual orientation. We need local authorities to help build such a society.

Yet they are in effect prevented by Section 2A of the 1986 Act from addressing the real needs of the gay and lesbian community and, in particular, from providing young people with information to deal with issues relating to their sexuality. That legislation has been seen by many sections of the community--not just the gay and lesbian community--as being less about the promotion of homosexuality than about the institutionalisation of intolerance.

In the past it effectively stopped authorities from funding support and counselling services to young gay men and lesbians and from giving advice to young people who are concerned about their sexuality. Nor, in reality, does it do anything to help protect schoolchildren, as its proponents claim that it does. It does not apply to school governors and schoolteachers. It is they, not education authorities, who are responsible for sex and relationship education. However, it has caused grave concern throughout the education field to governors, teachers and pupils who find themselves unable to turn to their mentors for information. This was an unfortunate piece of legislation. Rather than protecting children, it does exactly the reverse. It caused confusion and created a climate of fear. Many teachers feel that they cannot even discuss homosexuality with their pupils for fear of being accused of promoting it. It meant that many teachers have felt inhibited from providing the

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help and support needed by young people who are, or think they may be, gay at what can be a crucial and confusing time of their lives.

It has stopped local authorities and schools from addressing many of the issues which arise around what I regret to say is probably a growing phenomenon of homophobic bullying. One in five young gay people will inflict serious harm on themselves or attempt suicide. The removal of this pernicious piece of legislation will at least help to improve the atmosphere in which they grow up and come to adulthood. The Bill will therefore repeal what is in every way a very bad piece of legislation.

The Bill builds on the local government White Papers for England and Wales which we published in 1998. It is the next step along the path set out in the Local Government Act 1999 and looks forward to the next millennium for local government. This Government were elected to provide opportunity for everyone to fulfil their potential through education and employment, to create a fair and inclusive society in which communities are healthy and secure, and to create the platform for higher productivity and sustainable economic growth. This is part of a radical programme. It requires change not only to policy but also to the institutions of government at all levels and to their relationships with those they serve. Local government is absolutely central to delivering this vision. This important Bill, in turn, places local people at the heart of local government reform. I commend it to the House.

Moved, That the Bill be read a second time.--(Lord Whitty.)

3.32 p.m.

Lord Dixon-Smith : My Lords, the whole House will be grateful to the Minister for his now customary clear and concise exposition of the content of the Bill and the reason it is before us.

I think I am right in saying that this is the first Bill before this House to have gone through the whole gamut of pre-legislative scrutiny with consideration by a Joint Committee of both Houses before appearing here. The way in which that procedure clarifies the issues within putative legislation and sees that they are well discussed before the legislative process formally begins appears to be well worthwhile. I join the Minister in placing on record my gratitude to the noble Lord, Lord Bowness, who I am sorry is not able to be in his place, for chairing the Joint Committee. I am grateful also to his fellow members on the committee, two of whom are to speak today--the noble Baroness, Lady Hamwee, and the noble Earl, Lord Carnarvon. I am sure that the House will be interested to hear what they have to say about the Bill. They have perhaps greater of experience in examination of its detail than I have.

The House should understand that I first read the Bill when in bed with a high temperature suffering from flu. My state of mind at the time was probably febrile. It is not perhaps surprising that I did not find

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the Bill to be everything I had hoped. However, it is rather disconcerting to find that after reading the Bill again in what I thought was a rather more calm frame of mind my view of it has not improved. The intentions behind the Bill, as always with intentions, are impeccable. However, it is always the detail that causes a problem. The Minister made much of the power in the Bill to promote well-being: promotion of the improvement of the economic, social and environmental well-being of an area. Those are highly desirable aims which local government has sought for a long time. I am bound to say that I welcome their presence in the Bill as statements of principle. At the very least, that may, on occasion, prevent a local authority or its members being accused of acting ultra vires. To that extent the proposal is wholly to the good.

Clause 2(4) states that the power under subsection (1) includes the power for a local authority to incur expenditure, give financial assistance, enter into arrangements, and so on. If one is to have such powers, all rational thought leads to the conclusion that one must have power to incur expenditure. That is perfectly straightforward. However, Clause 3(2) then states:

    "The power under section 2(1) does not enable a local authority to raise money (whether by precepts, borrowing or otherwise)".

