It is a pleasure to serve under your chairmanship, Mr Brady. It is the first time that I have served on a Committee, and I am pleased to be here.
I will briefly explain the rationale behind the amendments. Norwich and Exeter city councils clearly want unitary status; that is a matter of record. Not only the authorities but the people who live in Norwich and Exeter have demonstrated in opinion poll after opinion poll that they would prefer the authorities to take charge of their own destiny. Unitary councils in Norwich and Exeter would save taxpayers’ money, which is important in the current climate, and they would help to deliver economic growth in the region. It is well known that cities are the drivers for economic growth in their regions, and giving both Exeter and Norwich unitary status would help them to promote the economic regeneration agenda. Importantly, doing so would create jobs for local people, not only for those who live in Norwich and Exeter but for those in the surrounding areas.
The Secretary of State is on record as saying that he wants to put town halls back in charge of local affairs, so why not in Norwich and Exeter? We acknowledge that each application must be considered on its merits, and on a case-by-case basis, but a two-tier structure makes local leadership more difficult and accountability considerably more opaque for local communities. The Conservative party used to support unitary councils, and it created a considerable number of them when it was in government before. My local authority benefited from that policy at the time. Similarly, before the general election, the Liberal Democrats said that they favoured a unitary or single-tier structure for local government. I hope that that commitment will not go the same way as their commitments on VAT and tuition fees. The Labour party can justifiably claim to be the true champion of localism, which is why we supported Norwich and Exeter becoming unitary councils when we were in government. Surely allowing local areas to control their own destiny is the basis of localism.
Amendment 3 would leave the door open for the Secretary of State to reconsider applications from Norwich and Exeter by requiring him to report within three years on whether he will entertain any further proposals for unitary status, and if so, on what basis. The Government need to be straight with the people of Norwich and Exeter about the future of their cities. Are the Government rejecting applications for unitary status for the time being, or will they never allow Norwich and Exeter to run their own affairs as unitary authorities under any circumstances? Singling out Norwich and Exeter in such a way is grossly unfair, and the amendment maintains the possibility that Norwich and Exeter could become unitary councils. As I have said, the Secretary of State is on record as saying that he wants local authorities to run their own affairs in such a way. The amendment would not require the Secretary of State to invite any proposals. It would simply require him to publish the basis on which he would invite proposals. That is a very modest proposal. It would allow the people and their democratically elected representatives from Norwich and Exeter to know where they stand. As things currently lie, people have been thrown into a state of confusion.
The period of three years gives the Secretary of State time to see what happens in the interim, how local authorities are coping in the new financial environment, where savings and better services could be delivered by unitary councils and where the people in Norwich and Exeter still want unitary authorities in their areas. I believe that there is a need for clarity on this issue. There is a danger of a mixed message being delivered by the Government because part 1 of the Local Government and Public Involvement in Health Act 2007 has not been changed.
Are the Government open to creating new unitary authorities, including Norwich and Exeter or not? If so, on what basis will those decisions be made? As I have said, we need clarity on this. The people of Norwich and Exeter deserve that clarity and the amendment would provide it.
I shall speak in favour of the amendment for a number of reasons. We have heard throughout the debate that the Government are keen on localism. Indeed, at one stage, the Secretary of State was quoted as saying that his three priorities in office would be, “localism, localism, localism”. We have not had a satisfactory or convincing explanation why, in Norwich and Exeter, that principle should not apply. Why, when we have overwhelming public support in Exeter and Norwich from all the local stakeholders and business communities and, in the case of Exeter, the support of all the four political parties on the city council, including the Conservative party, for Exeter’s unitary status, does localism not apply in those two particular cases?
By withdrawing the unitary status that has at long last been granted to Exeter and Norwich after their 36-year campaign to right the wrong of the 1974 local government reorganisation, no one can argue that by giving those powers back up to the upper-tier authorities—in the case of Exeter, to Devon, and in the case of Norwich, to Norfolk— that that is localism. It is the opposite of localism. It is giving power up. It is centralising power to the bigger, more remote, less accountable authority. At no point has anyone on the Government Benches or, indeed, on the Liberal Democrat Benches tried to make a convincing or satisfactory argument about how the Bill is consistent with localism. The amendment that my hon. Friend has tabled would at least leave the door open.
The other reason why the amendment is worthy of support is that it is not clear to me whether the Bill, as drafted, would prevent only Exeter and Norwich from reapplying for unitary status or whether it applies to all local authorities in the country. It would be helpful to the Committee if, in his reply, the Minister could give absolutely clarity on that matter. We did not receive it on Second Reading. We could, for argument’s sake, imagine the situation in which there was a Conservative-controlled county council and a Conservative-controlled district council. In my experience, all the local authorities in one area being of the same party generally helps in matters of local co-operation. Let us suppose, faced with the very severe spending restrictions and savings that they are having to make over the next few years, that they think, “Come on, unitary local government in our area makes sense. We can work together. We can deliver more cost savings.”
