Localism Bill

My Lords, I was very carefully not saying ““Not moved”” to any of those previous amendments. I rise to move Amendment 131D, which is grouped with Amendment 131ZP and with the question on whether Clause 73 should stand part, which is to be moved by the noble Lord, Lord Patel, which should lead to another interesting debate. Amendment 131D is a probing amendment to stimulate a discussion which follows on from the discussion we have just been having about the nature of the organisations which might end up running local services, whether they are very local services, such as looking after a pocket park, or much more substantial services, such as taking over refuse collection. In relation to ““relevant bodies””—in other words, the bodies that are challenging to take over services—my amendment would add the words: "““This section does not apply to any company or person the activities of which are carried out for profit””." It is clear that there is not an absolute distinction between profit-making and non-profit-making bodies. We have already discussed the way non-profit-making bodies might make a surplus, but for the purposes of discussion, that is fair enough. Amendment 133ZP is a belt-and-braces amendment, which would insert the same wording at the end of Clause 73. The fear about the proposed community right to challenge—and there is a lot of fear about the proposal—is that it will lead to the fragmentation, privatisation and commercialisation of a lot of council services; that, in the name of the community making the challenge and as a result of local community organisations, parish councils and whatever putting in the first challenge, the big boys will then come galloping in. The noble Lord referred to the risk of non-local bodies moving into the area. Perhaps there is a risk of local commercial organisations of a slightly cowboy variety, or, more likely, large corporate companies, coming in and taking over, all in the name of the community. The fragmentation argument is very important in relation to some services. It would be difficult in the area of refuse collection, for example, to fragment a service and have one parish council taking over its own little service; the whole question of economies of scale in refuse, recycling and so on might be lost if that happened. On the other hand, there might be circumstances in which that might work. However, there are clearly some services in which fragmentation is a problem. I am less concerned about fragmentation when it comes to truly local services; if they can be run at a local level, that is fine. Some question whether this is a backdoor to privatisation and compulsory competitive tendering of the sort that we used to have, except at least that was done on an organised basis across services and authorities and the in-house services were able to compete with outside services—some did so very successfully. The fear is that this will result in a much more anarchic kind of competitive tendering—disorganised, disruptive or perhaps unorganised—and could result in a damaging, fragmented breakdown of services. I am saying not that that is the inevitable result of this legislation but that that is the widespread fear of what it might result in. We therefore have to probe carefully to see how likely it is and what the dangers are. The Minister tells me that the figure of £156,000 is key. That is the level at which the annual cost of a service requires it to be put out to competitive tender under the procurement process under European rules. If the figure has changed since I last spoke to him then no doubt he will tell me. If a voluntary or community group challenges for a very local service and it costs less than that to run each year, does the council have a procurement process to negotiate simply with that community group for it to take over the running of the pocket park, the local playground or whatever? On the other hand, if the figure is more than that, the service will have to be put out to competitive tender, in which case the whole world will be able to come in and tender. If that happens, although there is a clause in the Bill that refers to having to stick to contract rules and so on, to what extent can the council not take the lowest tender, or not even take what appears to be the best value-for-money tender, which may also be the lowest tender, and discriminate in favour of a local community group because of the additional advantages that that would have in terms of local people getting involved in running their own local services? To what extent is that allowed and to what extent is it not? To what extent is it inevitable that if large corporate bodies put in lowest tenders—we all know about economies of scale—they will take over? What are the rules that will allow councils simply to say, ““Actually, we don’t want this to happen, so we will stop the whole process””? In his reply to the previous debate, the Minister referred to the power of stoppage—the first time that I have heard the phrase—that will be set out in regulations. I am not sure that I see where the regulations will come from but no doubt it is in one of these dozens of regulations here. This is quite a curious part of the Bill. Under the heading ““Community right to challenge””, Chapter 3 of Part 4 starts off with ““Duty to consider expression of interest””, but almost every other clause over 24 pages is about dealing with the expression of interest. There is little or nothing in this chapter about how the process of procurement will work. Before the Bill leaves this House, we need to understand what rules the councils are going to operate under when they carry out their procurement processes. Once they have started such a process, on what basis can they stop it? As I read the Bill, it is not clear what the basis is. If it is simply left to councils to start it and then stop it, one can see legal challenges happening further down the line. All those fundamental questions lie beneath the amendments. I am certainly not against contracting out in a properly planned and controlled way, nor are we as a party. However, we have to remember that the council and elected councillors are legally responsible for providing a lot of these services, and we cannot just hand over not only the operation of them but the ultimate responsibility for them, which will come back to them if things go wrong. I look forward to what the Minister has to say in response to this. These are fundamental questions, particularly about procurement. We have to get to the bottom of this before the Bill leaves this House.