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We know that the arrangements that the Government are proposing would create duplication, bureaucracy and tension, and we have good reason to infer from similar models that accountability in governance would be opaque and suspect. It is astonishing that if the Government's stated intention was to replace weak,
they managed to come up with an arcane replacement of dubious transparency, confused accountability and eroded powers to determine strategic resourcing decisions. Can this really be progress? We should not be creating corporations sole at all. I beg to move.
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Baroness Henig: I support all my noble friend's arguments. In doing so, I have to say that I struggle with all this. I have tried to understand it; I have studied extremely hard. I would hate, however, to have to be in that police authority environment and explain all this to the police and crime panel, and explain to local people exactly how all this is working out. I would find that extremely difficult. As my noble friend Lord Harris said, this has led to enormous fears among police staff, which is a problem. We should not be increasing insecurity among the people working in the policing environment.
I am almost led to make the point that while the noble Lord, Lord Bassam, and I do not always agree on things, we have one thing in common; both of us, every now and again, are less than fulsome in our praise of the Home Office-rightly or wrongly. I have great concerns about this legislation and what has been drafted. That might not be the fault of the Home Office, but somewhere along the line there are problems with this.
Because of that, the Minister will know that I have written to her in conjunction with my noble friend Lord Harris and the noble Baroness, Lady Harris, to try to put our concerns on the record. We are looking for a meeting with the Minister to try to thrash all this out. It is an extremely difficult and complex area, but it is an important area. If we get it wrong there will be a big impact on a lot of people who might suffer as a result. We want to avoid that. In her response, will she let us know the timescale for her reply to our letter and whether there is a possibility of talking about this in more detail? This would be a productive area to explore further.
Lord Hunt of Kings Heath: My Lords, before the Minister responds, I want to thank my noble friend Lord Harris, who made a powerful speech, and echo what the noble Baroness, Lady Henig, just said. Although the Government have responded to a number of concerns, which is welcome, so far there has been no real recognition of some of the risks of the governance structure that has been put in place. Whether that is because the government lack confidence in it and are therefore not prepared to engage or whether they really do not understand the legitimate concerns, I do not know, but I am puzzled by the response. I know that if I, as a government Minister, proposed something like this, the Conservative Opposition at the time would have attacked very forcefully this kind of proposal.
The corporation sole model is flawed for the reasons that my noble friend gave and in relation to the issue of staff and the bizarre process, now, of staff transfers between the PCC and PCP-with all the uncertainty that that raises. It renders me almost speechless to understand that this bizarre corporate structure is being proposed at a time when the police service is going through 20 per cent cuts. There is a reduction in the number of police officers and we know that some of the most experienced police officers were retired because that was the easiest thing for chief constables to do. We know that chief constables are being taken off the front line and put into the back office because back-office staff have been made redundant.
I pose my only question rhetorically: when will another police reform Bill have to be put before Parliament? If we cannot have pilots, I suspect that
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Baroness Browning: My Lords, it is quite right that I have received a detailed and lengthy letter from the noble Lord, Lord Harris, the noble Baroness, Lady Henig, and my noble friend Lady Harris. I am of course happy to meet them to discuss the contents. I have asked officials to draft a reply, which I have yet to see-it has only been received recently. I will do my best to speed that up as much as possible now that we are on Report. Some of the issues raised in that letter are of a very technical nature so I am not able to respond to it from the Floor of the House tonight. I hope that they will accept that I will try to get a meeting organised. I understand that there are issues around this. People want to feel that they confidently understand the position if they are relaying it to third parties.
I begin with this question of the corporation sole. One thing that the Bill seeks is to give chief constables the opportunity to employ their staff. That is at the heart of operational independence. Chief constables will welcome the fact that they have that control. In order for them to do so and also carry out other functions that involve resources, it is necessary for them to be a corporation sole. I remind the House that a corporation is a body that has its own legal personality, distinct from that of its members. This means that a corporation can own property, enter into contracts and take part in legal proceedings in its own capacity. Its assets, rights and liabilities are those of the corporation rather than of its members. Typically, corporations have more than one member. These are of course known as corporations aggregate. Local authorities are one example. However, corporations can consist of only one person-known as the corporation sole. This is so that they can carry out those same transactions that a corporation can carry out-but it is not the individual personally who has the legal responsibility for that, it is in their role as the corporation sole. It would be quite inappropriate-for example, in the case of employment contracts-for the chief constable to personally enter into an employment contract with each and every one of his employees. As a corporation sole, he then has that legal position, rather as a corporation in commercial terms.
