Alistair Burt (Shadow Minister (Communities and Local Government), Communities and Local Government; North East Bedfordshire, Conservative)

I would be grateful for some clarification from the Minister on staff issues. Subsection (5) says in italics:

“Any expenses incurred by a staff commission under this section and not recovered from a relevant authority shall be paid by the Secretary of State out of money provided by Parliament.”

Can he give us any indication of where and when he expects that provision to be triggered? Is it an indication of concern that the costs of winding up an authority might not or should not be met by that authority, and that the money will therefore have to come from Parliament? If so, what provision has been made for it? What sums are anticipated? It would be appreciated if he said something about that.

I would also like clarification on how the staff commission would deal with some of the practical problems arising from reorganisation. It is a disorienting time. During the transition, some workers may choose to leave the authorities in transition and go to more settled neighbouring authorities, depriving the area of key skills. In all the areas on the fringe of London, it is easy to transfer to neighbouring areas, take skills elsewhere and not be caught up in transition. Would the measures involve the payment of bonuses to retain key staff during the transition? Might short-term contracts be involved to bring in specialised skills to cover the transition period? Who will meet the costs?

Where will pension costs lie under transition? Which authorities can be expected to make provision for them? It is likely that authorities with very different financial situations will be brought together. Some will have been prudent and have significant reserves, but others will have very few. That will affect the payment of costs and pensions and, ultimately, the amount of council tax being paid by taxpayers. Who is picking up the bill for the transitional process? I would be very grateful if the Minister could enlighten us on that matter. In particular, when does he expect the provisions in subsection (5) to be triggered?

Phil Woolas (Minister of State (Local Government & Community Cohesion), Department for Communities and Local Government; Oldham East & Saddleworth, Labour)

I shall try and answer the hon. Gentleman’s questions, which once again are quite reasonable—they have been asked by trade unions, on behalf of employees, and by staff associations during this and previous rounds of consultation.

The employer of local authority employees is, of course, the relevant local authority and not the Government. The hon. Gentleman made the point about parliamentary accounts. Furthermore, on the 89 funds that make up the local government pension scheme, the local council or councils—they are combined for the purposes of the pension fund—are the employer. In that case, the Government are the regulator, given that it is a funded scheme. Of course, the points about potential redundancy pensions under such arrangements are very important indeed. It might be worth while for the Committee to note that the new regulations for the local government pension scheme are currently subject to consultation in a process that is coincidental to the proposal before the Committee.

The clause will try to deal, therefore, with transitionary periods and is similar to the proposal that has been put forward in previous reorganisations. I imagine that the new unitary authorities created through the process will want to take a fresh look at their management and staffing structures. Indeed, in large part, proposals for savings and efficiencies would probably look at staffing costs, given that those account for about 50 per cent. of local government’s total expenditure—80 per cent. if one includes the  commissioned or contracted sector. Nevertheless, the Government obviously recognise that staff will be anxious about the restructuring and, therefore, we will be holding discussions with those involved in local government and groups such as the local government employers body and public sector trade unions in preparing for implementation—should any go ahead through the current window of opportunity.

The clause, therefore, allows the Secretary of State to establish one or more staff commissions to consider staffing arrangements, transfers and problems that might arise as a result of orders for structural or boundary changes—the two procedures that might lead to such situations. Staff commissions may also be established to advise the Secretary of State on the steps necessary to safeguard the interests of staff affected by such an order. That provision is broadly consistent with previous legislation. In the reorganisations of the 1990s, staff commissions were established with the remit to advise the Secretary of State on the transfer of staff and to ensure that transfer schemes established by local authorities complied with regulations made by the Secretary of State.

As I said, staff anxieties are high on our agenda. Subsection (2) provides that a staff

“commission can be established for the whole or any part of England.”

That will give us flexibility depending on the proposals that come forward and will allow the Secretary of State to establish a staff commission to consider matters relating to an individual area, or number of areas, depending on the circumstances. Subsection (3) provides that the Secretary of State may direct the

“staff commission with respect to their procedure.”

Subsection (4) will enable the Secretary of State to direct an authority or a residuary body, relating back to clause 17, to provide the information requested, implement any advice given by the staff commission, and to pay the staff commission any expenses it incurs as a result of work requested by the authority so, again, it is not a cost on the council tax payer. Under subsection (6), the Secretary of State may wind up a staff commission.

We do not anticipate that funding from central sources will be required, to address the question of the hon. Member for North-East Bedfordshire. However, as happens often in local government, a local authority could undertake functions and is responsible for pay and rations, as it were, even when the functions are undertaken on behalf of the wider community, the national Government or other agencies. Such instances are many and varied. Clause 18 gives the Secretary of State some flexibility to ensure that the burdens that rightfully fall on central Government are met by them and not by local government.

I am confident that the clause reflects previous practice and gives a wide flexibility for staffing arrangements. However, I emphasise that the specific concerns of individual local authorities and the public sector unions will be subject to discussion between those bodies as the measure is rolled out.