Read a third time.

Clause 3 [Invitations, directions and proposals: supplementary]:

moved Amendment No. 1:

Clause 3, page 3, line 2, leave out subsection (1) and insert—

"(1) Neither a direction nor an invitation under section 2 may be issued or given after 25 January 2008."

My Lords, the Minister has spoken much during the debates about the powers in the Bill being used to "make sense" of local government in the future. She has argued that the power to invite authorities to become unitaries must remain in the Bill even though the Government have currently—I emphasise "currently"—no plans for a future rolling programme of restructuring. She has said that the power to invite is still needed to "make sense" of existing programmes for restructuring. This is all very well and good and there will be nothing to prevent her department issuing invitations that are still needed under current schemes, such as Bedford, prior to January 2008.

Yet there is more to the extent of this power than necessarily meets the eye. The Minister noted that in the future the Boundary Commission could decide to change a boundary to such an extent that an existing two-tier system had to be incorporated into another existing unitary council. In theory, this would not count as the formation of a new unitary council, but the reality would be that yet another two-tier system could be swallowed up, this time without the need for a full consultation but simply as a tidying up exercise.

Clause 3(3) and (6) imply that once an invitation is issued, the expectation is that it will be accepted. The wording of subsection (6) gives multiple authorities no option in responding to an invitation but to make proposals in accordance with that invitation. So it is clear that an invitation from the Secretary of State is not so much a suggestion or a request but an offer that those invited cannot refuse.

Even though the judgment of the judicial review put forward by Shrewsbury and others has supported the Government's policy of restructuring and the issue of an invitation prior to legislation, the measures still in the Bill mean that they could commence a huge restructuring programme in future with no need for primary legislation and no parliamentary scrutiny as to its appropriateness. Directions in this legislation have already been limited to 25 January 2008. We believe, as we have discussed previously, that invitations for unitaries should also be so limited. Therefore, I beg to move.

My Lords, we have addressed this matter in slightly different forms on a number of occasions during the passage of this Bill. At the last stage, my noble friend and I tabled a rather longer Amendment which provided for invitations to be given up to June of next year, rather than January, as under the noble Baroness's amendment, and flowing only from the work that has been going on. Therefore, while we absolutely sympathise with the points that the noble Baroness has made about clarity and certainty, we will be unable to support the amendment, because it seems not to address the point that the Minister has drawn to the House's attention—the tidying-up following directions that have recently been given. I think that Bedfordshire was the area that she mentioned in that regard.

I do not know whether the Minister can deal with that matter when she responds, or whether she will be able to respond to another issue that has troubled us since she drew it to our attention. If we put a complete cap on directions and invitations under this legislation, we would be thrown back to 1992. My noble friend Lady Scott and I considered bringing the matter before the House, as that was the position that we wanted, but then we thought that it would be an even more centralised arrangement than we will have under this Bill. At about that time we gave up because we did not think that we could go back to 1992, or further back still, at such a late stage in the Bill. Frankly, it was beyond us—or it was beyond me, at least. It might not have been beyond my noble friend.

Therefore, although I cannot say that we are hugely happy with the situation, we recognise the problems inherent in the arrangement that the noble Baroness proposes.

My Lords, I am grateful for the support of the noble Baroness, Lady Hamwee, because I shall have to say some of the things that I have said at previous stages. However, I shall also try to make it clear that the Amendment would have very serious effects, along the lines alluded to by the noble Baroness.

I shall set out the three main arguments for resisting the amendment. If it was accepted, there would no longer be on the statute book any process for effecting essential structural change. There would no longer be a comprehensive process for effecting essential boundary change and the Government could no longer respond—as I described at Report—to areas where there is some exceptional local need or a clear desire for restructuring, where that would be appropriate.

The mechanisms and process for effecting sensible structural and boundary change, which would always depend in any case on the approval of Parliament, would no longer be available to government or local government, even when it was clear that such governance change could greatly help the delivery of better local services and the achievement of more effective place-shaping by the councils concerned. Therefore, we would not be thrown back to 1992; we would be thrown back to nothing. There would be no mechanism anywhere that we could use. I shall come on to that in more detail. I shall deal with each of the three circumstances.

First, the issue that these amendments would mean that there was no longer on the statute book any process for structural change for England is very much an issue of principle but it is also an issue of practice because the Local Government Act 1992, brought forward by noble Lords on the benches Opposite, enabled the Secretary of State, at any time, to request that the Electoral Commission direct the Boundary Committee to consider whether there should be a move to unitary structures, and if so to make recommendations.

That process was very much in contrast with the process at which we are looking in this Bill. It was centralist, driven by the Government and the Boundary Committee and remains on the statute book to this day. As we all know having been through three stages of this Bill, its intention is to replace that process with a new process—a process which reflects the changing nature of the relationship between central and local government; a genuine relationship which is based on devolution.

Therefore, the Bill provides for the repeal of the 1992 Act regime and in its place provides a regime where local government is genuinely in the driving seat; a regime where there can be no structural change unless one or more councils propose that change and a regime where the shape of structural change is in large measure in the hands of councils themselves which propose that change.