Lord Hunt of Kings Heath: I am not quite sure how this works. Does the chief constable of the PCC have to divide their head into two? I understand what the Minister is saying in terms of legal definition but at the end of the day the fact is that the corporation sole is the same person as the individual. Does she not see the huge power that is being given to individuals without any corporate governance structure around it? The House has rejected the sensible idea of non-executives. Does she not see that that is open to abuse? The world is full of examples of how, where individuals have huge power without checks and balances, it leads to one thing: corruption.
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Baroness Browning: My Lords, I understand what the noble Lord is saying, but that is why in other parts of the Bill we have set out clearly what the appropriate standards should be for the chief finance officers: both the chief constable and the PCC will have separate chief finance officers, who should not be combined. If those positions were combined, one could well see that that could lead to the sort of difficulties that the noble Lord, Lord Hunt, has just identified. It is important that, as corporations sole, they are quite separate entities. There is a very clear distance between them in terms of that accountability.
Lord Beecham: Although I am a lawyer, I must confess that I struggle with the concept of the corporation sole. In listening to the noble Baroness outlining the position, there appears to be a dualism here: the chief constable acts in his own right and he also functions as the corporation sole. What happens if the chief constable is unable to function? He might be suspended or incapacitated or-heaven forfend-he might die in office. What happens then? Where is the corporation sole?
Baroness Browning: My Lords, I will come back to the noble Lord on that point, but my understanding is that the chief constable is the body corporate in the same way as a corporation would be. Although the chief constable or the PCC would be the corporation sole, they carry with them the corporate requirements that would apply in any other situation as far as a corporation was concerned. It is not personal to them; they are not personally legally obliged, for example, to issue contracts in their own name with their own personal liability, so the fact that they may be off the scene for some reason or other, such as the noble Lord has described, does not necessarily destroy the corporation sole as a legal institution. The legal personality-the legal institution-that the corporation sole brings about protects, obviously, the personal liability of the individual concerned, but that would not mean that everything would collapse in the event that the individual was not personally on the scene.
I am looking to see whether the noble Lord perhaps knows where I am coming from on this, but I hope that he does.
Lord Beecham: I am not sure. Somebody has to take decisions in the name of the corporation sole, and I am not sure whether that concept extends beyond the individual. Perhaps the noble Baroness could write to me about that-upon taking better legal advice than I can proffer.
Baroness Browning: I am sure that that is not the case.
The point is that it is the legal personality that the corporation sole invests in the chief constable and the PCC. For example, if the chief constable was for some reason unable to carry out his or her duties, the legal entity of a corporation sole would still remain, and whoever stepped in to cover the policing operation while that chief constable was indisposed or was waiting to be replaced would automatically have the protection
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I am not quite sure how I can explain this any more clearly. I feel that it is quite clear in my own head.
Lord Beecham: You have explained it very well-
Lord Beecham: But I still do not understand it.
Baroness Browning: My Lords, I am grateful to the noble Lord. I am not a lawyer, as he knows, but I have in a previous existence been a businesswoman, so I am used to dealing with corporate matters per se. Therefore, I feel that I have a clear understanding of what the provision is trying to do.
The amendments by the noble Lord, Lord Harris, to Clauses 5, 19 and 20 and Schedule 16 would limit the police commissioner's status as a corporation sole to employment purposes only or, alternatively, remove the corporate status entirely. Instead of a corporation sole, the amendments would allow PCCs to delegate functions to a chief officer, which the Bill currently prohibits.
The noble Lord has asked that Amendment 84 be added to this group. I think that the intention of Amendment 84 is to discuss the ability of the PCC to delegate to the chief constable. I get the point that he is making, to get rid of the status of corporation sole and reintroduce the idea of delegation of functions from the PCC to the chief as is the case with the police authority and the chief. This continues the severe lack of clarity between the bodies that results in poor accountability. As I have just said in the beginning of my remarks, it is important that there is clarity and separation between the two. The amendments to Schedules 4 and 16 would remove the requirement for the commissioner to have a qualified chief finance officer on his or her staff.
I will address the amendments on corporations sole first, but I have to say to the noble Lord, Lord Harris of Haringey, that I do not quite follow his concerns about the medieval basis of this. In this country, we have an understanding of the common law, which is at the heart of our criminal justice system and has been developed over hundreds and hundreds of years. The fact that something has a long history does not necessarily mean that it is not functional. I have to tell the House-and I must admit that I was rather surprised to find this-that I am a corporation sole, as a result of being a Minister of State who is able to sign off public expenditure. I have a particular personal interest now in making sure that I understand every single aspect of this role, so I can assure noble Lords that it is not something that would be regarded as archaic or medieval. I do not see myself in my role as a Minister of State as archaic or medieval. At the same time, we should not denigrate this role, which is widely used-we have already had some examples of it-just because it comes from our ancient history.
