Cities and Local Government Devolution Bill [HL]
Lord Teverson (LD)
My Lords, I am not going to enter into the polemics of the history of devolution within England or in the United Kingdom more broadly, but I look forward to what the Bill is likely to provide for certain other areas of England. I very much welcome devolution as a principle because it is needed and is a way of empowering local communities far better than has been the case in recent history. It is a way to liberate the economies of the regions.
The first word of the title of the Bill is “Cities”. Being a rural resident and someone who works within the rural economy as well as here, I was concerned that this area might be left out and that for every metropolitan powerhouse we might have a rural poorhouse. That clearly would mean that we would have a two-speed England, which would be completely wrong and unacceptable. More importantly, it would waste the resource, energy and ability of a large proportion of our English nation. Within rural areas in England, we have half a million businesses registered, the turnover of which is something like one-third of a trillion pounds per annum. We are not talking about something distant and unimportant or something that is not vital to get right in terms of the devolution jigsaw.
Noble Lords can imagine my surprise and delight when, going through the Bill, I came across Clause 10, which states:
“The Secretary of State may by regulations make provision about … the governance arrangements of local authorities”.
That is a very wide and general statement but I understand from the noble Baroness that it is the Government’s intention that the Secretary of State will be enabled to make secondary legislation allowing individual local authorities in England to have different powers and to be able to take more control of their future. I very much welcome that.
Cornwall has been mentioned a couple of times in speeches and in meetings that we have had with the Minister, which I welcome. But this is not about only that county in the south-west, it is a matter of principle that rural local authorities should participate in this process of devolution—not at the end of the queue but as an integral part of the queue. Within that context, perhaps I may ask whether there is a specific roadmap for local authorities. I should be interested to know how many are on the Minister’s action list at the moment. Is it a long list and where are we on that?
I welcome the fact that in her opening speech, the Minister emphasised that there are differences. I do not want to get into the arguments about elected mayors in terms of metropolitan and combined authorities. However, I presume from the legislation that it will not be compulsory for individual counties or other local authorities which take additional powers to have an elected mayor. I should like clarification on that. Clearly, it will be fine if they want them but a lot of rural communities are rather different in that regard and perhaps as existing authorities it would not necessarily be appropriate or be seen by the Government as being appropriate in the same way.
I understand that local authorities should not expect to queue up and say, “We want more powers”, and be disappointed if they are not granted. Clearly, there needs to be fiscal and financial responsibility. At worst it needs to be a zero-sum game and I hope that there will be financial savings, service enhancement being the most important. I look forward very much to the Minister’s reply as regards that issue. Rural areas are important. People living there are very keen to make sure that they do not become second-class citizens within this process.
I should like to mention two other issues. I was privileged to be one of the first members of the local enterprise partnership in Cornwall and the Isles of Scilly, which is probably one of the more successful. As regards more general devolution and economic development being a key part of the rationale for combined authorities and greater devolution, it is important that the LEP jigsaw should tie in better than it does at the moment. A lot of LEP boundaries are very random. I recently chaired a Local Government Association commission for non-metropolitan area economic development. I know from LGA members that one of their concerns was that the present boundaries of LEPs did not necessarily tie up very well with the way that devolution might happen. I am interested in the Minister’s response on that.
Lastly, I emphasise a point made by my noble friend Lord Shipley: there is a real concern and risk that we move, during devolution—certainly in metropolitan areas and maybe in some rural areas as well—into, effectively, one-party areas. There were great problems with them back in the 1980s, which were then solved with very blunt instruments. I would be very disappointed if this devolution process once again ended in that same sorry state in one or two decades’ time.
The Lord Bishop of Derby
My Lords, I, too, thank the Minister for her very clear introduction to the Bill and for showing us how it can be a creative, flexible way into the future. It ticks many of the boxes that we are concerned about today: localism, devolution, inclusivity, electoral accountability and enabling growth. I will make three very short points and ask three questions of the Minister.
