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Lord Davies of Oldham: My Lords, the noble Lord should not presume that these are straightforward and easy issues. The issue with regard to non-domiciles is

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obvious: we have to balance the tax loss of not taxing them as fully domestic residents against the obvious mobility of that community and the possibility that their investments might be taken elsewhere. That is a proper equation for the Government to worry about.

I know that it is a long time since the noble Lord was in government, but he will remember that his colleagues struggled with these kinds of issues when preparing Budgets. The noble Lord shakes his head, which may suggest that the Conservative Government never had the slightest problem with rates of taxation in terms of both their effectiveness and fairness. All I can say to that is that they made a sorry mess of 18 years in power given that they found managing the economy so extraordinarily facile and straightforward. I think that the noble Lord will have to give credit to the Chancellor for having to wrestle with some fairly complex issues in areas where changes to rates of taxation have to be measured against what the yield might be. In another context, the noble Lord would be the first to acknowledge the fact that, if you increase the taxation for a particular group, the yield may not necessarily be greater. I hope that he will recognise the importance of my point.

Lord Forsyth of Drumlean: My Lords, that simply will not do as an argument. If Russian billionaires are paying almost no stamp duty on houses in London costing £20 million, making them pay will not reduce the yield. What it might do is have an impact on the house price boom in central London, where domestic people, paying their taxes, cannot afford to pay the prices.

Lord Davies of Oldham: My Lords, that is to presume that, if such individuals then made up their minds that living in London was no longer an option that they wanted to exercise, there would be a straight gain for the Exchequer. All I would say is that I do not think that it is as cut and dried as he suggests. However, we shall continue with that argument later.

My noble friend Lord Sheldon said that the value of the committee lay in the strength of its bipartisan approach to these matters. However, I have to say that in certain representations made in this debate I am not convinced that bipartisanship has been the order of the day. The noble Lord, Lord Wakeham, set a magnificent example, but I am not sure that he has been totally successful in influencing the overall debate. Certainly the noble Lord, Lord Forsyth, has engaged in this debate in similar terms to those that he used so ably when he was in another place. Of course the Government take the views of this House on the Finance Bill seriously. The Government are also aware of the ability of the Economic Affairs Sub-Committee to produce a report, which is a great advantage to us.

However, we should not live in the land of delusion, which I think has attended some contributions to the debate. Some noble Lords have suggested that it will not be long before the House matches the Commons in its responsibilities for the Finance Bill. Some disparaging remarks were made about the conduct of the other place. If it is said about the other end of the building that people there over-engage in politics, it must be

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observed that the Budget and Budget decisions are made at the highest level of politics and of course are prioritised by all Oppositions. If the fault lies anywhere at this time, it lies on the Conservative Benches, but it is the same fault that we enjoyed when we were in opposition. However, this House is a revising Chamber and its responsibility for finance is bound to be more limited, so I do not think that it is suitable for us to suggest that we should take an equal position with the other place regarding this Bill. What we can do is bring informed comments and considered thoughts to the matter, and the debate has strongly reflected that.

I shall come on to the more general points made by the noble Lord, Lord Northbrook, in a moment, but I say to him that we do not think that the issue of managed service companies is about structural change; it is one of compliance and how we might succeed in getting the yield to which the Exchequer is entitled, rather than anything more fundamental, as the noble Lord suggested.

I am afraid that I have the most negative response for the noble Lord, Lord Newby, to his most straightforward question, and I apologise to the noble Baroness, Lady Noakes, for the same response. They asked me to confirm that 17 October would be the date of the pre-Budget review. At the moment I am unable to confirm that. It will not have escaped the attention of noble Lords that there have been one or two minor transitions in the Government in recent weeks, which may occasion a slight change in the dates. I apologise to the noble Lord and the noble Baroness for not being able to assure them on that point.