I found myself wondering what is the use of a power, even a power to incur expenditure, if there is no power for a local authority to raise such money in the first place. An expert in such matters--someone with a slightly more devious mind than mine, although I had been chairman of a local authority finance committee and was well aware of the situation--pointed out that a way round the procedure might be found by building up balances. In that way, money would not have to be raised for a specific purpose; it would be spent on these functions from balances. One might therefore avoid a charge of acting in an ultra vires fashion. However, any competent auditor would quickly see through a build-up of balances with that as a potential purpose.

I find myself in some confusion. I am not sure that I see a reason for arguing that Clause 3(2) is consistent with Clause 1(4). I therefore ask myself what is the purpose of the Bill. Clause 3(3) includes some of the regulation-making powers of the Secretary of State. I understand, in this instance, that they are negative procedure regulations in order to make provision preventing local authorities doing, by virtue of Clause 2(1), which we have just discussed, anything which is specified or is of a description set out in the order. That is a very heavy prescription indeed. We have not seen the regulations, and Clause 2 is meaningless without them. It is to be hoped that the regulations will be published before we reach Committee stage so that we can perhaps consider what it is we are actually talking about.

A separate but important consideration should be borne in mind as the Bill passes through the House. Article 4, Part 4, of the European Charter of Local Self-Government says:

    "Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law".

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That is what we are today creating. I strongly suggest that the way in which the Bill is drafted is outwith the intentions of the European Charter of Local Self-Government which this Government signed up to only two years ago.

Article 4, Part 5, states:

    "Where powers are delegated to them ... by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions".

That becomes important when we consider Part III of the Bill. Therefore we have a strategy without the power to implement it; and we have a conflict between what appears at the beginning of the Bill and the European Charter of Local Self-Government.

Part II of the Bill deals with arrangements for executives. I found myself wondering, until I read the Government's response to the Joint Committee's report, what had led the Government to take this action. If I understood the response correctly, it is because the Government believe that it might rejuvenate local government. I should like to know what their evidence is for that belief. I have seen none. If we had had a period of evolution; if a swathe of local government had been experimenting with executive arrangements and there was clear evidence that it provided an improved system of local government, then I could understand a government at that point wishing to legislate to make such a procedure general. We do not have that. We have the Government's belief. I believe that the Government are wrong, and there is just as much chance of my belief being correct as theirs. That is the tenuous basis on which Part II stands.

According to the Minister, among other things Part II is supposed to speed the power of decision and the clarity with which decisions are made. I have had intimate experience of the workings of a large administrative county council, as have others in this Chamber, and it is neither necessary nor proper for me to go into the decisions we took. But under the traditional arrangements we could take any action we pleased within the law with a speed which was often greater than that with which private industry, with whom we were required to work, was prepared to move. The decisions were obviously taken by a small executive group, albeit it did not go by that name, with the absolute certainty of the full backing of the council. So one could be sure of absolute clarity in the lines of communication and responsibility. I have seen nothing in Part II of the Bill which leads me to believe that the situation will be any better under the new arrangements. The French have a phrase,

    "Plus ca change; plus c'est la meme chose",

which fits the position perfectly.

The presumption behind the creation of an executive is that it will improve decision-making and the clarity of business and that the second class of councillors who are created by the division will be happy with a scrutiny role. It also presumes that a council's business divides neatly between executive action and that scrutiny role. I regret to say that it is my belief that, as a matter of practice, that will not be

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the case. Even if scrutiny committees were confined exclusively to post-decision scrutiny, it would not be possible. In this era of best value, of constant reports swirling around in the pool of local government comparing what everybody else is doing and how they are doing it, the scrutiny committees are bound to take such matters into account. It can only be a matter of time before a scrutiny committee, which is bound to develop expertise, takes a view and recommends to an executive committee a certain course of action. When that happens, who is taking the executive action? Is it the executive body, which does as it is recommended, or the scrutiny committee which did the work and told the committee it ought to do it? There is no clear dividing line between black and white; it is a murky area of grey.

