House of Lords - Explanatory Note
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Clauses 100 and 101: Performance Categories

Clause 100: Categorisation of English local authorities by reference to performance

280.     Clause 100 requires the Audit Commission to produce reports on its assessment of English local authorities' performance, including placing authorities into one of a number of categories by reference to assessed performance. The Secretary of State may then make an order establishing the categorisation and identifying the authorities placed in each category. The Secretary of State has no power to place an authority in a category different to that in which it has been placed by the Audit Commission.

Clause 101: Exercise of powers by reference to authorities' performance categories

281.     Clause 101 covers the exercise of various powers that allow the Secretary of State to remove regulatory controls on authorities or to grant additional powers to them. In particular, subsection (1) makes it clear that the powers mentioned in subsection (2) may be exercised for the purpose of making provision that relates to authorities that are for the time being in a particular performance category under clause 100. Where provision of that kind is made and an authority undergoes recategorisation, the result will be that the provision relating to the authority's old category will no longer apply to it and, instead, the authority will be subject to the provision that applies to its new category.

282.     The powers mentioned in subsection (2) include the power to modify legislation that prevents or obstructs compliance with Best Value or the promotion of well being and the power to remove requirements to produce plans or strategies. They also include powers to specify: performance indicators and standards; frequency and content of Best Value reviews and performance plans; and non-commercial considerations for local authorities entering into contracts.

283.     Schedule 3 (introduced by subsection (3)) amends some of the provisions conferring the powers identified above. The amendments seek to ensure that the powers can be exercised flexibly and not only allow provision to be made for authorities in different performance categories but also for particular named authorities, which (for example) may be necessary for the purposes of giving effect to Local Public Service Agreements.

284.     Subsections (4) to (7) provide that additional powers may subsequently be added to the list in subsection (2) by order, which will require the approval of both Houses of Parliament. Where any such additional power is not already capable of being exercised in relation to some English local authorities only or differently in relation to different authorities, an order under subsection (5) can amend the legislation conferring the power to allow it to be used in those ways. This procedure will also require the approval of both Houses of Parliament.

Clauses 102 and 103: Contracting-out: staff transfer matters, including pensions

285.     The clauses confer new powers on the Secretary of State, the National Assembly for Wales and Scottish Ministers to require best value authorities in England, Wales or Scotland, when engaged in contracting-out exercises, to deal with staff matters in accordance with directions. Clause 102 also requires authorities to have regard to guidance on staff matters issued by the Secretary of State, the National Assembly for Wales or Scottish Ministers. The background to this is the commitment made, as part of a package of workforce measures, following the review of Best Value, to legislate to make statutory within local government the provisions in the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector and the Annex to it, A Fair Deal for Staff Pensions (this is available on the Cabinet Office website at: www.cabinet-office.gov.uk/civilservice/2000/tupe/stafftransfers.pdf). It is intended to use the direction making powers to ensure that contracting exercises are conducted either on the basis that TUPE will apply or, in circumstances where TUPE does not apply, that staff involved should be treated no less favourably than had the Regulations applied, unless there are exceptional circumstances, and that transferees will be offered either retention of the Local Government Pension Scheme (LGPS) or a broadly comparable scheme.

Clause 102: Staff transfer matters: general

286.     This allows for the Secretary of State, or (in relation to authorities in Wales other than police and fire authorities) the National Assembly for Wales, or (in relation to relevant authorities in Scotland) the Scottish Ministers, to issue directions to require best value authorities, in contracting with other persons for the provision of services or in circumstances where a contracted-out service is brought back into the public sector on the termination of a contract, to deal with staff transfer matters (employment or pensions) in accordance with any directions made. The clause also requires authorities to have regard to guidance on staff matters issued by the Secretary of State, the National Assembly for Wales or Scottish Ministers.

287.     The duty of best value as set out in the Local Government Act 1999 or the Local Government in Scotland Act 2003 is subordinate to this requirement. Directions or guidance made under the power may relate to all best value authorities or to particular descriptions of best value authority.

