Local Democracy, Economic Development and Construction Bill [HL]

That the Bill be read a second time. My Lords, I am delighted to introduce the Bill to the House. Noble Lords will know that this debate is taking place at a time of great economic upheaval, global in its origin but with a huge impact on local communities across Britain. The Government are committed to doing all we can to help people through these tough times and to prepare the way for better times. The Bill is part of that response. As the Government continue to lead nationally and internationally with partners to address global economic problems, we will, through the Bill, strengthen the capacity of local government and its partners to drive recovery where it really counts—at local level. When tough choices have to be made, there is always the temptation to shy away from local discretion and flexibility. That would be the wrong response. Across our communities, people are facing uncertain circumstances, particularly in housing and jobs. In that situation, it becomes even more imperative that people feel they can influence what happens to them and know that opportunities will open up for better choices in the future. The Bill is about just that. It provides a new duty for local government to engage and inform the community about the work it does. That will help to raise its reputation as well as improving working relationships; it will help to build stronger, more resilient partnerships at local and regional level; and it will give local people, no matter where they live, a louder voice that must be listened to. This is the next step in a journey that has been going on for some time to pass power down to local government and to increase the visibility and accountability of local councils as well as their scope to develop innovative local solutions. I do not apologise for the fact that this is work in progress because we have tested each step as we have taken it. The Bill will build on what already works. The Local Government and Public Involvement in Health Act 2007 established new rights of involvement for local people and arrangements for local authorities to work with partners on local area agreements, setting out priorities for each area. I am delighted to say that the local area agreements, the LAAs, have proved to be one of the most successful innovations in local government for many years. They set out clearly how local government, with partners, will take the next steps in the improvement of public services through greater co-ordination at local level, whether that is well-being in old age, the environment or reducing teenage pregnancies. We have enshrined the principle of devolution in the Central-Local Concordat agreed with local government. We needed to go further, however, so in June this year we published the White Paper, Communities in Control: Real People, Real Power. It set out a range of measures, based on research, extensive consultation and above all listening hard to people, that aimed to transfer greater power from government to citizens and communities, providing a stronger role for local authorities. What do we know? For a start, we know from Jane Roberts’s work as head of the Councillors Commission that people are confused about the role of councillors and local government and its partners as a whole, and that this lack of information and public awareness is a major barrier to participation and engagement in all forms of public service. On the economic side, we have responded to the desire of many of our cities and towns to expand their powers to act collectively to bring in the skills, jobs and investment that they need. Over the past year, we have consulted extensively on what sort of framework and powers are needed at different levels in order to help drive economic development. We have listened to what local government has told us and produced a final package that I am pleased to say has been welcomed by the local government community. The Bill is based on a set of values underpinned by robust research, extensive consultation, sound evidence, good practice and the voices of people who know what it takes to improve and take advantage of the natural resources in the local community. It reflects fairness and balance—the two go together. It reflects fairness because we want every community to have the same access to information and influence, to ensure that partners work together as well as possible and that scrutiny, for example, is as effective as possible. This includes fairness for the voices of those who are sometimes drowned out, such as tenants. It includes fairness for local government, too, in its dealings with regions as well as localities. The Bill is also about balance, achieving the right balance between what is done at regional, sub-regional and local levels. It promotes the right balance between giving local government new responsibilities and providing it with new opportunities, powers and freedoms to influence local economies through multi-area agreements, for example, or the new economic prosperity boards. The Bill is also about providing more power for elected leaders and more accountability down to local citizens and communities. Turning to the themes of the Bill, the first part addresses the key issue of ensuring that people are more aware of what their council and other main public bodies do and how they can get involved to influence decisions. The Bill will bring into law Jane Roberts’s main recommendation for a statutory duty on all principal authorities proactively to disseminate clear and accessible information on how local government works. This will include what councils and councillors do and how to become a councillor, with the aim of facilitating more civic participation. To speak frankly, we want to end the current postcode lottery whereby while some people in some areas are well informed, many are not. Southwark is an outstanding example, and, seeing the noble Lord, Lord Hanningfield on the Front Bench, I am sure that Essex is; it is usually a leader in many aspects of local government. But many people are unclear about the basic facts of council functions and responsibilities, let alone how to get involved. We want to see uplift in all the ways in which people can take part in their communities, not just in the local authority but also as a school governor, a member of an NHS foundation trust or as a magistrate. The key challenge is to make this more of a priority for local government itself. Significantly, an LGA survey of 300 council heads of communication indicated that only one in five thought that informing residents was a priority. As a corollary to that, the Bill aims to extend the ability of local people to hold local services to greater account. Building on the new councillor call for action, which will come into force in April 2009, the Bill will enable communities to call for action on their concerns and to have a say in how their area develops. Again, we are working on the basis of what we know. We know from the citizenship survey that petitions are the most