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Baroness Hamwee: I have added my name to the amendment. Put simply, the question the noble Lord has asked is: does the term "authorised" extend to the well-being power? It suggests something more specific.

Lord Bassam of Brighton: I am not sure that the answer to the question is in my notes. The problem

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with the amendment is that it would dilute the definition of "discretionary services". I do not know whether that is what the amendment is intended to do, but it would do so in a way that would ensure that a discretionary service would be one that an authority was not prohibited from providing and not required to provide. That is why we have problems with the amendment.

First, the amendment would amend the definition of "discretionary service" only in respect of orders made under Clause 98. However, that which constitutes a "discretionary service" under Clause 94 remains unaltered. In the Bill, a "discretionary service" has identical meaning under Clauses 94 and 98. Amending the definition in Clause 98(11) would create confusion as to what is meant by the term "discretionary service".

Secondly, Amendment No. 201 would widen the scope of discretionary services in relation to orders under Clause 98. That could mean that the power to modify enactments through orders under Clause 98 could be used for a far wider range of services than envisaged; not only those where an authority had a power to provide a particular service.

Thirdly, the drafting of Amendment No. 201 runs contrary to the way in which legislation relating to best value authorities, particularly local government legislation, is constructed. It is that large body of legislation, developed over many years, that provides authorities with the necessary powers, either expressly set out or implied, to undertake certain functions and provide certain services. So authorities must first identify a relevant power to rely on, before they can say that they are authorised to provide a particular service. I am sure that we are all familiar with that.

The amendment is flawed because it is based on the incorrect premise that an authority has the power to provide anything it pleases, unless it is prohibited from providing it or is otherwise required to provide it. Is the Committee following this?

Baroness Hanham: No. But carry on anyway. We shall read it later.

Lord Bassam of Brighton: It makes sense when you read it. Authorities are constrained to act within the powers conferred on them by Parliament—after all, I was always told that local authorities are there as creatures of statute—and the amendment might encourage local authorities to provide services that are ultra vires—and no one wants to see that happen.

I take the noble Lord's point that a particular part of an excellent service provider—for example, the social services department—may want to trade across boundaries and so on. Subject to reasonable common sense, that is what we want to facilitate. We do not want to stop that. We want to allow local authorities to innovate. I shall not respond to each and every example because it is not right to legislate by example. We have to set out the proper categories, and that is what the legislation seeks to do. That is probably what I was trying to say.

Lord Hanningfield: I was happy with what the Minister said at the end, rather than trying to

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understand what he said during the course of his response. Obviously that is the point we were trying to make. We referred earlier to totally discretionary services such as archaeology. Here I was talking about social services equipment that could be marketed in a wider way. That is what I was trying to clarify. At the end of his response the Minister said that he wanted to make sense of the legislation so that it would help communities and local authorities.

We will have to read exactly what the Minister said in order to understand it. I do not know whether the noble Baroness, Lady Hamwee, wishes to comment further but obviously we will withdraw the amendment today. I note what the Minister said but we need clarity in this whole area.

Lord Bassam of Brighton: I understand the nervousness. This is an extremely good opportunity for local authorities and they want to grasp it. But they also want to understand where the boundaries are. They hope that those boundaries will have the flexibility to enable the system to work so that when they have got something with which to trade they can make good use of that trading. We understand that.

Lord Hanningfield: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 98, as amended, agreed to.

Lord Smith of Leigh moved Amendment No. 201ZA:

    After Clause 98, insert the following new clause—

(1) The Secretary of State may make regulations to authorise—
(a) public airport companies,
(b) companies associated with public airport companies,
to engage in a type of activity, specified in the regulations, in which the controlling authority of the public airport company concerned has no power to engage.
(2) The following shall not apply to any activity authorised by regulations under this section—
(a) section 17(4) of the Airports Act 1986 (c. 31) (control over constitution and activities of public airport companies),
(b) any condition imposed on any direction given by the Secretary of State under—
(i) section 68 (companies controlled by local authorities and arm's length companies), or
(ii) section 69 (companies subject to local authority influence),
of the Local Government and Housing Act 1989 (c. 42), if the condition has the same or substantially the same effect as the said section 17(4).
(3) In considering whether to make regulations under this section, the Secretary of State may take into consideration transport policy, the business of the airport as a commercial undertaking and the potential benefit to the economy of the implementation of the powers to be authorised by the regulations.
(4) In this section—
"company associated with a public airport company" means—
(a) any company of which the public airport company is a subsidiary,

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(b) any other company which is a subsidiary of a company of which the public airport company is also a subsidiary,
"controlling authority" and "public airport authority" have the same meanings given by section 16 of the Airports Act 1986 (public airport companies and their controlling authorities),
"subsidiary" has the meaning given by section 736 of the Companies Act 1985 (c. 6) ("subsidiary", "holding company" and "wholly owned subsidiary").