Clause 11 states in subsection (1):

    "The Secretary of State may by regulations specify functions of local authorities which may not be the subject of executive arrangements".

Subsection (3) states:

    "The Secretary of State may by regulations specify circumstances in which executive functions of a local authority under executive arrangements must be discharged by the authority and not in accordance with section 12, 13 or 14".

Those clauses set out the provisions under which executive arrangements will work. Again, we do not have the regulations.

The Bill says that there will in future be two councils in one body. One will carry out some of the council's existing functions. The second and new council will undertake functions under a new executive-type system. At the moment we have no way of judging--apart from some comment in the Joint Committee's report and the Government's response to it--where the dividing line will be and where it will be drawn. The Minister referred to regulations that he would bring forward. To the best of my recollection, he has not brought that one forward.

Clause 30(3) states:

    "The Secretary of State may by regulations make provision as to the conduct of referendums".

That is an important point. The case has been argued before the House on a number of occasions that there should be a referendums Bill to set out the basis on which referendums are held. In the case of local government, would it be satisfactory to have a referendum with a simple majority in favour of something, in which 12 per cent of the electorate vote and 7 per cent say "Aye" and 5 per cent say "No"? Is that the basis on which we should change the whole constitution of an authority? I doubt it.

When we considered a referendum for Scotland, we had a referendum Bill. When we considered a referendum for Wales, we had a referendum Bill. When we considered a referendum for London, we had a referendum Bill. We should at the very least have regulations for these particular referendums set out in the Bill as well.

I could go on picking holes in the Bill but that would not be particularly helpful. It is clear that there are deep reasons for disagreeing with some of the detail of

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the Bill. This is a flawed Bill from a flawed Government. We have a great deal of hard and immensely detailed work before us. It is time that I let others get on with it.

3.53 p.m.

Baroness Hamwee: My Lords, the Minister gave a clear explanation of the Bill, for which I thank him. I do not enjoy starting this speech with a complaint but I will. My speech could be very short. I could say that those of us on these Benches will comment on the Bill once we know what Bill the Government wish to promote. I must disappoint your Lordships and not confine my remarks to that one sentence. That may not be as much of a disappointment to some of your Lordships as the fact that we do not yet know the proposals that the Government will bring forward.

When the Bill was published, I read Part II of the draft that the Select Committee had examined with increasing puzzlement and fury--and I was not suffering from flu at the time. There were one or two changes, so clearly it was not the same Bill as we had seen in draft, but what happened to the alterations that we understood would be made? Were the Government so dismissive of the consultation on the draft with people outside Westminster as well as the Select Committee that their response to almost every point was no response?

I tripped over a planted--I do not say that pejoratively--Written Question and Written Answer in another place. As the Minister and the Whip in this House are so courteous, perhaps we would have learned informally that the Government's formal response to the Select Committee's report would be published shortly after 26th November. The Written Answer said that the Government will bring forward as early as possible during the passage of the Bill such amendments as are necessary to give full effect to their response. We have had the response and await the amendments.

During the passage of the Greater London Authority Bill, we on these Benches took the view that it was more important to concentrate on the issues rather than complain about late--sometimes, very late--government amendments. This Bill indicates that the Government do not want to learn from that unhappy experience. If this is the way an executive treats its scrutiny body, it is not a good example for the other spheres of government that the executive is seeking to regulate.

The noble Lord, Lord Bowness, turned himself and his committee inside out to consider the draft Bill, take evidence, deliberate and report in two months before the committee's demise. That is the terminology of the report. I must tell the Government that members of the committee are very much alive and kicking. What progress has there been four months later plus--and what is the betting that the Government will say that your Lordships' House must get a move on with the Bill and progress it very fast?

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Can the Minister confirm that, as recommended by the Companion, the period between Second Reading and the first day of Committee will not start running until publication of the Government's amendments? In other words, will the proper period elapse before we start the Committee stage? I ask that not just as a criticism but to suggest that the next stage will be much more effective if that arrangement is observed.