The first is on unevenness. We have just heard about Truro and the rural south-west; the right reverend Prelate the Bishop of Norwich lobbies me about the east of England and the very different economic, social and political contexts. The east Midlands, where I work, is complex, with cities such as Derby, Nottingham and Leicester and very rural hinterlands. There is therefore a lot of unevenness in the territory that we are trying to use to enable economic growth and prosperity. How will those very different areas use the freedom the Bill offers? As we have heard, there is also unevenness between London and other parts of the country. Finally, there is the unevenness of some opting in and others opting out. The noble Lord, Lord Prescott, gave us a very helpful picture with the football leagues—some are “non-league clubs”, in a way, such is the complexity. If there is unevenness, what priorities will the Government have to manage it, so that we do not prioritise just some areas to flourish, while others are “non-league clubs”, to use that image?
Secondly, on London and the northern powerhouse, the Minister spoke about the redistribution of power and the noble Lord, Lord Heseltine, spoke about an historic shift. This is an historic shift because local government has been about “place”, and the identity of a place that joins all kinds of people, of all kinds of cultures and economic positions, around it. The Bill proposes that local government will be not about a place, per se, but about building places into units that deliver economic growth, which is a reconfiguration of places. That may raise some interesting questions about local cultures—what will it mean to live in Hull if you are part of a great conglomeration that can deliver economic growth, but which perhaps does not have the sensitivities for that kind of local government?
There is a very interesting question about cities and the role of London. Many would argue that the process of changing our understanding of “place” is happening to nations too: that nations are less and less important as factors in the global economy and the global ecology, and that the drivers of economics are global cities and their hinterlands. There is a lot of truth in that argument. I therefore ask the Minister: with this desire to redistribute power and properly to develop economic resources across the country, how will the Government take responsibility for a partnership between London as a global centre that needs a particular level of investment and development, and the way that other parts fit around it? I do not think that it is a simple matter of distributing, but of recognising that we benefit from having a major international city, and then asking how the other bits fit around it.
My last point concerns the shift from inviting people to participate in politics by voting for their local authority, to participating in the creation of these economic growth units. This means that local government will now be carried out not just by politicians—although mayors will be elected, and I, too, wonder whether mayors will have the leadership expertise for this large task. Local government will now be the responsibility of politicians and business, which is good. Businesses will contribute to growing the local economy and the making of the place that is a viable unit for it; but how will we deliver what the Minister called “allowing the aspirations of people in the city to share in the rewards”?
There is a danger that in this new politics, you might be able to vote for a mayor but all the deals will be fixed by politicians and businesses. What about ordinary people with jobs, “less than jobs” or no jobs? How will ordinary citizens experience a redistribution of power in the economic sense? If these spaces are about economic growth, how will the Government ensure that the proper partnership between politicians and business also connects with the aspirations of ordinary people, who need jobs, better jobs and more security? If the shift is from political participation to economic participation, what will that mean for the ordinary citizen? How will the Government make sure that that interest has a say not just every five years, when people vote for the mayor, but in the way that these partnerships operate on the ground?
Baroness Wheatcroft (Con)
My Lords, it gives me great pleasure to follow the right reverend Prelate the Bishop of Derby, whose contributions are always thought provoking. I support the Bill but am delighted that it is my noble friend the Minister rather than I who has to answer his questions.
The need to rebalance the economy has been much spoken about in recent years but not just in terms of financial services versus manufacturing. Clearly, this is also a geographical issue. The Bill is a sensible step in that direction. There is no doubt that the increased concentration of wealth and power in London has been detrimental to other parts of the country, and you do not have to go very far from the capital to feel that. There are places only 25 miles from the centre of London where people cannot believe that MPs cannot keep three families on an MP’s salary.
Not so long ago local towns and cities had thriving businesses of their own. They had the sort of economic infrastructure that could support strong communities and growing new businesses, but gradually local businesses, whether grocers, department stores, dairies or local newspapers, were taken over, generally by businesses headquartered in London or the south-east. Simultaneously, Starbucks and McDonald’s have plagued our high streets. The end result is that local, professional firms, whether accountants or printers, again lost business to the big firms of accountants and printers headquartered in London.
Things have to change. We have to find a way to bring back businesses that can thrive in local communities. It seems to me that the mayor proposed in this legislation is a very important step in that direction. The mayor will be in a position to stimulate local enterprises and support movements such as the shop local day that has proved so successful in the United States and has recently been launched here. He can pioneer high street partnerships that will bring new life on to high streets and help stimulate the businesses there.