As I say, departing from the principles explicit in the 1992 Act these amendments would remove from the statute book any process for structural change. It is not the case that the Bill, as amended, would in some way keep the status quo; it would not. That is the problem. It would mean that, after 25 January 2008, there would be no process for effecting structural change. That is a breach with our traditions and not a sensible position in which to put either local or central government, leaving them with no ability to respond.

Secondly, the amendment would mean in practice that the type of boundary change that could in future be effected would be only those changes that would not involve a unitary council merging for example with a neighbouring shire district council. We covered this issue on Report, but I shall do so again. When reviewing an area, the Boundary Committee may form the view that a unitary district council needs to expand its boundaries due to population or housing growth. It may be necessary to expand the boundaries to such a degree that the remaining area of the two-tier district council is no longer viable. However, Clause 8 prevents the Boundary Committee from recommending the replacement of a two-tier area with a single-tier as a consequence of altering the boundary of a unitary council. In this situation—where there is a strong and sensible case for structural change stemming from a boundary change—Clauses 1 to 4 enable the Government to invite the local authorities in that area to come forward with a proposal which they believe makes sense for the local area. It is wrong in practice to introduce the kind of inflexibility which means that we cannot deal with that situation. I do not think that local government would be at all grateful for that.

However, it is equally wrong to introduce the kind of inflexibility where we could not deal with situations where, in the future, there is a specific and definite appetite for change and where it would be right to issue a focused and targeted invitation to the councils concerned. It would not be an offer they could not refuse because they would have had to take the initiative and say to central government, "We think it is only sensible that we proceed in this direction. Will you invite us to go ahead"? That is the way the dialogue would go. We certainly would not be imposing it; we would be responding to their considerations.

On Report, I explained at length and with great care that this does not mean that local authorities have carte blanche to come back and forth with proposals for unitary status. There is no future rolling programme, nor is there an open-ended invitation or a revolving door. However, we cannot and should not bolt that door so tightly that if, exceptionally, a local authority does seek sensible structural change, it is not free to approach Government and we are not free to invite it to make proposals. However, I assure the House that this is not a way of seeking by the back door to entice local authorities to seek to form unitaries. I believe—I hope that the noble Baroness will accept—that there are mechanisms in place, and it is important that we have those mechanisms to deal with the kinds of situations that I have outlined. The process that the Bill puts in place is devolutionary, with councils in the driving seat. There is no change unless one or more council wishes it, and there is no change unless it is approved by this House and by the other place. That process is fit for today, and it recognises constitutional—

My Lords, I am grateful to the Minister. Does she accept that one of the reasons why we have had such difficulty with this is because of the clear, unambiguous remarks made in Another place by the then-Minister, who is on record as saying that the proposals in the Bill are intended to relate only to the local authorities that are under consideration? We have wasted quite a lot of time having a debate around that, whereas if he had been much more clear and had enabled the noble Baroness to be clear in Committee about the exact status of the proposals, we could perhaps have saved ourselves and the House a great deal of time.

My Lords, in the course of debates in both Houses one sometimes wishes one could have been as clear at the beginning of the process as one is at the end. I hope that we are all now clear. I ask the noble Baroness to withdraw the Amendment.

My Lords, I thank the Minister for her third reply on this subject. Unfortunately, every time we discuss this another point is raised. I will challenge the Minister a bit on this. As I understand her, if we do not take the invitations out and we leave the provision as it is, local authorities will come to the Government and say that they want to form unitaries and not the other way around. That is not what the legislation says. The legislation says:

"Where invitations or directions under section 2 are given".

"Under section 2" is a direction from the Government. All of Clause 3 is about an initiation by the Government; either an invitation or a direction. We are all very clear that a direction will cease on 25 January 2008. With respect, I do not think that the legislation does what the Minister says it does. It may be that local authorities can come to the Government and say that they would like to form a unitary, in which case the Government can say, "All right, in that case we will issue an invitation". That is not what the legislation says. It will have to be turned round in some way.

Confusion exists over the word "invitation" and it leaves a very open-ended situation, which has already caused enormous angst among the elements of the new unitaries. We have already had one judicial review, and it is not certain that there will not be more. It is certainly not clear that in the proposed unitaries there is unanimity between the districts or on the county councils, where proposals are being put forward. We ought to see an end to this part of the legislation. I beg leave to test the opinion of the House.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 84; Not-Contents, 178.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 33 [Resolution for whole-council elections: requirements]:

moved Amendment No. 2:

Clause 33, page 19, line 37, leave out paragraph (b)

My Lords, this group of amendments tidies up the Bill following your Lordships' decision to remove the elected executive model from the Bill. We are of course disappointed that noble Lords opposite have chosen to remove what is, as I have stressed throughout every stage, a highly innovative model. However, as that is the will of the House, we have ensured that all references to elected executives are removed from the Bill.

The amendments remove Schedule 3, which sets out the voting system for a directly elected executive and is therefore no longer required. We are bringing back amendments to Schedule 4 which make consequential amendments to the Local Government Act 1972 and relate to the provisions in Clause 66(3), which clarifies when a mayor is to be treated as a member of a local authority.