The noble Lord said: And now for something completely different, as they say. Before I move the amendment I should declare an interest as an unpaid director of the Manchester Airport Group. It was very difficult to register that interest in the House because no one could understand the concept of being a director and not receiving a salary for it. But I am not paid.

The Manchester Airport Group is 100 per cent local authority controlled. Section 17(4) of the Airport Act 1986 limits the activities of airports to those of their controlling local authorities. So we cannot do more in airports than the local authorities have the vires to do. This severely damages the commercial development and operational capacity of airports such as Manchester. I remind the Committee that Manchester Airport Group now controls four airports—Manchester, East Midlands, Humberside and Bournemouth—and handles 21.3 million passengers a year. So it is second only to the BA Group. It is subject to utility regulation by the CAA but Section 17(4) places unfair and uncompetitive restrictions on the airports.

Section 2 of the Local Government Act 2000 lays out the broad principle of social, economic and environmental well-being but, as that legislation specifically states, it does not override other legislation. Therefore Section 17(4) of the Airports Act still applies to local authorities.

The Committee may be wondering why I am moving the amendment here. I tried in July 2000 to move a similar amendment to the Transport Bill that was then going through the House. At the time the Minister, the noble Lord, Lord Macdonald of Tradeston, stated:

    "We have told Manchester Airport in correspondence that we are sympathetic to the principle of much of what the airport company is seeking to achieve through this clause".—[Official Report, 10/7/00; col. 115.]

He then advised me that it was not appropriate for insertion in a transport Bill and to wait for an appropriate Local Government Bill to come along in which to move the amendment.

I hope the Minister will clarify the position. I hope that the Government still support the principle and, if he is not going to ease the restriction of Section 17(4), perhaps he will advise me how I should proceed in future to change the legislation.

[The Sitting was suspended for a Division in the House from 6.55 to 7.6 p.m.]

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Lord Rooker: It might be worth putting on the record part of my speaking notes. They state:

    "This is the second time Lord Smith of Leigh has attempted an amendment of this kind. He raised the issue previously on the Transport Bill 2000 and at that time the line was that this should be addressed in a Local Government Bill. However, the issue has gone quiet since then".

My noble friend is going to get the brush-off, but it is a legitimate brush-off. The Government are sympathetic to the proposal, and there are some nice words at the end of my brief, but I appreciate that he received nice words in 2000 as well. That is the problem.

We cannot accept the amendment as drafted because it goes too wide. It would allow airports to participate in airport activities abroad, which would not be an acceptable extension of their powers. Before introducing any such power we would have to ensure that we had examined all the issues.

The Bill has not arrived by accident; it has been the subject of a good deal of consultation. It was considered in another place, but this is the first time that the issue has been raised again. I know that Manchester is a red hot authority but, as I said, the issue has gone quiet in the meantime. The position might have been different if it had been raised a bit earlier. The Government also need to answer for some lethargy as the implication was apparently that the issue did not need to be raised because we would address it in a Local Government Bill. It may be six of one and half a dozen of the other.

The long and short of it is that I cannot accept the proposal today. However, we are sympathetic to the principle of giving additional freedoms to local authority companies. I am very pleased to note that Manchester's local authority airport company has survived all the pressure to get rid of such companies. Obviously it used very good tactics of delay and procrastination during those long dark years.

As I understand it, we have given a concession to six companies with an established record of profitability by exempting their investment from the normal public expenditure controls. However, for the reasons I explained, I must ask my noble friend to withdraw his amendment. In return, however, the Government would be happy to take work forward on this issue outside the Bill to see what more can be done to give airport companies increased freedoms, with a view to legislating when a suitable opportunity occurs.

The following bit is not in my speaking note. I am translating the above as a firm commitment that the Government will stay awake and do something about it. In other words, it should not now be left to my noble friend Lord Smith to come along for a third time to be told, "We are sympathetic but you have not quite got it right". So I see this as a commitment.

In all honesty, there is no way that we could have amendments drafted in time for inclusion in this Bill. At this time of year the pressure on parliamentary counsel is enormous and we just could not have done it. It will happen outside of this Bill. I cannot say whether it will be done in this Parliament, by the

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DETR or by my department. However, I am speaking on behalf of the Government. My notes say that the Government will do it. The Government will not go to sleep or be as lethargic as we obviously have been over the past couple of years during which it all went quiet. I genuinely mean that. This is something we want to do and something that the local authority airport company wants to happen. For some reason we have not done anything over the past two years to make it happen.

The good will is there. I know that Ministers come and Ministers go, but this is a firm commitment on behalf of the Government. Immediately after the amendment is withdrawn, I hope that we will set in train the necessary action to bring about a happier conclusion than the one I can offer today.

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