Clause 103: Staff transfer matters: pensions

288.     This provides that the Secretary of State, National Assembly for Wales and Scottish Ministers shall exercise their powers under clause 102 to give directions so as to ensure that English, Welsh and Scottish local authorities, in contracting for the provision of services, secure specified pension benefits. These are, first, that the contractor is required to secure pension protection for employees of an authority who are transferring from the authority under TUPE or who, in a re-contracting case, transferred from the authority under TUPE when the services were first contracted out, have transferred under TUPE on each subsequent change in contractor and are again transferring under TUPE in connection with the contract with the contractor. Secondly, that the contractual terms for the securing of pension protection for a transferring employee are enforceable by the employee. Pension protection is secured where the employee's rights to acquire pension benefits are the same as, or broadly comparable to, those enjoyed by the employee before the transfer.

Clauses 104 and 105: 2004 Local Government Elections

Clause 104: Power to change date of local elections in England

289.     This clause permits the Secretary of State to move, by order, the dates of local elections (for principal councils and parish councils) and Greater London Authority (GLA) elections in 2004 so that they are held on the same day as the European Parliamentary general election due in 2004. Ordinary local and GLA elections (i.e. elections other than by-elections) would normally be held on the first Thursday in May (6th May in 2004), whilst in 2004 the European Parliamentary elections have to be held in the period 10th to 13th June. Subsection (1)(a) enables the Secretary of State to leave ordinary parish council elections to take place on 6th May, or to move with them to June with the GLA and other ordinary local elections.

290.     A by-election generally has to take place within a specified period after a vacancy occurs. In the event that local elections are moved to June, subsection (2)(a) would (for example) allow the Secretary of State's order to provide that by-elections should not take place during the period from 6th May 2004 until the June election date.

291.     Section 16(1) of the Representation of the People Act 1985 provides that where parish council, principal council and European Parliamentary elections would otherwise all take place on the same day, the parish council elections are to be postponed for 3 weeks. Subsection (2)(b) would allow the Secretary of State's order to override that provision with the result that all of the elections could take place on the same day in June.

292.     Local authorities, joint authorities and police authorities are required to hold annual meetings. In a year where a local authority has an ordinary election, the date of the meeting is linked to, but follows, the date of the election. In other years, and in every year for a police authority, the period within which its annual meeting has to be held allows for by-elections, or elections of its locally elected members, to take place on the first Thursday in May. Subsections (2)(c) and (3) will allow the Secretary of State's order to cater for those meetings being moved to after the June elections in areas where ordinary elections are not held in 2004 but by-elections might be.

293.     Some statutory provisions assume that there will be a single ordinary date of election for councillors throughout England and Wales. Subsection (4) enables the Secretary of State to make an order providing, for example, for the sensible working in England of such provisions in the event of the National Assembly for Wales making an order under clause 105 moving some or all of the Welsh local elections in 2004 from May to June.

294.     Paragraph 7 of Schedule 6 to the Bill extends the power under section 15(5) of the Representation of the People Act 1985 so that, in the event of local and GLA elections being moved in 2004, regulations about combining those elections with the European Parliamentary general elections in that year will be able to modify any of the legislation governing any of the combined elections. The references to Gibraltar (both in paragraph 7 of Schedule 6 and in clause 128(4)) allow for the enactment of the European Parliament (Representation) Bill, as that would result in combined 2004 elections being governed by law which extended not only to each part of the United Kingdom but also to Gibraltar.

Clause 105: Power to change date for elections in Wales

295.     This clause permits the National Assembly for Wales to move, by order, the dates of local elections (either the principal council elections, the community council elections, or both sets of elections) in 2004 so that they are held on the same day as the European Parliamentary general elections due in 2004. Ordinary local elections (i.e. elections other than by-elections) would normally be held on the first Thursday in May (6th May 2004) whilst in 2004 the European Parliamentary elections have to be held in the period 10th to 13th June.

296.     A by-election generally has to take place within a specified period after a vacancy occurs. In the event that local elections are moved to June, subsection (2) (a) would (for example) allow the National Assembly for Wales' order to provide that by-elections should not take place during the period from 6th May 2004 until the June election date.