We also reinstate Schedule 5, less any reference to elected executive models, as the provisions within that schedule are necessary to allow local authorities to make the transition to the executive models that remain in the Bill—that is, the leader and Cabinet executive and mayor and Cabinet executive models.

The amendments reflect the will of the House and ensure that the Bill is fit for purpose. I commend them to the House and beg to move.

My Lords, I hope that the Minister received a message from me earlier this morning concerning some questions that I want to ask about this group of amendments. That might seem a little odd, as my name has been added to some of them, but that was for a procedural reason that I still do not quite understand.

First, have we now filleted the Bill completely as regards directly elected executives? This is not an Amendment to her amendment but, if I am right, it can possibly still be swept up, as there is a little sweeping-up time left. It seems to me that in Clause 12, which concerns structures, there remains a reference to directly elected executives.

My second point concerns Wales. When I originally read the provisions regarding Wales, it seemed that Part 3, which introduces directly elected executives, was drafted to separate out the Welsh provisions so that the National Assembly for Wales could make its own decisions about local government structures. Can the noble Baroness say something about the impact on the Welsh system of deleting from the Bill references to directly elected executives?

Thirdly, as was pointed out to us fairly early on in our deliberations, Section 11 of the Local Government Act 2000 would have enabled everything that this Bill contains as regards executives to be brought in anyway through regulations. Therefore, as those provisions still remain, can the Minister say what effect the regulations would have and, in particular, if we assume that the deletion sticks, as it were, to the end of this Bill, whether the Secretary of State would rule herself out from using the backdoor method of regulations under the earlier legislation?

In the circumstances that we are now in, I find it quite difficult to read new Section 33I of the 2000 Act alongside Section 11. Can the Minister say something about the implications of reinstating Section 39(4) of the 2000 Act, which would be the effect of the amendment to Clause 66, to which she spoke?

Finally, I turn to Amendment No. 79. I am afraid that I did not give the Minister notice of this. This relates to a new schedule after Schedule 4, which refers to operating the old-style leader and Cabinet executive model. I know that that is defined, but in colloquial terms am I right in thinking that this is the leader and Cabinet executive—same style but older Act? I find it difficult to understand what that is all about.

My Lords, while the noble Baroness is having a drink of water, perhaps I could say that I had understood that we were now to hear the important European Statement. If the noble Baroness is to speak for very much longer on this Amendment, perhaps we could carry on by having the Statement for which the House is now waiting.

My Lords, I have only one more sentence, but I have no idea how long the answer might be. I, too, was rather surprised that we went on with the Bill and I apologise to noble Lords who are not as transfixed as I am by the new schedule to the Bill. Under paragraph 4 of the new schedule, a local authority must make a change in its governance arrangements under what will be Section 33A. I find it really hard to understand what the Government are expecting local authorities to do.

My Lords, we took another Amendment before turning to the Statement because we thought that we had better ensure that the Prime Minister was not on his feet. We thought that we had a short technical amendment.

I shall answer the noble Baroness as briefly and as concisely as possible. Let me take the Welsh situation first. The Bill allowed only English authorities to operate DEEs. As local government is a devolved matter, it is for the National Assembly for Wales to consider whether, in future, Welsh councils should be able to develop this model. So Wales is pursuing its own course.

I turn to the amendment that looks at the relationship between new Section 33I and Section 11. I can reassure the noble Baroness that our amendments remove all the provisions that would have allowed councils to resolve to move to the DEE model. In tidying up the Bill, we have amended the Local Government Act 2000 to return it to its pre-Bill position in relation to providing for additional forms of executive arrangement. On Section 11(5), at various stage of the Bill I said that this would enable local authorities to come forward with other innovative forms of executive arrangements. Therefore, by implication, the Government would not be bringing forward DEEs by a backdoor, but would be able to respond if local authorities had something in mind that they wanted to do, to which all members of the executive agreed. Where a council asked to pilot such an approach and we were satisfied that leadership arrangements would be likely to ensure that decisions of the authority were taken in an efficient and transparent manner, we think that we should be able to provide for that—that is the burden of the Clause. Clearly, we would have to seek the approval of both Houses for any such regulations, but that possibility is there.

On Clause 12, I am grateful that the noble Baroness has brought her third point to our attention. I can assure her that, despite the references in Clause 12, the substantive amendments to remove DEEs mean that we would not be able to provide for this model for a council that had been newly established.

The final point was about this rather confusing language of an old-style leader and Cabinet. That is indeed the leader and Cabinet as created through the 2000 Act; the new style is the leader and Cabinet as amended by this Bill.

On Question, amendment agreed to.

Clause 38 [Resolution for elections by halves: requirements]:

moved Amendment No. 3:

Clause 38, page 22, line 5, leave out paragraph (b)

On Question, amendment agreed to.

Clause 40 [Resolution for elections by thirds: requirements]:

moved Amendment No. 4:

Clause 40, page 22, line 38, leave out paragraph (b)

On Question, amendment agreed to.