Local Government and Public Involvement in Health Bill

I rise to speak to my new clause 63, which deals with the power to issue guarantees in respect of parish councils. I preface my remarks by echoing what the hon. Member for Stroud (Mr. Drew) said, as it is, indeed, welcome that the Government recognise the value of parish councils. I was lucky enough a little while ago to secure an Adjournment debate on the subject of parish councils and the Minister for Local Government replied to it, making clear his personal support for them. It was perhaps one of our more discursive Adjournment debates, lasting several hours, and it provided a very good opportunity to discuss the powers of parish councils. My new clause deals with a much narrower issue. I raised the matter on 22 January on Second Reading of what is charmingly abbreviated in Hansard as the ““Local Government in Health”” Bill. I hope that we are talking about local government in health rather than otherwise. I raised a point that had been brought to my attention by the Somerset Association of Local Councils about the power to issue a guarantee. The Secretary of State, responding to my intervention said:"““The hon. Gentleman makes a valid point that we are actively considering with local parishes. We are seeking to find a way forward, but I shall certainly correspond with him to see whether we can address the problem.””—[Official Report, 22 January 2007; Vol. 455, c. 1151.]" I was rather pleased with that reply, as it sounded as if there was a possibility of making progress, but I have to say—I am not being overly critical of the Department—that I have not received any such correspondence from the Secretary of State or other Ministers since. According to my interlocutors in local councils, nor are the National Association of Local Councils or the Society of Local Council Clerks aware of having had such discussions since that intervention as we had hoped might take place on this specific issue. I looked into the matter in more depth subsequently and noticed that a similar issue was discussed—though not in the same terms—in relation to local government legislation in the other place on 16 July 2003. Lord Hanningfield—not in my party, but a man I well know as leader of the Conservative group on the Association of County Councils when I was the leader of the Liberal Democrat group—raised a broadly similar issue in that debate. He was told in due course by the Minister that the matter was under review, and that active discussions would take place to find a solution. I am not waiting with bated breath for a response from the Government. I want briefly to say what new clause 63 is about. There is an anomaly at the moment, in that principal councils—however defined, as the hon. Member for Stroud said—have the power to enter into a guarantee. They may do so under the terms of the Local Government Act 2000 and their power to promote well-being. Clause 57 of the Bill provides parish councils with the power to promote well-being, but restricts that to quality councils, as defined by the Minister, rather than extending it to all parish councils. I am a little surprised that the hon. Member for Poole (Mr. Syms) did not mention his own amendments in this group. I had expected him at least to refer to them, so that I would be able to support them. Those proposals would extend the power to promote well-being to all parish councils, rather than just to the chosen few that have passed the test applied by the Secretary of State. The absence of such a measure creates a difficulty. If a parish council did not have the power to promote well-being, on which it would rely in order to enter into a guarantee, it would become subject to the court judgments made in respect of guarantees made before the 2000 Act, particularly London borough of Sutton v. Morgan Grenfell, which was based on the Credit Suisse case against Allerdale borough council in 1994. Both cases found that a guarantee given by a local authority was unenforceable in the absence of the power given in the 2000 Act. That is why I have tabled my new clause. Without the power to issue a guarantee, a parish council cannot participate in the joint arrangements that now often involve a company that is limited by guarantee. It cannot be a full participatory member of such arrangements. Parish councils take many forms in this country, ranging from the very small ones with small budgets, which are unlikely to enter into such agreements, to the substantial town councils or even city councils. I can think of two examples in Somerset: Frome town council is a substantial council with considerable assets and a reasonable-sized budget, and Wells city council, which has all the trappings of city government but is still a parish council because Wells is a very small city in the context of this country. They are unable to enter into the kind of arrangements that other councils have. My new clause would do three things in respect of the ability to issue a guarantee. It would enable a parish council to enter into"““membership of a company incorporated under the Companies Act””," in other words, to enter into one of the associations of councils—perhaps a regeneration body, or a citizens advice bureau consortium or other non-governmental organisation consortium—that are now often incorporated as companies limited by guarantee. It would enable it to do that as an equal partner—a floating partner—which it clearly ought to be able to do if it is providing funding to the partnership or another body. The new clause would also regularise the position of associations of local authorities, removing the strange position of having an unincorporated body of corporated councils. That anomaly needs to be corrected. The third effect would be to enable parish councils to give the kind of small guarantees that are clearly in the interest of the local area. Examples include the underwriting of a small event such as the village fete, or of a body such as the cricket club or other sporting club within the parish council area. Those are small guarantees involving limited liability for the parish, but at the moment parish councils cannot legally enter into any such guarantee arrangements, because to do so would be ultra vires. In anticipating the concerns that the Minister might have about these proposals, I have also incorporated a qualification that the Secretary of State may limit the maximum sum to be guaranteed. Indeed, if the measure were accepted, I envisage different limits for different sizes of council, based either on the council’s budget or on a sum per elector in the council area. I share the possible concern of the Minister that there might be occasions on which a small council might hopelessly overreach itself in giving financial guarantees and find itself in significant difficulties. Although I trust parish councils to make appropriate financial decisions, I would have no problem with limiting those guarantees. It is now time to correct this anomaly and to ensure that all parish councils—not just those that pass the threshold test that the Minister has in mind—have the power to enter into guarantee arrangements. My colleague in local government in Somerset, Mr. Peter Lacey of the Somerset Association of Local Councils, followed his comments to me on this proposal with a personal observation, which I hope he will not mind my sharing with the House. He said:"““I do not want to retire before this quite reasonable power is given to my members.””" As I want Peter to be able to retire satisfied that he has done his bit and that I have done mine on behalf of the membership in Somerset, may I ask the Minister to accept my new clause now? If she cannot do that, I do not propose to divide the House on the issue, because it is not the sort of material on which we should be dividing the House, but will she at least give me an assurance that there will be genuine progress on the matter, and that a new clause or an amendment will be tabled in another place to correct this minor yet important anomaly for the parish councils of this country?