On the overall position as presented, the noble Lord, Lord Newby, and to a more moderate degree the noble Baroness, Lady Noakes, identified failures of the Government as represented in this Finance Bill and in the way in which we have conducted the economy over the past few years. I have to say that the House needs to recognise the confidence with which the Government approach these issues. I heard the noble Baroness bemoan the fact that interest rates are rising. Interest rates have risen to 5.75 per cent at the present time. That must be measured against the record of the previous Administration, which never managed to get them down into single figures. That is the difference.

Baroness Noakes: My Lords, I cannot remember the exact figures, but I think that I would like the noble Lord to withdraw the statement that we never had interest rates in single figures, because it is simply not true.

Lord Davies of Oldham: My Lords, I shall certainly withdraw it if the noble Baroness challenges me, because I am sure that she is quite accurate. Let me say that average interest rates over that period were in double figures; that I will assert. If the noble Baroness presses me and I am wrong, I will certainly write to her.

Baroness Noakes: My Lords, can the noble Lord justify in his terms over what period, and then we will deal with this outside the Chamber?

Lord Davies of Oldham: My Lords, through the majority of the years during which the Conservatives were in power, average interest rates were in double

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figures. That is the clearest definition that I can give. If I have made a slip, I shall certainly write to the noble Baroness and apologise.

While the noble Baroness deplored the fact that growth rates in the economy have declined over the past year, she will appreciate that over the 10 years that we have been in power we have achieved growth rates that have guaranteed for average families an increase in living standards that are far above those that obtained under the previous Administration. Moreover, if the growth rates seen under that Administration had continued to obtain, average families would now be immeasurably worse off.

I thank all noble Lords who have participated in the debate. The report of the sub-committee is important and identifies in several areas clear points about which the Government have to think very seriously on issues where further work needs to be done and for which there are no immediate and easy solutions. On the general issues, the Finance Bill continues a pattern of successful management of the economy that is there for all to see. I therefore take great pleasure in commending the Bill.

On Question, Bill read a second time; Committee negatived.

Then, Standing Order 46 having been dispensed with, Bill read a third time, and passed.

Finance Bill: EAC Report

6.59 pm

Lord Wakeham: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That this House takes note of the report of the Economic Affairs Committee on the Finance Bill 2007 (4th Report, HL Paper 121).—(Lord Wakeham.)

On Question, Motion agreed to.

Local Government and Public Involvement in Health Bill

7 pm

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Tordoff) in the Chair.]

Baroness Hamwee moved Amendment No. 215:



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(a) provision of information to a relevant overview and scrutiny committee, as defined by the Local Government Act 2000 (c. 22),(b) attendance at a relevant overview and scrutiny committe to answer questions,(c) a requirement to consider any report or recommendations of an overview and scrutiny committee, and(d) a requirement to respond to the overview and scrutiny committee indicating what (if any) action the organisation proposes to take.”

The noble Baroness said: I wish to speak also to Amendments Nos. 216 and 217. These amendments take us to the area of overview and scrutiny. Amendment No. 215 deals with who shall be subject to the attention of an overview and scrutiny committee. The amendment proposes that this should extend beyond the immediate local government family to others who provide services.

The White Paper stressed the need to expand competition and to have a diversity of providers. I think that it said that service deliverers should not be protected from public scrutiny. The requirement could apply to contractors delivering services through contracts and companies involved in public/private partnerships, which are a very topical issue. I say in parenthesis that the Greater London Assembly has paid some attention, and will pay a good deal more, to the London Underground PPP with Metronet. However, it is a bit early to apply the word “legacy” to the new Prime Minister. The amendment could apply also to PFI consortia, joint ventures, strategic service delivery partnerships and so on.