297.     Section 16(1) of the Representation of People Act 1985 provides that where community council, principal council and European Parliamentary elections would otherwise all take place on the same day, the community council elections are to be postponed for 3 weeks. Subsection (2) (b) would allow the National Assembly for Wales' order to override that provision with the result that all of the elections could take place on the same day in June.

298.     Some statutory provisions assume that there will be a single ordinary date of elections for councillors throughout England and Wales. Subsection (3) enables the National Assembly for Wales to make an order providing, for example, for the sensible working in Wales of such provisions in the event of the Secretary of State making an order under clause 104 moving some or all of the English local elections in 2004 from May to June.

299.     Paragraph 7 of Schedule 6 to the Bill extends the power under section 15(5) of the Representation of the People Act 1985 so that, in the event of local elections being moved in 2004, regulations about combining those elections with the European Parliamentary general elections in that year will be able to modify any of the legislation governing any of the combined elections.

Clauses 106 and 107 (and Schedules 4 and 5): Valuation Tribunal Service

Introduction

300.     Valuation Tribunals (VTs) are independent bodies established under Schedule 11 to the Local Government Finance Act 1988, although they have existed in one form or another since 1948. Their purpose is to hear appeals against rating, council tax valuations and liability. There are 56 Tribunals in England, served by 25 administrative offices, grouped into 14 regional units with around 160 staff.

301.     Tribunals are organised broadly on a county or metropolitan area basis. Members are appointed jointly by local authorities and presidents of local VTs. Each VT may appoint a clerk and other employees and maintain a permanent office, although some VTs maintain joint offices and appoint the same clerk and staff. The Office of the Deputy Prime Minister undertakes a range of administrative functions on behalf of the VTs, including accommodation, pay and technical finance matters.

302.     A quinquennial Financial Management and Policy Review of the VTs in 1999 recommended that their administration should be brought together in a regional structure and that a management board supported by a small national office should provide central direction. The purpose of this provision is to implement that recommendation.

Clause 106: The Valuation Tribunal Service

303.     Clause 106 establishes a new non-departmental public body, the Valuation Tribunal Service. The Service has power to carry out administrative functions for the VTs in England only, including accommodation, staffing, information technology, equipment and training needs. The Service also has power to give general advice about procedure in relation to proceedings before tribunals in England.

304.     The Service is under a general duty in carrying out its functions to do what, in its opinion, is best to secure the efficient and independent operation of VTs in England.

305.     The Secretary of State may provide guidance to the Service about the carrying-out of its functions. Following consultation with the Service, he may also provide directions for the purpose of securing the effectiveness of the Service in carrying out its functions. Once issued, the Service will be required to comply with any directions and have due regard to any guidance in carrying out its functions.

306.     The Service will be required to consult with the valuation tribunals about the carrying out of its functions to ensure consistency and best practice.

Schedule 4: The Valuation Tribunal Service

307.     Schedule 4 makes further provision in relation to the Service.

308.     The Secretary of State will appoint between six and ten members to form the Service. At any time, the majority of members of the Service must be presidents or chairmen of the VTs. The rest of the Service need not be presidents or chairmen of VTs but must have suitable qualifications or experience. The Secretary of State will appoint a Chairman and a Deputy.

Disqualification from membership of the Service

     309.     A person will be disqualified from being appointed to the Service or from remaining a member of the Service if he is an employee of the Service or is married to one, he is subject to a Bankruptcy Restrictions Order in England or Wales, he is an undischarged bankrupt in Northern Ireland or Scotland or he has been convicted of an offence in the last five years and sentenced to imprisonment for three months or more. Bankruptcy restrictions orders will be made under Schedule 4A to the Insolvency Act 1986 (inserted by Schedule 20 to the Enterprise Act 2002). Under section 268 of the Enterprise Act 2002, the Secretary of State may by order amend pre-8th November 2002 legislation that imposes bankruptcy-related disqualifications. Orders under that section may remove disqualifications or extend them to, or replace them with disqualifications of, persons subject to bankruptcy restrictions orders, and may also provide for disqualifications to be applied at a specified person's discretion. Although paragraph 2(1)(c) of Schedule 4 (disqualification of bankrupts in Northern Ireland or Scotland) will not be pre-8th November 2002 legislation, paragraph 25 of Schedule 4 provides for it to be treated as though it were such legislation for the purposes of section 268. So an order under that section will be able to modify paragraph 2(1)(c) should bankruptcy restrictions orders, or a similar regime, be introduced in Northern Ireland or Scotland. An order modifying the identified disqualifications in paragraph 2(1)(c) of Schedule 4 cannot make those disqualifications applicable at the discretion of a specified person and will be subject to the negative resolution procedure.

