Local Democracy, Economic Development and Construction Bill [HL]

I hope that I can put the noble Lord’s mind at rest in response to his concerns. We have reached Clause 116 and there is a sort of warmth creeping around the Committee. We are not now accused of doing damage, so there is a conditional welcome. Terrific. MMAs are voluntary. They are shared agreements between groups of local authorities and partners to deliver improvement targets—I shall come to that point in a minute—particularly in relation to economic development. They help to increase the co-ordination of policies that have an impact on growth at a level that reflects the boundaries of the local economy. The noble Lord asked the bold but necessary question: why do we need Part 7 at all? Why are we thinking about changing the system that has only just been set up? The Committee knows that MAAs have certainly proved increasingly popular among local authorities as a tool for improving economic prosperity. In July last year, we signed the first wave of MAAs with local authorities in seven sub-regional partnerships. Three further MAAs were signed last month. There are seven other local partnerships actively developing an MAA and one or two others considering the potential for one. I took the trouble to look at the sort of flexibilities and freedoms that the MAAs are beginning to negotiate, particularly in the light of what my noble friend said last week about the slow progress. I was struck by the commitment that local authorities are putting into multi-area agreements and the complexities that are clearly inherent in any system that seeks to achieve a better deal on flexibility for a local area. Whether we are talking about skills, employment, investment or any policy that can make a difference on the ground, it is a serious process. I understand a little more than I did last week about why it is a complex process and why it is slightly slower than we had hoped, but it is heartening to see all the work that is going into it. I want to try to convince the noble Lord, Lord Greaves, on this point. In bringing forward this legislation, we are responding to the wishes of MAAs. We are not creating statutory MAAs; they will remain voluntary. The majority of existing MAA partnerships has told us that agreements would have greater weight if they were put on a statutory footing similar to that of local area agreements. They are voluntary agreements with certain statutory powers, in particular, to make partnerships. This message came out clearly in responses to our consultation paper on the SNR last year. For example, the Association of Greater Manchester Authorities suggested that, once signed, MAAs should have the same status as LAAs and other partnerships, such as Tyne and Wear, said that a duty to co-operate should apply to MAAs. Consultees argued that doing this would strengthen local collaboration and bind partners more firmly into an agreed set of actions. Local authorities want that extra facility to ensure that partners place greater store on achieving those targets and on the contribution they are making to that end. Essentially, the partnerships are looking for one thing: they should have a duty to co-operate in developing targets to be set out in the agreement and to have regard to them in exercising their functions. MAAs want to be more effective. That is how they see the greater effectiveness coming. They see that as a way of securing a higher level of commitment from local partners to the targets set out in the agreement, and Part 7 delivers that. MAAs are intended to complement rather than replace the existing model for MAAs. There is no requirement on any MMA to take that road. It is entirely up to local people to decide the right thing to do. It gives them a further bit of engine power to bring their partners on board as a statutory requirement. Part 7 therefore brings forward legislation that allows local authorities to establish an MAA with statutory duties, to be referred to as MAAs with duties, to provide local authorities and partners to be placed under a duty to co-operate in developing the MAA and to have regard to the targets within the MAA that relate to their functions. I shall come to specific points, but in relation to the targets themselves, we must remember that this is in the context of having a bonfire of targets, which are being reduced from more than 1,200 to 198. With reference to improvement targets, I seem to remember a Methodist hymn that we used to sing about getting better every day in every way. It would be foolish to abandon the principle of the objective of constant improvement. Indeed, as socialists we believe in the perfectibility of human beings, so we could hardly move away from an improvement target. We can always get better in everything we do. Amendments 199 and 200 seek clarification on targets, and I can assure the noble Lord that Clause 125 does not specify that each local and partner authority must have regard to every target in the agreement—that would be over the top—but that they must have regard to every improvement target that relates to that body in the agreement. We have simply followed the wording of the 2007 Act. With that explanation, I hope that the Committee will understand why I cannot accept Amendments 197B, 197C and 198G, which remove the reference to targets. I hope that it is equally clear that we must resist Amendments 198J and 198K, which would remove the duty to co-operate: the very duty that local authorities are seeking. Let me also reassure the Committee that the decision to proceed with an MAA with duties would come from the local authorities within the area concerned. The Government cannot direct local authorities to go down that route without a proposal from them; it is their decision. In addition, these provisions do not allow the Secretary of State to impose an ongoing duty to co-operate in respect of an MAA. Any agreement would need to specify the period for which it would apply. They also provide flexibility by allowing partners to submit proposals to the Secretary of State for revising any agreement, including changes to improvement targets set out in the agreement. We are not providing any restrictions on the area that could be covered by an MAA. This means that no area would automatically be precluded from entering an agreement, although we would expect any chosen area to reflect a functional economic area. Given that the intention behind this legislation is to bring MAAs on to the same statutory footing—I use that in the limited sense in which I have been describing these extra powers—it is only logical that the legislation broadly follows the provisions for LAAs as set out in Part 5 of the Local Government and Public Involvement in Health Act 2007. There is one crucial difference, however, because, unlike the LAAs, the Secretary of State will not have the power to direct that a draft MAA be prepared unless a proposal has been received from a group of local authorities that wish to work together in this way. Therefore, the MAA with duties remains voluntary at inception. Why does the Secretary of State need a power to direct at all? It is simply a formal mechanism. It provides the trigger for the duty for local authorities and partners to co-operate: the duty that local authorities have asked us for. The alternative would in fact