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The Government are clear on our need to establish chief constables as corporations sole. It is that legal status that allows them to employ staff in their official capacity-a vital function in the context of providing greater autonomy over the day-to-day management of the force.
During our Committee debate, the noble Baronesses, Lady Henig and Lady Hamwee, and the noble Lord, Lord Shipley, also tabled amendments to limit the ability of a chief officer to enter into contracts so that it applied to employment matters only. These amendments would have removed the chief officer's ability to enter into other contracts and agreements unless the chief officer had obtained the PCC's permission to do so. The Government recognise fears, which have been expressed, that we may have given chief officers too much unfettered power. We agree that the powers that we are giving to chief officers, along with their corporate status, should be subject to appropriate safeguards. We agree that to give chief officers an unfettered power to enter into contracts and agreements, potentially committing the force to multimillion pound deals, does go too far.
In government Amendments 13, 15, 33 and 34, we still believe that in the interests of flexibility, chief constables should be able to enter into contracts other than simply those in relation to the employment of their staff, but we believe that it should be subject to a requirement to obtain the authorisation of the PCC. We believe that there can be flexibility in this; the authorisation could be given in general terms-for example, a PCC could give a general consent for a chief constable to enter into any contract in relation to a particular kind of service, such as provision of forensic services, which are often required as a matter of urgency in an investigation. Or the PCC could give a general consent for the chief constable to enter into any contract with a value less than a specified amount.
Lord Hunt of Kings Heath: I realise that the Minister is introducing an amendment at this late hour and that this is our only opportunity to discuss it, but the provision gives huge power to the police and crime commissioner. It gives a total hold over the chief constable in budgetary terms. I know that there is some tension here between those who think that that is a right way to go and those who do not, but what is clear is that the PCC is in total control. This amendment actually adds to that. That is why it would have been much better for the Government to have constructed a corporate governance model around the chief constables which would have allowed them to have much greater freedom over their own budget. In essence, the construct here is that the chief constable will become the deputy to the PCC. I wish that the Government would come clean on this.
Baroness Browning: My Lords, that absolutely is not the case because we have listened carefully to what noble Lords have said on this matter. Concerns were expressed, which we looked at carefully, and we have tried to strike a balance here. If I look at the current situation in police forces, in some forces-not all, I hasten to add-it is the practice for the annual budget
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Again, on the working relationship with the PCC, one would expect these matters to be discussed so that they could make sure that there were no problems. I have just described one example. It would be quite inappropriate for the chief constable to constantly have to keep going to the PCC to get authorisation for services that are clearly needed at short notice. The chief constable would know exactly what sort of services they were and in initial discussions with the PCC would say, "Look, these are the things that we need to access rapidly. Can we come to an agreement?", and draw up their own needs, together with the PCC. That would be at the heart of the relationship between those two people.
I believe that in putting in some checks and balances we have gone a certain way to addressing the concerns that were expressed by Members of this House, without constraining the chief constable in a way that meant it would affect them operationally. For example, the PCC could give a general consent for the chief constable to enter into a contract with a value less than a specified amount. If they came to those agreements at the beginning of the contract, this would almost certainly reduce the bureaucracy required. The important point is that the PCC would have control over what the chief constable could do, in the same way that the chief constable can only act, at the moment, within the scope of the delegated authority given by the police authority. It is not as though chief constables have a completely free run on these matters at the moment with police authorities.
Lord Hunt of Kings Heath: My Lords, what is now becoming clear is that political control is to be exercised over the budget by one person, the elected police and crime commissioner, without any effective corporate governance at all. That is the problem with the corporate sole: it is the same person. Of course, I understand that there is the entity of a corporate sole and the individual, but they are the same people. In a sense, the noble Baroness has said, "We have rebalanced this because of concern that the chief constable has too much power over the budget in the terms of the original Bill", but we are now transferring that to an elected party politician without any corporate governance safeguards whatsoever.
Baroness Browning: My Lords, if in practice the PCC discharged his or her duties in respect of coming to a practical and non-bureaucratic agreement with the chief constable, I would expect the panel to talk immediately to the police and crime commissioner about the way they were conducting themselves. When the noble Lord talks about checks and balances, this is exactly the sort of thing where one would expect the panel to call that commissioner to account. It would
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It is not that this is a completely open situation, where nobody would call the PCC to account. Later in the Bill, we have tabled additional amendments that give far more access for the chief constable to the police and crime panel, which would be a very good thing. I am sure that if the chief constable thought that the financial arrangements with the PCC were affecting operational independence or causing problems, they would soon make that known to the police and crime panel.