310.     Appointments must not exceed three years but a member may be re-appointed. The member may resign at any time. The chairman or deputy chairman of the Service will cease to hold that office if he ceases to be a member of the Service. A member of the Service who falls foul of one of the prescribed disqualification events will automatically cease to be a member. A member of the Service who was appointed by the Secretary of State as one of the majority of members who was a president or chairman of a VT will cease to be member of the Service if he ceases to be a president or chairman of a VT. Furthermore, where a member fails to attend Service meetings without reasonable excuse over a continuous period of three months, his appointment will cease.

311.     The Secretary of State may also terminate a member's appointment where he is unfit or unable to carry out his functions.

312.     The Secretary of State will have the power to re-appoint a person a member of the Service, provided he did not cease to be a member because he was disqualified by reason of conflict of interest, or in connection with his bankruptcy, he was convicted of an offence and received a sentence of imprisonment of three months or more, or he was absent from meetings for the prescribed period.

313.     The Secretary of State will determine how much remuneration members should receive from the Service. The Service has power, if so required by the Secretary of State, to pay pensions to members and former members, or to establish pension schemes for such people. The Service, if so required by the Secretary of State, will make compensation payments to a member leaving the Service.

     Staff of the Service

314.     The Service will have a Chief Executive. The first Chief Executive will be appointed by the Secretary of State in consultation with the chairman or chairman designate of the Service. Future Chief Executive appointments will be made by the Service subject to consent from the Secretary of State.

315.     The Service can appoint such other staff and pay remuneration and allowances to its staff, as it thinks appropriate. The Service will determine how much remuneration such staff should receive, subject to the Secretary of State's consent.

316.     The Service can set up a pension scheme and pay pensions for the staff of the Service. However, VT employees (for example, clerks to VTs) are eligible to join the Local Government Pension Scheme. It is envisaged that Service employees (including the Chief Executive) will also be eligible to join this scheme.

317.     Currently all staff are locally employed by the valuation tribunal they work for. The new body will become the employer of all staff. Where the Service proposes to appoint a clerk for a VT, it must obtain the consent of the VT before it may do so.

Committees of the Service

318.     The Service has the general power to delegate performance of its functions to committees and its employees, by specific written authorisation. Committees will be able to delegate their functions to their sub-committees and Service employees, and sub-committees will be able to delegate their functions to Service employees. Non-Service members will be allowed to sit on committees so that specialist expertise may be utilised in appropriate cases. The Service may pay such remuneration and allowances as the Secretary of State may determine, to members of committees and sub-committees who are neither members nor employees of the Service.

Interests of members of the Service

319.     A member who has an interest in any matter that is brought up for consideration at a meeting of the Service, committee or sub-committee must disclose his interest to the meeting. His interest will be minuted and that member shall not take part in the deliberation or decision regarding that matter. The member can give a general notification that he has an interest in a company, firm or other organisation. If he takes reasonable steps to ensure that his interest is notified in a notice which is read and considered at the meeting, he does not need to attend the meeting in person. The Secretary of State has power to allow the member to take part in considering matters in which the member has an interest subject to such conditions as he considers appropriate.

The Service's finances

320.     The Secretary of State may pay grants and loans as he thinks fit to cover the expenses incurred by the Service in performance of its duties. However, the Service will not be able to borrow money from any other source without the consent of the Secretary of State.

321.     The Service will be subject to the normal provisions applying to public bodies in relation to the keeping of proper accounts, the role of the Comptroller and Auditor General, and the presentation to Parliament of reports at the end of the financial year.