be more burdensome. If we were to impose an undefined, open-ended duty to co-operate, it would weigh far heavier on authorities and their partners. With that explanation, I hope that the questions raised in Amendments 198B, 198C, 198E, 198H and 198F are satisfied. Amendment 198A relates to consultation. The amendment would require the Secretary of State to consult all local authorities for the areas covered by the MAA in question before making an order changing the list of partner authorities. The amendment is not necessary because consultation with all local authorities via their representatives is already assured, in Clause 122, and the Secretary of State can consult individual authorities or groups of authorities as appropriate. Given the linkages with the list of LAA partners, it is likely that any changes to the lists of partner authorities for both MAAs and LAAs would be made in unison, and it is appropriate that the consultation requirements are the same. I need to deal specifically with Amendment 197D, which would remove economic prosperity boards and combined authorities established under Part 6 from the list of local authorities set out in Clause 117. We have included EPBs and combined authorities on this list because both bodies will, in our opinion, be potentially important complementary mechanisms for delivering sub-regional collaboration among the constituent local authorities. MAAs and EPBs are different in form and function. MAAs articulate shared commitments between local and central government to delivering shared ambitions in the form of local and sub-regional targets. While the local authorities concerned may create governance arrangements—the noble Lord, Lord Smith, talked about his joint committees, for example—to support the delivery of targets, MAAs are not legal entities in themselves; they are not corporate or legal bodies and they cannot therefore employ staff or hold budgets. Local authorities already negotiate through MAAs flexible arrangements, protocols and agreements with Whitehall departments for the delivery of certain objectives—on the delivery of skills training or worklessness programmes, for example—but MAAs are not a mechanism for establishing robust sub-regional delivery arrangements, and there is a limit to what they will be able to achieve. It may well be that the evolving MAAs will continue to be the preferred choice for many areas, but, as I said, some groups of authorities may look positively for a more powerful arrangement for sub-regional working through an economic prosperity board. It is perfectly possible for an EPB to coexist with an MAA: the former providing a strong governance arrangement, while the latter articulates the targets for the area. In some instances, the EPB and the MAA could agree that the EPB as the delivery body would take over the delivery of some or all MAA targets. But whatever the relationship might be, the EPB could be a significant tool for the local authorities for delivering their ambitions as a whole. That is why it is included in Clause 117. Amendment 198D would require that local authorities requesting the Secretary of State to give a direction for the preparation and submission of a draft MAA should include all local authorities for the proposed area, including non-unitary district councils. That is not in Clause 119. I have confirmed my willingness to consider again the role of district councils in agreeing an EPB scheme that covers their area where the whole county is covered. District council involvement in MAAs is very different from the question of EPBs for the important reason that MAAs will be time-limited voluntary agreements to deliver targets, while EPBs will be corporate bodies with specific functions. EPBs have wider and more long-term implications for the economic development functions of a district council. Clause 119 is drafted in this way to prevent the situation in which one district council in a large, complex two-tier area prevents the other local authorities in the area proceeding to an MAA. While there may be situations in which a non-unitary district council does not wish to be party to an agreement and to any targets set out in it, we do not believe that that should prevent other local authorities within the sub-region working together to deliver agreed targets. In such a scenario, we believe that the MAA covering the proposed area should proceed but that the district council concerned should not be bound by any targets to which it has not agreed. That is absolutely right and proper. The provisions achieve that. They require each district to be consulted in the formulation of the agreement but to be bound only by the targets to which it signs up. That is fair and logical in terms of what the MAA will be trying to do. That said, it is clear that the views of other local authorities in the area will be relevant factors in the Secretary of State’s decision whether to issue a direction. If one or more district councils in an area voiced strong opposition to an agreement, it would clearly be material to the consideration of any such request for a Secretary of State direction, particularly if such an area were key to the delivery of the ambitions for the functional economic area. Were this amendment to succeed, if a district council decided to exclude itself from the request to the Secretary of State, it could in effect block the rest of the authorities in the area from taking advantage and going forward as they would want to into an MAA with duties. A possible alternative might be to redefine the area of the MAA to exclude the area of the district council, but in many cases that would not be workable and would have a negative impact on the ability of the agreement to deliver, especially if there were a hole in the middle of the economic area. I hope that my assurances have addressed the noble Lord’s concerns and that he understands why the amendment is not necessary. I am getting towards the end. I think that Amendment 201 may be the final amendment. It would allow any local authority to withdraw from an MAA at any time as part of any revision proposal. I understand that noble Lords are concerned that local authorities may find themselves tied into commitments that they no longer feel able to achieve. However, this amendment is not appropriate. MAAs with duties are responding to a desire for a more robust and sustainable partnership to achieve shared objectives. If local authorities that had signed up were able to walk away from an MAA, that could undermine its stability and purpose. I return to the point that MAAs are time-limited agreements, typically for three to five years, so local authorities would not be signing up for indefinite, intolerable commitments. MAA targets are voluntary at the outset for all local authorities. The Bill allows an MAA to be revised with the Secretary of State’s approval. Such a revision proposal could include changes to improvement targets specified in an agreement and the removal of targets, but that would be a proper adjustment, whereas giving local authorities the freedom simply to walk away from obligations that they have entered into is different. That is why I think the Bill is right in this respect. I hope I have addressed all the amendments. I shall have to read Hansard tomorrow to make sure. If I have not, I will do so in writing.