The Bill extends councils’ scrutiny powers to enable them to require the attendance and engagement in scrutiny of public service bodies defined as “partner authorities” in Clause 106. Partner authorities have a duty to co-operate in the context of local area agreements. They are required to take part in scrutiny and to have regard to scrutiny recommendations where the scrutiny report or recommendation relates to a local improvement target in the local area agreement. Amendment No. 216 would strengthen the duty to take part in scrutiny by requiring participation in scrutiny meetings as well as the provision of information. I am sure that the Committee will understand that it is not possible adequately to scrutinise an activity unless one can ask questions. Simply receiving written information is not enough. Amendment No. 217 would extend the scope of scrutiny to require the participation of partner authorities more broadly on issues which are of specifically local concern.

This area was debated in Committee in the Commons where the Minister referred to the first of my amendments as being “unnecessary and potentially bureaucratic”. She added that it “could undermine accountability”. She raised an interesting point. Is it confusing and does it dilute accountability to require contractors to provide information to overview and scrutiny committees, as she said? She talked about encouraging,



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It is interesting to note where the balance lies in this. Intellectually, one should hold to account the partner authority which engages the contractor. That is absolutely right. But in a world where we look to contractors to do so much work for local communities, and where they are brought in by the local authority, it is right to consider whether the contractor should be subject directly to the scrutiny function.

Contractors would also be witnesses, as it were, in this structure. What they have to say in explaining how things are working as part of the total picture is important. I should like to think that the Minister’s comments in the Commons constituted a rowing back from contracting out services, but I suspect that they were not.

The Minister in the Commons also talked about overview and scrutiny committees being able to investigate any issue, to decide for themselves what they wanted to do and to “ask anybody to attend”. She referred to ploys that an overview and scrutiny committee might use to shine the spotlight on an unco-operative contractor. That is all very well. She referred to the occasion when the noble Lord, Lord Hattersley, did not accept an invitation to appear on the programme “Have I Got News For You” and a tub of lard was put in his place. However, you can do that only once. The formal arrangements and powers are important. I would not want to symbolise the shortcomings of local government members by putting tubs of lard in their places and recording that in the minutes. I do not think that is the way to go. I beg to move.

Baroness Hanham: The name of my noble friend Lord Hanningfield is attached to this amendment. Therefore, it is clear that we support it and are in general sympathetic to it. It needs to be made clear that it refers to organisations and contractors that are funded by the council; that is, the council is handing taxpayers’ money to people to do a job for the council. That covers not only private organisations, but voluntary organisations and, as the noble Baroness, Lady Hamwee, said, it applies to contractors, who are being paid by contract.

The whole of this part of the Bill is designed to increase the authority and power of overview and scrutiny, which until now has been a toothless tiger—no one much enjoys it and it has not had a hugely influential role. That is beginning to change. Interestingly, a short time ago three overview and scrutiny committees in my area looked at a plan for bringing two hospitals together, of one of which I am chairman. The three scrutiny committees worked together. It was a very effective inquiry into the proposals, which produced an effective and important report. There is beginning to be more of a role; clearly, where council money is concerned, overview and scrutiny ought to be able to extend its role, which is very important.

There are endless areas—IT systems, care of the elderly in old people’s homes, contractors providing food and voluntary organisations providing services for bathing and, in many cases, now running old people’s affairs. It is crucial that the overview and scrutiny committee should have a role and be able to be part of a rigorous process that enables it to get information. It is not satisfactory to say that a written

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report will be made and that someone will not need to appear. As the noble Baroness, Lady Hamwee, said, that would be useless. You need to be able to ask people questions, to see the colour of their eyes and how they respond to the question. It is over-protection of people in that position that they should not be required to appear and give information as put forward. Some might be limited, but it should be there.

For those reasons and because local area agreement targets will need to be scrutinised—some of those targets will be with people receiving public money—I think that the two amendments are extremely important. I therefore support them.

Baroness Andrews: I entirely agree that the amendments are important and I appreciate the spirit in which they are brought forward. Obviously, we want to ensure that overview and scrutiny committees are able to hold public service providers to account. Unfortunately, we do not think that the amendments are necessary for that. I will try not to duplicate what was said in the Commons Committee, but it is difficult, because the arguments offered there were sound. I will try to find different language.