Lord Beecham: What could the panel do about it?
Baroness Browning: My Lords, the whole point is that this is transparent. These are not things done behind closed doors, which nobody else will know about. While the panel is there, doing its job, we expect it to act, if it identifies such a problem, as with any other problem between the chief constable and the PCC that causes operational difficulties on the ground. The panel should then call the PCC to account for an explanation and to resolve the matter.
I do not agree that there is no check or balance on the PCC in this matter if there is a good strong panel. In a way, this reflects what police authorities do today. I understand the point that the noble Lord is making: this is an individual elected person. However, this is not much different from the way in which the police authorities would step in if they perceived a problem in their force area at the moment. I shall move on from this but I am sure that we will come back to it.
The Government's view is that there need to be clear lines of accountability for the public. That requires the public to know what the respective responsibilities of the PCC and the chief officer are. The current system of delegation does not allow for this. Inspection has shown that sometimes even police authorities are unclear as to where the divide is. HMIC has said in its report on inspections of police authorities:
"It is critical that police authorities maintain clear division between their governance responsibility and the chief constable's responsibility to lead and manage the organisation".
Establishing two corporations sole, and prohibiting delegation means that it will always be clear who has which responsibilities. This a positive move forward. However, chief constables should not have unfettered powers, and this is what we have sought to address. Therefore, I hope I can persuade the noble Lord to withdraw his amendment and to support government Amendments 14, 15, 33 and 34.
Lord Harris of Haringey: My Lords, I congratulate the Minister on how she has conducted herself in this, and on her mastery of the niceties of this issue. Having said that, I am afraid I do not entirely agree with her position. She said that I am being unfair-I am sure that is better than being naughty-in complaining that this is a medieval construct. However, it is a medieval construct: it is rooted in the system that sought to avoid priests acquiring property that properly
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The point is that this is still, despite the Minister having discovered that she is a corporation sole, rather a rare construct. The one example-that of the Children's Commissioner, who has recently been created as a corporation sole-says that this is not a sensible way forward. I do not believe that there is any other circumstance in which you have two corporations sole, one responsible to the other, with two chief financial officers with statutory auditable responsibilities, existing together. I am sure the noble Baroness would tell us if there was such a case. I do not believe that there is a single other structure in the United Kingdom that does that. If I am wrong, I look forward to the noble Baroness interrupting me to tell me. When we have the meeting that she has promised on this matter, perhaps we will be able to go through that in more detail. I appreciate that the Government's amendments are helpful but they do not solve all the problems.
I do not think that we can take this much further tonight. I was rather tempted to try noble Lords' patience by dividing the House at this time of night. I am sure that the government Chief Whip would be thrilled if I were to do that as it would reward her troops who have stayed here for many happy hours. However, I do not propose to do so because I take very seriously the noble Baroness's offer of further discussions. Given the amount of toing and froing between the government Front Bench and the officials' Box during this brief debate, I rather suspect that the Front Bench is not entirely sure that we have the balance absolutely right. Under those circumstances, it may be necessary for us to return to this matter.
I keep saying that I think it is in the Government's interest to postpone Third Reading until September to allow for more detailed consideration of some of these points. Otherwise, the danger is that they will store up enormous trouble on these issues. On the basis that the Minister has offered to meet us to discuss the details of this matter, and that we may have the opportunity to discuss it further at Third Reading, I beg leave to withdraw the amendment.
Amendments 9 and 10 not moved.
11: Schedule 2, page 109, line 13, leave out "chief finance officer of a chief constable" and insert "police force's chief finance officer"
Amendments 12 and 13 not moved.
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14: Schedule 2, page 109, line 32, after "not)" insert ", but only with the consent of the relevant police and crime commissioner"
15: Schedule 2, page 109, line 35, leave out paragraph (c) and insert-
"(2A) But the chief constable may not borrow money.
(2B) Sub-paragraph (2)(a) does not require the chief constable to obtain the consent of the relevant police and crime commissioner in order to enter into a contract or other agreement with a person-
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(a) by virtue of which the person becomes, or is, a member of the police force's civilian staff, or
(b) which otherwise relates to the person's membership of that civilian staff (including the terms and conditions of the person's membership)."
Consideration on Report adjourned.
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