As we all acknowledge, unitary authorities are better value for money; they are cheaper; they are more efficient. Are we really saying that the local authorities in those areas should not be allowed even to make an application or suggest to the Government that they think they can run the services in their area more cheaply, more effectively, and more efficiently if they were allowed to pursue unitary status? Is the Bill a de facto, in-principle road block to bottom-up local government, which is exactly what the Government claim they are in favour of? They are looking for localism. They are looking for bottom-upness.
I am interested in hearing an argument about value for money and particularly in such times, it is something that we are all keen to pursue. However, the right hon. Gentleman will surely recognise what the principal accounting officer argued in advice given to the then Secretary of State, which was that following that course would not represent value for money.
No, the hon. Gentleman is wrong. The principal accounting officer was saying that what was then the alternative—the boundary committee’s proposal that there would be a unitary Norfolk and a unitary Devon, a unitary Exeter and a unitary Norwich, with the rest of those counties remaining two-tier—was not the cheapest option. Of course, the most expensive option is the status quo, which I will be coming on to shortly. What the Government are ensuring is that we stick to the most expensive, most wasteful option.
Of course, the hon. Gentleman may be in favour of a unitary Norfolk or a unitary Devon but, if he knows anything about the subject, he will recall that those proposals commanded the least support. In fact, the most opposition came from within Exeter and Norwich, and also within those county areas—not least from the districts. Turkeys do not tend to vote for Christmas, as the old political saying goes. Those proposals, which would have delivered even greater savings than a unitary Norwich and a unitary Exeter, had no political support. They were a complete non-runner. They were never going to happen and that is what the accounting officer in the Department at that time was talking about.
I want to move on to savings. The Government are keen on constantly saying that they are interested in making savings—we are all interested in making savings, particularly in the current economic climate. So it seems to be complete madness to rule out—depending on what the Bill actually does—a bottom-up approach coming from either Exeter or Norwich in the next few years, which would deliver the sort of savings that the Government’s own Minister in the House of Lords, Baroness Hanham, made quite clear would be greater under unitary government.
The overall cost within two years would be just under £2 million for Exeter, but after that, the savings would be much greater every year going forward. Those savings are really significant. Are we saying that other local authorities around the country—for argument’s sake again, Conservative-controlled authorities—who want to work together and move to unitary government should not be allowed to do so? In the case of Cornwall, the Liberal Democrats are great supporters of unitary government, and the Labour Government delivered that using exactly the same arguments. Are we really saying that in this day of economic and public spending restrictions, this more affordable, more accountable and more efficient model of local government should not even be proposed by the people at the bottom? The Government are supposed to be in favour of localism and bottom-up democracy, but in the Bill, they are doing exactly the opposite.
I welcome you to the Chair, Mr Brady. It is a pleasure to serve under your chairmanship on what it is my first Bill as a Minister, and the first on which the hon. Member for Derby North has served as my shadow. I hope it will not be the last for any of us.
With respect to the arguments that have been advanced, the proposition put forward in support of the clause seems to rest on an attempt to drag out an analysis of the Government’s stance on unitary authorities generally—and I will say something about that—but it has been done in the context of a specific piece of legislation, in a way that is wholly devoid of history. Actually, the background to how we arrived at the situation we are in is rather important, as I shall demonstrate in responding to the points made by the hon. Gentleman, and by the right hon. Member for Exeter.
I will start with textual analysis of the amendments. Simply, if the amendments were made, they would allow the Secretary of State to make a replacement order, and that replacement order would have the same effect as a relevant order. A relevant order, as defined by the Bill, means
“an order implementing…a proposal received by the Secretary of State before the commencement of this Act”.
In other words, the proposals relate to Devon, Norfolk and Suffolk, and do not go any broader than that. The measure does not, in fact, achieve its purported objective of requiring the Secretary of State to publish criteria by which any future proposals for local government restructuring would be judged.