popular civic activity; however, in 2007 the LGA found that fewer than a third of local authorities guaranteed a response to petitions. We have since found out that even fewer authorities make this information publicly available, and the Bill seeks to remedy this. Clauses 10 to 22 require local authorities to have a petition scheme, to publish details to guarantee responses and, in certain circumstances to take action. Councils will no longer be able to ignore petitions calling for a community hall to be handed over for management by local people, more allotment space or empty buildings to be dealt with. Councils will have to explain their actions, and if enough people sign a petition, it could trigger a debate of the full council. For the first time, citizens in England and Wales will have the ability to set the agenda and influence the issues their elected representatives discuss. We have worked closely with the LGA in developing our proposals; we intend to continue this to ensure that any guidance on petitions is informed by the sector’s view. The next step is to build stronger partnerships and local connections so we will also extend the duty to involve. In 2007, the Government introduced a duty to involve for local authorities. As part of the new local performance framework, we placed a duty on local authority partners to co-operate to agree local targets. It is right, therefore, that these partner authorities should have a duty to inform, consult and involve those interested and affected by their functions. Indeed, they welcome this. It will send a clear signal that all the partners must strive to give people across the community the opportunity to influence and challenge local policies and priorities. We have also followed other advice. The creation of a national tenant voice was one of Martin Cave’s recommendations in his review of social housing regulation, Every Tenant Matters. He recognised that, while social landlords have well established organisations in place to represent them at national level, not least in discussions with government and the new social housing regulator, tenants lacked the resources and expertise to ensure that their interests were as effectively represented. Through this Bill we will ensure that we are able properly to fund the national tenant voice and that it has a statutory relationship with the regulator. Following the logic of my argument of fairness and opportunity, the Bill also includes important measures to improve local governance and audit. Overview and scrutiny is an essential and growing part of the democratic process in holding to account those who exercise executive leadership. It is fast improving but, as the Centre for Policy and Scrutiny established, more can be done to help. Surveying local authorities extensively last year, the centre found that more must be done in tackling the capacity and perception of, and weight given to, the work of overview and scrutiny function in councils. We therefore want to ensure that joint scrutiny committees have a sufficiently broad remit to review and scrutinise issues of wider concern to the area, and that there is a designated officer in upper-tier authorities to help drive delivery of the LAA. This will help overview and scrutiny committees to use their powers effectively to drive improved outcomes; to help scrutiny members, primarily back benchers, to raise their profile and how they are perceived; and to ensure that the public can get engaged to raise issues of local concern. This Bill will also deliver on a UK Government commitment to enhance the legislative competence of the National Assembly for Wales. In the field of local government, a suite of powers was transferred to the National Assembly in the Local Government and Public Involvement in Health Act 2007, which has enabled the Welsh Assembly Government to progress their public service reform agenda with the introduction of legislation that will reform the statutory basis for service improvement and strategic planning in Wales. The framework provision in this Bill will build on that, enabling the Assembly Government to consider proposals for the governance and scrutiny of Welsh local government. I turn to two separate issues, which also increase transparency and local democracy. Clause 31 provides the framework for implementing recommendations in the report of the noble Lord, Lord Sharman, on audit and accountability to give the Audit Commission in England and the Auditor-General for Wales power to appoint an auditor to certain entities connected to local authorities. Such auditors will have the power to issue reports in the public interest when it is considered necessary to do so. The provisions will give confidence that there is a robust system in place for local government which reflects the special audit and accountability arrangements which are appropriate for public funds and already implemented in central government. Moving on, the 11th report of the Committee on Standards in Public Life, Review of the Electoral Commission, published in January 2007, recommended that the Boundary Committee for England, which as noble Lords are aware is currently a statutory committee of the Electoral Commission, responsible for the upkeep of electoral arrangements for principal local authorities in England, should become an independent body separate from the Electoral Commission. We agree entirely with this. Clause 49 establishes the Boundary Committee as an independent body and Clause 55 removes responsibility for English local government boundary electoral arrangements from the Electoral Commission. I turn to the second set of issues addressed by the Bill. The strength of our national economy depends upon the viability of our regional and local economies. Our regions have different strengths and weaknesses. They need organised intelligence, investment and support if they are to make the most of their strengths and protect against their vulnerabilities, particularly at this time. The party opposite appear to have a visceral prejudice against RDAs—and I see noble Lords actually nodding—but let me just outline their achievements in recent years. RDAs have driven through real improvement—230,000 more jobs, 35,000 new businesses, the transformation of 1,000 hectares of brownfield land into employment sites, and 180,000 people put into training Over the past year, we have consulted widely with regions and local authorities about what new configurations at regional and local level might be helpful to align strategies on skills, transport, housing, planning and economic development; not more architecture, but a more effective bringing together of the things that people really need in order to thrive and flourish. Specifically, within the review of sub-national economic development and regeneration, we set out our plans for a more coherent sub-national framework for economic development as we are facing the demand not only of the new global economy but also of the unrelenting pace of technological change. A strategic role for a regional development agency and a