Local Government and Public Involvement in Health Bill

Removing the clauses would take away a very important safeguard of the interests of new authorities and, much more importantly, the interests of council tax payers in areas being restructured. I am sure that noble Lords opposite are not prepared to see council tax payers burdened by irresponsible decisions of councils that are to be abolished through restructuring, which is what the clause attempts to prevent. We would all like to think that there would be no such councils. The idea is that everyone involved in restructuring would work together to ensure that change is smooth and efficient and that all decisions fully safeguard the position of those who will be responsible in future for delivering services and leading local communities. Like noble Lords opposite, I wish that that was achievable without having these clauses in the Bill. I agree that these clauses, which restrict what councils can do in certain circumstances, are not devolutionary, but sadly I believe they are necessary if our greater devolutionary aim of allowing councils to seek unitary structures is to enable them to deliver in full the benefits to council tax payers and service users. It would be reckless to think they were not necessary and to try to remove them, because sadly there are many examples from previous rounds of restructuring where authorities to be dissolved acted irresponsibly over assets, disposals and contracts. The clauses would safeguard against that. Their purpose is simply to ensure that councils that are to be dissolved do not dispose of valuable lands, enter into long-term contracts or apply financial reserves to reduce council tax above a limit that may be specified by the Secretary of State. All those things would have a negative effect on any new authority. These clauses do not mean that an outgoing authority has to cease business. The Secretary of State, or the other person specified in the direction as being the person to give consent, may consent to a disposal, to the authority entering into the contract or to the use of reserves. The Secretary of State may specify that consent should be sought from the new authority if, for example, it has already been established as a shadow authority. These clauses do not seek to remove the discretion of local authorities to spend a reasonable amount of reserves to reduce their budget requirement for council tax purposes or any other reason. However, allowing the Secretary of State to restrict the amount of reserves an authority includes in its calculation of its budget requirement, even for the purpose of reducing council tax, is essential to prevent the situation I described. Amendment No. 58 would open the door to a council using reserves with the following possible effects: reserves that may otherwise have been available to the new authority might no longer be available; it might artificially lower council tax in the area, making it harder for the new authority to equalise council tax across the area as a whole. Those actions potentially undermine a new authority’s financial position both in the cost of restructuring and in the future as it looks to equalise services and service provision. Lastly, an undue use of reserves in a given year places further pressure on the Government’s fiscal rules, as it adversely affects the fiscal aggregate in a given year by increasing spending but not receipts. This is not about the Government being dictatorial and restricting what authorities can do; it is about prudence and ensuring the financial viability of the new unitary authorities. Therefore, the provisions should remain part of the Bill. Amendments Nos. 59 and 60 would amend ““31 December 2006”” in Clause 27 to ““the commencement date of this Part””. That would seriously weaken the safeguards against irresponsible decisions. The inclusion of ““31 December 2006”” means that the value of disposals or any contracts entered into from that date by authorities that are to be abolished count for the purposes of the direction issued under Clause 24. Clause 24 allows the Secretary of State to require an authority that is going to be dissolved to obtain consent before it can dispose of land over £100,000, enter into certain contracts or include an amount of financial reserves when calculating its budget requirement for council tax purposes. In effect, the clause would mean that, for example, if an authority disposed of land worth £60,000 on 2 January 2007, once subject to a direction under Clause 24, if it sought to dispose of a further piece of land worth £50,000 after the date of the direction, it would need to seek consent for that further disposal because it will count: the value of both transactions is £110,000, which is over the £100,000 limit. So alteration of the date would mean that councils that are to be abolished would be free to make disposals or enter into contracts until the commencement of the provisions in Clause 24 without any subsequent consequences as to what they could do once the Bill had been implemented. That would obviously weaken the safeguards. The noble Baroness asked what would happen if a local authority entered into a contract without consent. I am told that if an outgoing local authority which was subject to a direction entered into a contract without consent, the contract would not be enforceable against the successor authority. Clause 28(2) provides for that. These are technical issues, but they provide further safeguards in what could be an unfortunate process. I think that they are necessary and I hope the noble Baroness will be able to withdraw the amendment.