That leads me into a very short recapitulation of the background and why we are here. The purpose of the Bill is to draw a final legal line, so to speak, under the restructuring proposals for Devon, Norfolk and Suffolk. It therefore puts an end to a process that began when a Labour Secretary of State invited bids for unitary status from local authorities some years ago. All the bids, except those three, have one way or another been resolved. For reasons that I have explained, those three remain in a sort of legal limbo that now needs to be rectified. So, the Bill puts a full stop to what has been described as a torrid saga, the previous Government’s attempts to force through plans, which were unaffordable, unwanted and unwelcome, because it is not realistic to look at changes to the two cities concerned—
Chris Williamson rose—
I will just finish this phrase and then I will give way. I may be about to deal with the point that the hon. Gentleman was going to raise. It is not realistic to look at changes to the two cities concerned without looking at the impacts on the surrounding counties of which they are part, and that is why I say what I say.
The Minister said that the proposals for unitary status in Norwich and Exeter were not wanted. In reality, there was cross-party support in Norwich and Exeter, and indeed the general public there supported the authorities having control over their own destiny. Will the Minister reflect on that and withdraw the comment that unitary status in those areas was not wanted?
No, because, as I have said, one cannot look at the matter purely in the context of what happens within the boundaries of the cities, because at the moment these two cities are part of the counties. If we remove a considerable part of the population—and the tax base—from the two counties, whatever the arguments in favour from the city’s point of view, there is the potential significantly to undermine the viability of the counties that remain. Those points were well rehearsed and therefore there was considerable objection to the various formulations put forward, but I will happily go through them again.
On that point, does the Minister accept that in all the areas that I can think of, many of which are Conservative-controlled, where in former shire counties the main urban areas have acquired unitary status—Wiltshire, Swindon, Dorset, Bournemouth and Poole—those counties have been perfectly all right? In fact, they have performed better than Devon. If we look at all the performance criteria over the past few years, counties that have lost their main urban centres have performed better because they have been able to focus on their rural needs.
There is a difference in the demography of all those counties. The particular rurality of Devon, for example, is reflected in the fact that if Exeter were removed, the largest urban unit in the remaining county would be Exmouth, with a population of 37,000 people. It is well known that there are considerable extra costs—potentially—for local authorities in delivering services to overwhelmingly rural populations. Also, a considerable part of the tax or rate base would be removed, and they cannot be seen in isolation.
I just wanted to respond to the Minister’s comments on removing, as he put it, Exeter and Norwich from their respective counties. Does he accept that it would provide an economic benefit not only to Norwich and Exeter but to the surrounding counties? There is common ground between us. Cities are the economic drivers in their locality, so that would be a huge benefit to people living in the county. Furthermore, does he not also concede that in terms of the cost of providing services—I am not minimising the difficulties of delivering services in rural communities—many of the most significant challenges faced by local authorities are those challenges posed by providing services in towns and cities where there are often large deprived communities, which require significant resources from the respective local authorities. By removing Norwich and Exeter, that demand would no longer be required of the respective counties.
I do not accept the logic that the economic prospects of those two cities and their surrounding areas will be improved by artificially disaggregating them from their hinterland, particularly because the bulk of the areas offering opportunities for development in both cities lie outside the city boundaries. Neither do I accept the proposition that the pressures of delivering public services in urban areas are unique to unitary authorities. They exist in many other towns as well.
What is needed in Exeter and Devon is evolution, not revolution. The Labour amendment is the wrong approach. We must say either yes or no, and I think that, in this case, no is the best answer. It is clear that the city council and county council must work together, share offices and facilities, and cut the cost of the delivery of local government in the county and in Exeter. The right hon. Member for Exeter quoted from various opinion polls, but I can cite another from Exeter in which, of the respondents to a question asking whether the cost of forming a new city council would be a good use of money or resources, 22% agreed, 59% disagreed and 19% had no view. The results of a poll depend on how and to whom the questions are asked. It is right to proceed and to get the local authorities to work together.
My final point is that, if things continue in the same way for two or three years, the offices will end up working against each other rather than together.
If what the hon. Member for Tiverton and Honiton says is correct, why did the Conservative party in Exeter support the Exeter unitary bid? Its leader was very brave in withstanding the pressure that she was put under by the Conservative party nationally. Was she wrong?
I will deal with the intervention of my hon. Friend the Member for Tiverton and Honiton first. He represents the hinterland of Exeter in the county of Devon, and makes two cogent points. First, as we all know, consultations and responses to them produce varying results. It is not realistic, sensible or in the interest of good local government arbitrarily to disaggregate the impact on the services of the county from what happens within the city boundaries. In that context, the most recent consultation took place between last December and January 2010, and more than half of the respondents from Norfolk and 85% of those from Devon did not want any change. It depends which figures one looks at, so I do not think that bandying particular polls about advances the argument.
I know that the right hon. Gentleman is keen to speak, but I would appreciate it if he could be patient for a moment so that I can finish my point. My hon. Friend also raised the important issue of shared services and the way in which joint working between local authorities can deliver better value for money and more effective and more economic service delivery without becoming obsessed with structural issues and change. I will return to that later, but my hon. Friend is right to highlight it.
