Orders of the Day — Local Government (Contracts) Bill

Part of the debate – in the House of Commons at 4:54 pm on 23rd June 1997.

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Photo of Nick Raynsford Nick Raynsford Parliamentary Under-Secretary (Department for Environment, Transport and the Regions) 4:54 pm, 23rd June 1997

The hon. Gentleman is getting slightly carried away by the technicalities of the subject. The legislation is designed to ensure that local communities do not have to meet additional costs. It establishes a sensible certification framework that will make sure that proper questions are asked before contracts are entered into. Our objective is to ensure that proper safeguards exist.

The private sector would not enter into contracts if it did not believe that it could recover the contribution that it expected to receive through the compensation route should a contract be ruled ultra vires. We have achieved the proper balance. We are ensuring that local authorities have the power to enter into contracts and we are establishing a more prudent framework for making contracts in order to safeguard public interest, while providing the equivalent of a safe harbour for the private sector so that it may invest confidently without fearing that it may be left with no way of recovering its investment. That is a sensible and practical way of addressing real, existing problems.

The hon. Gentleman also questioned the certification process, which he described as bureaucratic. It is not: it is a sensible provision that any sensible local authority will welcome. It will help to concentrate the mind on the process of reaching agreement on the contract. It will also ensure that the proper steps are taken to assess the probity and appropriateness of a contract so that the local authority may enter into it with confidence. That is the correct way to deal with partnership arrangements.

The Government believe that partnerships between the public and private sectors are the best way of raising the quality of services delivered to the community. On 8 May, my hon. Friend the Paymaster General announced an end to universal testing: the rule that all projects had to be tested for private finance potential. On the same day, Malcolm Bates was asked to launch a rapid review of the workings of the private finance initiative. As I have said, that review has been completed and accepted by the Government. The summary and conclusions of Malcolm Bates's review were published this morning, and we have lost no time in ensuring that speedy action is taken to reinvigorate the private finance initiative and establish a framework for successful public-private partnerships.

The main conclusion of the Bates review was that public sector structures must be simplified and responsibilities made clear. A new Treasury task force will be set up, covering both policy and central input on projects. That will end the confusion over who is responsible for what at the centre, while making the best use of available resources and expertise. There are clear recommendations for removing the barriers that have hindered the progress of many projects to date, including measures to keep down the costs of tendering for projects.

The Government will consider carefully with the task force and PPPP the implications of developing public-private partnerships in local government and how such projects should be encouraged. The Bill is an essential part of the framework for ensuring that projects can be taken forward successfully under the partnership approach. We do not want uncertainties about local authority powers to curtail an approach that can deliver innovative schemes at best value to local communities. I am pleased to commend the Bill to the House.