What reassurances can the Government give on the timing of the publication of draft regulations and guidance? The Select Committee called the draft a skeleton and the Bill has not put much flesh on it. Much of the Bill is dependent on regulations. The Minister was not specific today about when we will see drafts. It is important that Parliament gives proper scrutiny to the Bill. Can the Minister confirm that the Government do not intend to propose amendments other than to Parts II and III of the Bill?

We welcome many aspects of the Bill, although in many cases the Government have fallen short of that for which many people had hoped, because of their refusal to give up control from the centre. One aspect is the new powers as regards well-being. We agree with the Minister that they will make a real difference.

Those who have not seen how the Government operate have been surprised that after offering so much, the Bill then says that the Secretary of State can stop a local authority doing what he proscribes. As the noble Lord, Lord Dixon-Smith said, the powers will enable a local authority to raise money, which is at the heart of what local authorities can achieve. Liberal Democrats would prefer a power of general competence but we accept that Part II goes a long way towards it.

Everyone in local government knows that if one is strapped for cash, one can go whistle to achieve some of one's aspirations for the community. If the cash is earmarked, with someone else making the mark, one is also in trouble. Specific grants, as distinct from general revenue or borrowing--were that possible--restrict local authority autonomy. Next year, the revenue support grant will fall by 4.8 per cent after inflation. Specific grant will rise by 14 per cent after inflation. That is in the context of increasing obligations on local authorities. We are most concerned about the restrictions on decisions, authority by authority, because of the nature of the Government's approach to making specific and general grants.

We often come up against the dilemma of ensuring flexibility for good authorities and support and direction for those which, in any judgment, are less successful. The approach to the new powers illustrates this. We, instinctively, would be more comfortable with a power than a duty but we understand the concerns about the shortcomings. The RSPB has cited Local Agenda 21 activity, which indicates that up to one third of local authorities will not have an LA21 strategy in place by next year. I would be glad to hear the Minister's explanation as to why the legislation provides a power rather than a duty. Perhaps he could also explain the Government's thinking behind allowing local authorities to cherry-pick between the three powers.

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We are still concerned about the restrictions which will remain in place on local authorities; for example, what is regarded as "trading"? We will wish to explore those issues in Committee. We shall also table amendments in Committee to deal with racial and other discrimination and the promotion of equality, along the lines of what was achieved by co-operation around the House during the progress of the GLA Bill.

I turn now to Part II of the Bill. The draft regulations, which we await, include those explaining the nature of "executive functions". We understand that there are and will be no criteria on the face of the Bill. The debate which the Government's White Paper sought to encourage, but which I believe is not as much reflected in the response as the Minister seemed to indicate, has shown the range of views as to what executive functions are and where the boundary is between the proper responsibilities of the executive--if that is what a local authority is to have--and its scrutiny and over-view body.

The Select Committee heard with interest suggestions that scrutiny can include policy advice to the executive. I confess that I am still not clear whether the Government intend policy--the "what"--to be the responsibility of the whole council, or whether it is to be confined to the executive, which would clearly deal with the "how". The arrangements would also include a councillor, who has primarily a scrutiny role, sitting on a cabinet committee, or having a cost-cutting, co-ordinating role. These concerns about demarcations also arise in Wales where, in the National Assembly, members of the executive are members of committees. We will consider in Committee in this House whether the Bill adequately recognises the devolution to Wales. Certainly, if there is to be central control, the centre for Wales should not be London.

In giving evidence to the Select Committee, Professor Stewart had some wise words about the models that we considered, including the statement that many of our current problems arise because of party discipline, which prevents adequate, open discussion. He said--and I agree--that the same problems could occur in the new models with the same results. We have heard that the Government's objectives are "transparency, accountability and efficiency". I would have preferred "effectiveness", which I believe to be more compatible with transparency and accountability. But the "how"--the method by which a local authority chooses to work within the chosen model--will be critical to good government.

