Local Democracy, Economic Development and Construction Bill [HL]

My Lords, the noble Lord gave examples of that in Committee. I am saying that there is self-interest in these arrangements but one cannot generalise about localities. My argument holds that partnership working serves interests. There is a mutual interest at stake here and an EPB will be a serious undertaking. Given the changes that we have made to the Bill, it is highly unlikely that anyone could be coerced if there was not a real interest in being a part of such a partnership. On the issue of local authorities leaving EPBs—I shall try not to provoke the noble Lord again—there is a balance to be struck between allowing for flexibility and a recognition that we are trying to provide something that will serve for the long term. Difficult, long-term problems cannot easily be tackled effectively without some degree of commitment, stability and permanence, and EPBs are designed to be one of a range of options that operate at different points on this spectrum. We appreciate that significant alternatives such as MAAs will be available and it will be up to local authorities to determine whether, for their particular needs and partnerships, flexibility is, frankly, more important than having a robust governance arrangement. The noble Lord, Lord Hanningfield, discussed these kinds of issues outside the Chamber. As I have said, EPBs are designed to be stable and should be created only where there is a strong commitment to joint working and a clear economic case, so we would expect local authorities to have made every effort to resolve differences that arise between them before seeking to withdraw from the EPB. But, of course, circumstances, people and situations change, and, in some instances, local authorities may no longer feel that the economic development of an area is being well served by the EPB. Therefore, there is a process within the Bill for local authorities to leave an EPB or for an EPB to be dissolved. This process involves one or more of the local authorities conducting a new review and preparing a revised EPB-free scheme as it would obviously be important to consider how the area was going to be affected by the change and how the functions carried out by the EPB would be exercised if it no longer covered a particular area. A withdrawal would be a symptom of a major breakdown between the local authorities. In those instances, there would be a legitimate role for the Secretary of State in determining whether the proposed change to the EPB was beneficial for the area, although it is clear that if there are irreconcilable differences within an EPB it would be in the interests of the area as a whole for the boundaries to be altered or for the EPB to be dissolved altogether. So there are safeguards built in. Amendments 168A, 168D, 168G, 168Y and 168AA, tabled by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Tope, require that a number of the Secretary of State’s order-making powers in this part could be exercised only following a request from principal local authorities. For the many reasons that I have advanced already, these amendments are unnecessary, but particularly so in relation to what I am about to say. There are only four instances in which the Secretary of State will make an order under this Bill: to create an EPB or combined authority and to set out the conditions under which the body would operate; or to amend an existing EPB or combined authority. In each of those situations, the Secretary of State may exercise one or more of the specific order-making powers provided to her, depending on the circumstances. But the key point is this: no order can be made without one or more of the local authorities having first prepared and published a scheme that proposes using those powers. That restriction on the Secretary of State’s powers is contained in Clauses 96(1), 99(1), 107(1) and 110(1). They all provide that the Secretary of State must have regard to a scheme before making an order to either establish or change one of these bodies. It follows logically that without having a scheme to regard to, the Secretary of State may not exercise her order-making powers. Furthermore, the Secretary of State has no power under any circumstances to require that a scheme is prepared. So it is simply not possible for the Secretary of State to exercise any of her order-making powers in this part without one or more of the local authorities having made a request, in the form of a published scheme, that she does so. I hope that I can give the noble Lord, Lord Hanningfield, further reassurances in regard to his Amendment 168B. The amendment would require local authorities not only to consent to the scheme for a new EPB before it is submitted to the Secretary of State but also to consent to the order that is produced from that scheme before it can be laid. The amendment provides an opportunity for me to put assurances on the record. I can assure the noble Lord that the Secretary of State would make only minor deviations from the scheme when making that statutory order because she would have to have regard to the scheme. The deviations would be necessary to ensure that the EPB worked effectively. The order would not contain any more significant changes unless they were agreed by all of the local authorities involved. I hope that what I have said and the amendments that I have tabled will assure noble Lords that the bodies really are for the local authorities to choose to pursue and in no way for the Secretary of State to dictate. The noble Baroness, Lady Hamwee, raised the issue of democratic accountability and the fact that these local authority bodies are not directly elected for the task. As I have said, I believe EPBs are a helpful option, but there are various precedents for local authorities pooling functions. In previous debates I have mentioned that integrated transport authorities and joint waste authorities exist to allow local authorities to set up a single entity. I know that EPBs are, admittedly, a significant extension because they allow a greater range of functions to be pooled, but they are the same principle. As the noble Baroness said, democratic accountability is an absolutely fundamental issue. We take it very seriously and that is why we have provided in the legislation that there will be bodies that are completely controlled by the authorities concerned. They will have at least a majority of local authority members; other members will be there only because the local authorities want them and choose them; and all voting members will be councillors unless those councillors decide for themselves otherwise. The noble Lord, Lord Hanningfield, raised issues of bureaucracy with me outside the Chamber and I should like to put on the record my response to his concerns. He was concerned that this could lead to additional layers of bureaucracy. We expect and want the opposite to happen. By working closely together within a formal structure, local authorities will be able to pool and streamline their activities across the sub-region and engage more effectively. For example, local authorities could second existing economic development staff to the EPB, providing for reduced duplication of tasks. The noble Baroness, Lady Hamwee, referred to the Budget Statement today. I will not go into much detail about this, but in Committee we discussed the delegation of functions and powers, and today we have seen in the Budget Statement the announcement that Greater Manchester and the Leeds city region are indeed to become city region pilot areas. It outlined new powers that have been agreed with them and provides a process for developing new approaches to sub-regional working. All I will say is that the city region process is not the same as the process of working towards an EPB, but it illustrates that we are serious in our attempt to facilitate sub-regional working, and the EPBs would be an option as a legal personality for those local authorities if it was felt that that would facilitate those ambitions. I have laid Amendment 168AU in this group, which replicates the one that was laid by the noble Baroness, Lady Warsi, and the noble Lord, Lord Hanningfield, in Committee. It will allow the Secretary of State to issue guidance to integrated transport authorities about the process of establishing a combined authority. That is appropriate, as ITAs are one of the bodies that could initiate the creation of a combined authority under Clause 105.