I am sure that the Minister would not want a factual inaccuracy to go on the record, but the consultation he mentioned relates to the boundary committee’s proposal for a unitary Devon, to which there was massive opposition, as was the case with the proposal for a unitary Norfolk. That was not the consultation on the proposal for a unitary Exeter, which, as the Minister’s own party in Exeter is well aware, commands overwhelming support in the city.
I am grateful to the right hon. Gentleman for putting the record right. I will not argue with him, but he leads me neatly to my next point. As I said before this flurry of helpful interventions, when the previous Labour Government sought proposals, they published criteria by which they were to be judged and stated that they would not be accepted unless they met all the criteria. The then Secretaries of State—the right hon. Gentleman’s right hon. Friends—judged that the unitary proposals in Exeter and Norwich did not meet the financial criteria and that the Norwich proposal did not meet the value for money criteria. That is why the proposals were rejected.
The boundary committee was asked to advise on alternative formulations and it proposed county-wide unitaries, to which there was considerable objection. The previous Government concluded that they did not want to proceed with those either. The then Secretary of State, in trying to find a politically convenient solution, ignored the advice of his officials and the opinion of the independent boundary committee and pushed through proposals for Exeter and Norwich that did not meet his Government’s criteria. That is why this Bill is needed. At the end of the day, he suddenly invented exceptional reasons that had not previously been articulated for departing from the criteria. As a West Ham supporter, I am conscious of what it is like to be robbed by a last-minute goal when all seems well, but even though it seemed like it, nobody actually moved the goalposts at Arsenal last Saturday. The then Secretary of State moved the goalposts without proper consultation, which is why his proposals were ultimately struck down by the High Court. That is the background to this Committee.
I would like to respond to the Minister’s comment about moving the goalposts. Does he not concede that his party has shifted the goalposts significantly from the last time it was in government, when it created huge numbers of unitary councils up and down the country? As I have pointed out, my authority of Derby benefited from that. If anybody is moving the goalposts, surely it is the Minister and the current Administration.
I do not agree for one moment. I will come to our broad philosophical view shortly.
“He alerted no one, and none were able to address the principle of changing the role of the criteria or his two specific reasons for now allowing a proposal to proceed despite not meeting all of the criteria. On the face of it, it appears that something has gone very wrong”.
I will not take lessons on shifting the goalposts from Opposition Members, although I know that the hon. Gentleman was not here at that time and was not party to those decisions. That is the background to this Bill and it explains why the amendments would not achieve the objective that has been set out.
I have been asked about our views on restructuring. My right hon. Friend, the Secretary of State has made clear his stance that it is common sense that through closer collaboration and more joint working, councils can not only save money, but improve the services on offer to people. That is absolutely right and councils do not have to become unitaries to do that. We do not have to spend that £40 million or so, or go through such a lengthy and disruptive process. During previous reorganisations, there was general agreement to the process of creating unitaries, but costs and disruption inevitably arise.
For the record, the Government have no plans to invite new restructuring proposals from councils. However, if the Government decided that it was necessary to invite new unitary proposals, the amendment would still not be helpful. Kicking things back for three years would not help the process one way or the other. The 2007 structure, with the ability of the Secretary of State to invite proposals from local authorities, remains in place. Putting in an artificial three-year limit would not change the situation. There is nothing in the Bill that would stop the Government from inviting proposals for new unitaries if that was deemed helpful for local government. Nothing in the Bill would preclude Norwich, Exeter or anywhere else from putting forward proposals if that occurred. We are not closing the door, but, equally, we are making it clear that we do not have such plans, because, frankly, we do not think that structural reorganisation is a priority at the current time. In the current economic climate, the priority has to be the efficient and cost-effective delivery of local services to people in the relevant areas, which can just as readily be delivered through joint working. There are some excellent examples of joint working in the counties that we are talking about.
If structural reorganisation is not a good thing, why are we seeing such major structural reorganisations of health and education. Such reorganisations directly affect local government, so why is there no consistency across the whole patch?
I would have thought that the hon. Gentleman would welcome the greater involvement that local authorities will have in the provision of public health services as a result of the Government’s proposals, which are entirely consistent with our policies of localism and handing back power to communities. The palpable difference is that here the joint working is by sovereign local authorities working together, rather than being forced together into unnatural units. That is why there are many examples of this.