Her Majesty's Government are intent on the separation of powers, though from their response to the Select Committee they seem to accept that these are not fully explained. The rejection of the status quo, even--apparently--if a community is happy with it, seems to smack of a "not invented here" syndrome. We believe, as does the Local Government Association, that it is important to identify the criteria for outcomes of an approach to a new model and to allow a structure which meets them. First, that may mean an executive mayor, though I confess that I am not an enthusiast. Secondly, it may mean a mayor, plus a council

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manager, but I doubt that the public will easily see the distinction between the two models. Thirdly, it may mean a cabinet model, with a leader who is "strong" or who disperses power. We believe that the Government have failed to recognise just how much power an indirectly-elected leader may have, especially if the checks and balances of the council are not effective. Fourthly--perhaps fifthly, sixthly, and so on--our approach might mean other models.

We recognise that the Bill fulfils the Government's promise--possible "threat"--after the rejection by the Official Opposition in another place of the Bill introduced by the noble Lord, Lord Hunt of Tanworth, that, if it was rejected, change would come nevertheless and there would not be the opportunity for experiments. We regret that there is no place for pilots nor for incremental change.

We worry, too, about the unforeseen or, perhaps, unacknowledged side-effects--the career structure for both councillors and officers. In both cases, if they are not on or serving the executive, there is the danger of them being regarded as "second class". There is also the likelihood of parallel groups, both of officers and councillors, who cannot easily swop over to the other career path. We believe that the models risk losing the valuable contribution of back-bench councillors. Like others who have commented on the Bill, I do not much like the term "back-bench" but none of us has been able to suggest a better term. By seeing the committee papers in advance and being able to attend meetings where their role is very much that of representing the community, those councillors can contribute at an early stage.

There is much talk of the new structures meaning that everything will be open, but, unless the law precludes councillors talking to one another outside the council chamber, there will always be private discussions. We will want to make certain during the course of the Bill's proceedings that the new structures are all transparent.

The Government have clearly rejected one aspect which concerns us; namely, the power of recall of a directly-elected mayor. This was an issue upon which we fought within the context of the GLA Bill and we shall do so again. We will do so in the knowledge that we must address not only the issue of incompetence but also matters which may come to light six months after, not six months before, an election.

I move on to Part III of the Bill. This is less contentious, but the detail will certainly deserve examination in Committee. For example, I have in mind the involvement of opposition members on the standards committee and ensuring that trivia do not clog up the system. In particular, we must ensure that the code of conduct commands support and--to use the management jargon--is "owned" by local authorities: all else in this part of the Bill hinges on that. Indeed, those issues will detain us a little. We very much welcome the abolition of the surcharge.

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Part IV of the Bill deals with elections. We have some concern here about the scope for the Secretary of State to impose the patterns of election. We are also worried about how the elections for councillors and for the mayor--the mayor is to be a councillor but he will be directly elected--will fit together. We regret that the Bill deals with the dates, not the methods, of election. The view that the first-past-the-post system means strong leadership ignores, we believe, the damage that a one-party state can do, though not always. That will not be solved, for example, by a scrutiny committee of the same political persuasion, especially where the tradition in the authority is for the opposition to be kept on the side lines. I shall confine my questions on fair electoral systems to one question. Can the Minister say whether the Government are at any rate open to paving the way for PR elections in the future?

Part V of the Bill relates to grants for welfare services and certainly raises interesting issues, especially as regards the difficulties of properly establishing the funding required and how partnership funding will operate. We shall seek reassurances in that respect. I have to say that the prospect of charging and means-testing rings alarm bells with us. Any new scheme will only support the fight against social exclusion if the grants do not slip between the cracks.

I turn now to my final point. I should stress that my few words in this respect should not be taken to underplay the significance of the section, nor our support. The repeal of Section 28, as we always call it, was in this party's manifesto. We shall support the Government in repealing a measure which has led to no prosecutions but to much confusion and difficulty for teachers and pupils, as the Minister has said. We are sad that the Official Opposition--the leadership, at any rate--have chosen to flex their muscles over this issue.

When I was first elected a councillor, my mother said, "There will be an awful lot of meetings, dear." There were, but many of them were necessary to take forward the modernising programme of the group to which I belonged to ensure the wide support of councillors and those whom they represented.

Change for the sake of change is not good, but to resist some change does not necessarily indicate a mind-set against improvement. We hope that we shall end up with a Bill which better supports local government than we believe parts of this version do.

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