single regional strategy is a crucial part of this. The purpose of RDAs is to bring together partners and information, to prioritise economic activity, to respond to the challenges faced by significant markets, to take long-term decisions, to co-ordinate activity, and to ensure that no area is left behind. However, they are not operating at full strength. In particular, the separation of spatial planning—including housing supply, land for employment and infrastructure provision—from economic planning is absurd. It means, for example, that too often the bus will stop before the employment site or it does not go to the most vulnerable community, new housing is built miles from the workplace or the town centre without the required infrastructure, or towns and cities attempt to pursue contradictory economic, social and environmental ambitions. The Bill will therefore bring together economic and spatial planning into a single regional strategy. It will bring real focus to the long-term analysis, diagnosis and solution of problems over 15 to 20 years. It will bring together the priorities and the economic possibilities, set out a long-term vision to enable all partners to pursue genuine agreed sustainability for the region, and draw on the five drivers of productivity and combine economic development with housing, infrastructure, skills and the natural assets of the region. That is the way to get a more effective balance between the needs of the environment, the economy and our communities. We mean all partners to be involved. To complement regional strategic planning, we need a greater capacity at local level to inform and influence the regional strategy. Local authorities—including district councils—operate at the level where the most direct impacts are felt, where economic exclusion and deprivation are most clearly recognised and where opportunities can be exploited. We listened closely to the concerns expressed during the consultation about the need for elected local authorities to be part of the process of taking decisions on such major issues as the provision of much needed new housing at the regional level. Clause 66 therefore requires local authorities to form a new body—a leaders’ board—at the regional level to work with RDAs in developing the strategy, bringing stronger democratic accountability to the process. The LGA has described this measure as a victory for local government. Leader’s boards, along with new regional select committees, will play a major part in addressing what many have regarded as a democratic deficit at the regional level in the absence of elected assemblies. The twin ““poles”” of national and local democratic oversight will combine to deliver stronger and more responsive regional working. The involvement of council leaders will ensure that vital debates about the future of our regions involve elected representatives with stature and authority. The effectiveness of the dialogue between local and regional tiers will also depend on the unique knowledge and creativity councils bring. Therefore, the Bill also strengthens the role of local authorities in promoting and delivering economic development by introducing a new statutory duty on local authorities to assess local economic conditions. No doubt I will be told that some councils do this, but not all, and not systematically. We have evidence to show that. This will ensure that councils have the necessary evidence to take decisions to strengthen their local economy and to channel resources into those activities that will produce the greatest benefits for local residents and businesses. The economic assessments will also provide valuable underpinning evidence for the regional strategy and the overall needs of the broader economy. In recent years, it has been evident, not least from the steps taken by regions themselves to make the most of their partnerships, that economic markets—this is so self-evident it hardly needs to be said—often cut across the boundaries of local authorities, and that issues such as housing, transport, and skills are often best addressed by groups of authorities working together. That is what they want to do but that link has been missing in recent years. The Bill therefore opens up new opportunities for councils to set up joint working arrangements. We are working with what works and with what local authorities want. Multi-area agreements have proved phenomenally popular with local authorities. There are now seven finalised MAAs, involving 59 local authorities, with three more being negotiated. When local authorities told us that they want MAAs to operate on the same statutory basis as LAAs, we listened. Through this legislation we will therefore allow for the voluntary creation of multi-area agreements with statutory duties. We will also legislate to enable councils, where they wish, to set up formal legal arrangements for joint working. These will be known as economic prosperity boards and will be designed to drive forward economic development across a city or sub-region. We will also allow areas that choose to do so to combine an EPB with the functions of an integrated transport authority. All those legislative changes being introduced on sub-national economic development are the result of well ventilated arguments that have taken place over the past two years, and are rooted in what local government has said that it needs. Finally, there are important provisions in the Bill to improve the operation of construction contracts. Lack of clarity about payment and any ensuing disputes can seriously impact on the successful delivery of construction projects. The 1996 construction Act, which regulates construction contracts, has generally worked well. But it has become clear, following extensive consultation with the industry over a number of years, that it is defective in certain regards. Our amendments address these weaknesses and will create greater certainty and clarity of cash flow for all in the construction supply chain. Of course, well managed and successfully delivered construction can act as a catalyst for wider economic regeneration and improve public services. Therefore, this is a very timely and salient improvement in legislation. Noble Lords will see that this is a wide-ranging Bill for good reason. The economic problems we face are unprecedented and its impact will be felt in many different ways. It gives every neighbourhood, city and region more opportunity to reach its potential and unlock the talent of its people. It helps to build strong, resilient and more powerful communities, which is more important than ever in these times where local services have to adapt to meet local circumstances and difficult local choices have to be made in the face of financial constraints. But we continue to put our trust in local government and in the intelligence and good will of communities to find their own solutions that best respond to local needs, and to shape their local destinies. I have every confidence that local authorities and individuals will continue to rise to the challenge. I beg to move.