There is good collaboration between districts in Somerset and East Devon. In three of the Devon districts there is good collaborative working on the insurance arrangements. There is a Devon procurement partnership, with which I hope Exeter will be closely involved. It is clear that the development of economic opportunities involves close collaborations. Exeter airport, for example, is outside the boundary of the city council, so it is important that surrounding districts work together. In Norfolk there is a well developed shared services agreement between all of the authorities, and I believe that a joint structure plan is in place. So there is collaboration. What we seek to do can be more effectively achieved through collaboration than through the costly upheaval of an enforced reorganisation, so I hope that the Committee will reject the amendment.
I do not want to take up a great deal more of the Committee’s time. There has been a considerable degree of inconsistency in the Minister’s remarks as he has tried to justify the Government’s position on this matter. He said that he does not want the disruption of further local government reorganisation at this time, but, as my hon. Friend the Member for Scunthorpe has pointed out, the Government are embarking on a massive reorganisation of the health service, so there is a considerable degree of inconsistency. If it is acceptable for the Government to reorganise the national health service—in their view, to make it better or more effective—why is it wrong for local government to be reorganised in some form for the same purpose, particularly when local government is faced with significant reductions in its budget?
The other interesting point is that the Minister supports a reduction in the cost of politics in this country—he supports the Bill to reduce the number of MPs, which is the underlying reason for that—yet he has rejected this proposal, which would have reduced the number of councillors in Norwich and Exeter, thereby reducing the cost of politics.
As I have already said, it is important that people in Norwich and Exeter know where they stand. I hope that hon. Members, having listened to the debate and the interventions of my hon. and right hon. Friends, will reflect on that and support my amendment.
My hon. Friend may wish to comment on the Minister’s point about the potential for collaboration and give his views on whether he thinks that this has any chance of having the same status as unitary government. In the case of Devon and Exeter, such collaboration is virtually non-existent. Exeter city council has just been deliberately excluded by the county council from the local economic partnership, which is one of the reasons that that local economic partnership has been a total shambles.
My right hon. Friend points out a significant problem with local collaboration. While I welcome local collaboration—we all want to see collaboration between authorities and between the different agencies providing public services—it is clear that if the structure is not right, it makes it extremely difficult to wring out those savings that are absolutely vital in the present climate, when all public sector organisations will see a large reduction in their budgets, and local authorities will see a reduction of 28% over the next few years with most of those cuts being front-loaded. To rule out a proposal that could wring out significant efficiencies, in a much more effective way than collaboration with other authorities in a two-tier structure could bring, is complete and utter madness. I repeat my point that I hope that Government Members will reflect on how they vote based on the remarks of Opposition Members.
Is the hon. Gentleman really saying that it is necessary to spend the £40 million on restructuring and that the savings could not be achieved through joint working?
I will come on to that point when we are considering the next amendment. The Minister is not giving all of the facts when he makes that comment. What he is ignoring—this was made clear in the impact assessment that was provided by his Department—is that while the costs of restructuring in Norwich and Exeter would be £40 million, the savings over that same period would £39.4 million. The total cost, therefore, is around £600,000. The Minister is also ignoring that there would then be ongoing savings in excess of £6 million a year. For Government Members to claim that they favour value for money and then to ignore this opportunity and the advice and information provided by their civil servants seems again, to repeat the point, to be complete and utter madness.
Talk of savings will astound council tax payers in Wiltshire, where under this process £8 million has been spent in severance payments to fewer than 40 senior council officers and where, under the flawed Act passed by the previous Government, the former interim chief executive of Wiltshire council was entitled to total remuneration in his final year in office of £500,000, even though he did not apply for the permanent position in the new council.
I am not sure that that point is entirely relevant, particularly when one considers that the hon. Gentleman’s Government have just agreed cuts in local authority funding of 28% over the next four years, which will see at least 500,000 local government workers made redundant. His argument does not stack up. He cannot argue that point on the one hand and then sign up to making wholesale massive cuts—unheard of in living memory—to local government jobs, which are far higher than occurred under Margaret Thatcher’s Conservative Administration. Whether severance pay is too high is not the point, irrespective of the level of severance pay given to some of the higher paid officers within the authority.
Before the hon. Gentleman replies, I have allowed quite a wide-ranging debate, which may help to preclude the possibility of a debate on clause stand part, but I would be grateful if Members tried to bring this to a conclusion reasonably soon.
Thank you for your guidance, Mr Brady. The point made by my right hon. Friend is pertinent, and it is important to have it on the record.
In conclusion, there is a case for some opportunity to be given for the reconsideration of this matter within a three-year period—it could be done before the end of the three years—to give some certainty to the people of Norwich and Exeter and to their respective representatives. It is not an extreme amendment in any way, shape or form; it is a reasonable amendment, which I hope any reasonable, fair-minded Member would support in the Division.