Clause 107 and Schedule 5: Transfer to Service of property, rights and liabilities

322.     As a result of the establishment of the Service, there will be a need to make a formal transfer of property, rights and liabilities from its sponsoring Department (who currently own many of the assets used by the administration offices which support the Valuation Tribunals), and from individual valuation tribunals, to the Valuation Tribunal Service. This means that all tribunal offices and associated assets and the associated contractual liabilities arising from them will need to be formally transferred via a transfer scheme or schemes. It is envisaged that this will take place on the day the provisions establishing the Service comes into force. More detail about transfer schemes is given by Schedule 5.

Clauses 108 to 112: Audit Commission

Clauses 108 and 109: Auditors' public interest reports

323.     These clauses make amendments to the Audit Commission Act 1998 regarding the publication, and handling by local authorities, of public interest reports prepared by appointed auditors. They provide for the auditor to have direct responsibility for publishing reports and making copies available more widely than just to the authority concerned. They also reduce the time authorities have to respond to these reports to ensure that the matters to which such reports refer are considered promptly by authorities.

Clause 108: Auditors' public interest reports: time allowed for consideration

324.     This clause amends the Audit Commission Act 1998 and reduces from four months to one month the time limit within which local authorities must consider, in a meeting open to the public, the contents of public interest reports prepared under section 8 of that Act by appointed auditors. The existing provision whereby an auditor may allow longer for consideration of such reports is to be retained.

Clause 109: Auditors' public interest reports: publicity

325.     An auditor may, under section 8 of the Audit Commission Act 1998, make a report in the public interest on any matters coming to his notice during an audit which he considers should be brought to the attention of the public. A report may be made at the conclusion of an audit, or where the auditor considers it appropriate the matter may be made the subject of an immediate report. The auditor must give a copy of the report to the audited body forthwith if it is an immediate report, or otherwise within 14 days of the conclusion of the audit. Where an audited body receives an immediate report any member of the public may inspect the report, make copies or require the body to supply a copy of the report, or any part of it, on payment of a reasonable fee. The auditor may also notify any person that he has made a report and supply a copy or any part of it to any person he thinks fit.

326.     This clause amends the Audit Commission Act 1998 to provide that auditors should assume responsibility for publishing all public interest reports, notifying persons they think fit that such reports have been published and supplying copies to members of the public on request. From the time a report is sent to an audited body, auditors should ensure that members of the public may inspect reports and have copies made available. The obligation on auditors to provide copies will last for one year, thereafter it will fall to the Audit Commission.

     Clause 110: Registered social landlords

327.     This clause confers on the Audit Commission powers to inspect housing services provided by registered social landlords (RSLs). Inspection of RSLs' housing services in England is currently undertaken by the Housing Corporation as part of its regulatory role. In future, a single housing inspectorate within the Audit Commission will be able to inspect all social housing landlords in England whether local authorities or RSLs. Such a single inspectorate would be able to ensure that local authorities and RSLs provide the same standards of service for all tenants of social housing, drawing on the expertise that the Audit Commission has built up. The powers conferred on the Commission also apply to RSLs registered with the National Assembly for Wales: inspection of those RSLs is currently undertaken by the Assembly.

328.     Subsection (1) will be commenced in relation to RSLs registered with the Housing Corporation by commencement order made by the Secretary of State and, in relation to RSLs registered with the National Assembly for Wales, by commencement order made by the Assembly.

     329.     Subsection (1) adds two new sections to the Audit Commission Act 1998. The new section 41A defines what may be inspected in RSLs, gives the Audit Commission powers to publish reports and powers of access to premises and information, and requires it to consult the Housing Corporation (or, in Wales, the National Assembly) on its programmes of inspection. The new section 41B makes provision for the Commission to charge RSLs for inspection. The Secretary of State (or, in relation to RSLs registered with the National Assembly for Wales, the Assembly) may make an order authorising the Commission to charge fees, but only after consultation. If so authorised, the Commission would have to consult on the level of fees. The amendment made by subsection (3) of the clause requires the Commission to balance its income and expenditure on RSL inspection over time. The amendment made by subsection (4) of the clause authorises the Secretary of State and Assembly to pay grant to the Commission.

 
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Prepared: 13 March 2003