However, I took the point of the noble Baroness, Lady Hanham, about how overview and scrutiny committees could be seen as rather toothless. Part of the Bill’s purpose is to build on the Local Government Act 2000, as we have, to make three changes that will toughen up the overview and scrutiny committees and give them more power. Of those three ways, one essentially requires local authorities—executive members and members—to respond when called to a committee; they are required to attend and to respond to what the overview and scrutiny committee says. What have now come into the frame are the partner authorities; in the Bill is a requirement that information should be provided from partner authorities connected to the local area agreements and that they should sit together. There is also the duty to have regard to the report and recommendations of the overview and scrutiny committee. Those are three important changes that toughen up the O&S committees.

The point about contractors is, however, important. As the noble Baroness said, a lot of work is now done through commissioning. Our principle, which is why we cannot accept the amendment, is the importance of those who are commissioning—the local authorities and public service providers—actually being responsible for the quality and delivery of the work that they commission. Once you start asking contractors to turn up and account for themselves, you have let the contracting body off the hook. It is terribly important, given the pattern of commissioning, that you get the responsible people to come and explain why they actually contracted those people, if it turns out that they have not got the capacity to deliver or whatever. Sometimes it is no good asking the IT provider to come. You want to know who made the decision, on what grounds and on what evidence. We might find ourselves in a position where we are allowing partner authorities to shift responsibility.

7.15 pm

It is perfectly open to the overview and scrutiny committees to request anyone to appear before them.

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If they feel that they have not got to the bottom of something in this situation, then they can call the contractor to come. It is a slightly different context, but there is nothing to stop them doing that. Furthermore, when local authorities contract, they have to specify in the contract those arrangements that would enable them to obtain information from the contractor, so that they in turn are able to respond to a request from an overview and scrutiny committee for information. A means for councillors to obtain information from contractors exists. We have provision for making information available. On those grounds, I have difficulty with Amendment No. 215.

Amendments Nos. 216 and 217 concern the requirements on partner authorities to respond to an overview and scrutiny committee. In response to Amendment No. 216, about partner authorities being required to attend to provide information, we think that the regulation-making powers under Clause 123 are sufficiently wide enough and that they address the question of attendance. We intend to provide in the planned regulations for partners to appear before scrutiny committees. However, I think it wrong to impose a blanket requirement on partners to attend in person. I take the point that on some days you have to look a person in the face in order to test out resolve, commitment and so on, but I do not think that where councillors are working in partnership with public service providers it is all that helpful to allow overview and scrutiny committees to compel attendance. In some instances they are statutory bodies in their own right. We do not want to destabilise or undermine relations. We think it right to provide discretion about whether there is oral evidence or a written submission. My impression is that if the written evidence is not sufficient, they could always call for oral evidence afterwards. I should have thought that that option remained open to them, but it may be appropriate in some circumstances simply to have written submissions. That would certainly reduce the work of the committee.

Amendment No. 217 requires partner authorities to have regard to any overview and scrutiny report. As I have explained, overview and scrutiny committees have the power to make reports to their executive on any matter that affects their area—quite rightly. We all probably agree that where the councils have formal partnership arrangements with local partners, it is right that councillors should be able to send reports to those local partners to which they must have regard. The Bill requires that where councils and local public service providers work together on LAAs, local partners will be required to have regard to reports relating to the LAA targets. That is the focus and what they would want to be chasing up and ensuring that they are getting delivery on. It would not be appropriate to allow councillors to require partner authorities to have regard to wider reports on any matter relating to their areas. That strikes me as certainly losing focus. I could imagine, for example, that a council might do a report on global warming—that would be forward-looking in some respects—but requiring partners to respond to that report would be taking it beyond their scope and taking up time that they might be rather short of.


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