I beg to move Amendment No. 57, in

Clause 16, page 9, line 38, leave out 'sections 22 and' and insert 'section'.

This explanation will become quite complicated—I hope that all my cross-referencing has gone according to plan. Section 22 of the 1992 Act refers to the power to create residuary bodies. The effect of amendment No. 57 is therefore to remove the ability to create residuary bodies that will assume the residual liabilities—and assets, I suppose—of local authorities that are to be abolished.

It is important that the Bill does not create a mechanism for increased public expenditure or duplication of resources and effort. We are talking about a reorganisation of local government in a region and the transfer of powers from two-tier authorities to unitary authorities; in other words, powers will either move up from shire districts or down from large county authorities that are to be restructured as more than one unitary authority. I can see no reason why all the assets and liabilities of existing authorities should not be vested in one or other of the newly created authorities. I suspect that we are talking about a one-off manipulation of the situation that may allow, for example, the Secretary of State to give a huge, concealed benefit to a region that is moving towards having an elected regional assembly and unitary authorities.

If—to select a region at random—the north-east were to choose in a referendum to pursue elected regional assemblies and the Minister were minded to establish residuary bodies for the liabilities of some of those authorities, might that not be a way of offering an inducement to electors in those regions? They would see a significant improvement in the financial situation of their local authorities as a result of the ability to transfer liabilities out to residuary bodies. Who would pick up the ultimate liability of those bodies? Would central Government pay—the taxpayer from other parts of the country? I am concerned about the way in which this provision might be used, but I also think that, even if it is not misused, it is simply inappropriate not to transfer the liabilities and assets of existing authorities to their successor authorities.

I am surprised by this Amendment, not least because—incorrectly, I suspect—my speaking notes suggested that it was tabled by the Liberal Democrats; I was expecting it to come from their end of the Room.

The 1992 Act specifically gave credence to the idea that in certain situations residuary bodies may well be necessary for flexibility or common-sense reasons. Therefore, it is strange that all of a sudden the Conservative party is proposing never to allow such flexibility to exist, and that the hon. Member for Runnymede and Weybridge sees sinister motivations—he asked questions about manipulations of the situation being a motivation for creating a residuary body. It is also strange that he picked the north-east at random when, as everyone

now knows, the Audit Commission has deemed that that region has the highest proportion of excellent local authorities. As everybody can see, until such time as the boundary committee makes recommendations for a unitary structure, we cannot know what changes there might be to the local government structure of a particular region. Therefore, it would make sense to make provision now in case there are difficulties with regard to reasonable flexibility.

The Under-Secretary's comments about the comprehensive performance assessment results neatly draw the Committee's attention to the correlation between adequacy of funding and performance of councils. He might draw a lesson for his Department from that.

That comment implies that the hon. Gentleman believes that the north-east should receive a lower grant through the local government settlement. I am unsure whether that should be the Conservative party's policy, if its members want to show their face in that region. I suspect that my hon. Friends who represent the region will take note of that comment and place it in their manifestos in future elections.

The evidence of previous structural changes shows that there are often property issues that cannot be resolved by successor authorities. In such circumstances, previous Governments as well as this one have found it necessary, pending the resolution of the problems, to appoint residuary bodies to take on certain property rights, liabilities and so forth, and generally to act as advisers on those issues. It would not make sense to prevent the Government from making similar arrangements in the case of forthcoming reviews, should the need arise. The provision for residuary bodies is sensible, and I urge the hon. Gentleman to withdraw the Amendment.

The Under-Secretary has not addressed the issue, and he has not offered any relevant examples.

It is my understanding that the last reorganisation involved the creation of the London residuary body, which took over certain property and other responsibilities from the Greater London council. That provides an example of how transitional arrangements can be necessary.

I understand that, and I understand the logic in the context of London, where the devolution of power was to a large number of successor authorities. This reorganisation will involve relatively modest changes to authority boundaries—we are talking about district authorities being amalgamated into unitary authorities, or county authorities perhaps being broken down into unitary authorities. I had hoped that the Minister would address this matter, because it is not immediately obvious to me that the proposed reorganisation would involve the kind of issues that arose in London. I fully understand why the London residuary body was created.

I do not have chapter and verse on this matter so, in order not to delay the Committee, I beg to ask leave to

withdraw the Amendment. I shall study the matter again in quieter moments.

Amendment, by leave, withdrawn.

Clause 16 ordered to stand part of the Bill.