The Government envisage that the new combined authorities will be able to develop certain specific sector strengths in their areas. We know that clusters work. We have seen how the clusters of high-tech business can generate new ideas and thrive to the benefit of their communities. Now we need to find other ideas and all sorts of scientific innovations. The Bill envisages that the new combined authorities will work with universities and develop science initiatives and that sort of technical business in new areas. My noble friend the Minister referred to local enterprise partnerships in her introduction. I, too, see them as very important but I stress, as I did last week, that the quality of the local enterprise partnerships varies enormously and it will be important to bring up the lesser-performing ones to the standard of the better.
Then there is the matter of planning. Any thriving local community needs housing, as we have heard already, but the nimby tendency in this country is not to be underestimated. When we put several authorities together, there is a great danger that there will be very different views on where the housing development and indeed any other development should go. I am not entirely clear what the mayor’s role will be in ironing out that sort of conflict. I would be very interested to hear from the Minister exactly how the planning decisions will be taken in these new combined authorities.
The Bill gives the new mayors the power to raise levies and to borrow—for example, for transport. I would also be interested to hear what the Government’s attitude towards municipal bonds will be. In the current climate, there is obviously an appetite for bonds that appear to be slightly community-spirited, and they do not need to offer a hugely inflated interest rate to attract interest, although I would be very interested to know whether attitudes might change. There have been unfortunate incidences with some local authority schemes in the past but I think people have moved on and municipal bonds might be worth exploring.
When we come to devolving power from London, I would be interested to hear the latest thinking on devolving jobs. Some government jobs have moved out, but all too often when departments move it is the less important jobs that go and the higher earners tend to stay in London. I think those who did move out have generated sufficient taxi and train bills to make it imperative that they were moved back fairly quickly. If we are serious about devolving from London, we should be devolving the important jobs from the centre as well. Given the effectiveness of Skype, teleconferencing and videoconferencing, some of the objections that might have been raised in the past can presumably be dealt with more easily now.
Finally, I would just like to make a plea that the mayors who are elected follow the example of our own mayor in London, who has been a source of joy and delight to the community. This joie de vivre has obviously come from a mayor of the people—there have been festivals and fireworks and, generally, the feelgood factor. Our mayor uses bicycles and public transport. I would like to think that the new breed of mayors will not live in mansion houses or travel in limousines. Could we have mayors of the people?
Baroness Hollis of Heigham (Lab)
Yes, my Lords, if they are for the people as well.
First, I thank the Minister for an admirable speech, but I would expect nothing else of a former local government leader.
Of course I support the principle of rebalancing London’s dominance in our economy by strengthening the powers, resources and sheer political clout of the great cities of the north. It is long overdue. As the noble Baroness, Lady Wheatcroft, just said, the dominance of London within the UK is unparalleled anywhere in Europe, but the global banking crisis, London’s overheated house prices and its huge and widening economies—in which a City trader can earn more in a day than a cleaner can in a year—show how problematic and unhealthy such dominance can be.
The eight preferred core metro cities share a history, they share economies and they share, for the most part, their politics. Devolution makes sense and is good news, but I join this Second Reading to ask one other question: what about the other cities of England? London is sorted; the great northern cities are soon to be sorted; and then there are the rest of us, the mid-tier cities. Our populations and contributions to the economy equal those of the metro cities. Our productivity and potential for growth probably—almost certainly—exceed them. OECD research shows that there is proportionately higher economic growth in medium-sized cities than in either the capitals of Europe or the secondary great European cities, yet we seem politically invisible. Devolution presumes that decisions made locally are best, not that decisions are better the larger you are.
I loathe the arrogance—and I know that this view is shared by many in your Lordships’ House—of “earned autonomy”. I distrust the simple-minded alpha-male obsession with size, the Treasury’s cosy preference for dealing with a few large authorities, rather than many diverse ones, the bureaucratic dislike mentioned by the right reverend Prelate the Bishop of Derby for geographical untidiness and the instinct for one-size-fits-all uniformity. I am afraid that I also have no patience with powerful, charismatic Westminster politicians, who have never been in local government, demanding that power can be safely devolved only to other powerful politicians—that is, mayors. If your Lordships will forgive the personal note, as a former leader of my council there was nothing I could not do that the proposed mayors can do, and I could do it with the consent of the majority of my council and all their financial support. I have yet to have it established to me that the situation would be different under mayors.
The devolution debate has so far been about size: bigger is better, more productive, more efficient and more effective. I challenge that. Medium-sized cities, relatively speaking, are doing the heavy lifting. Here and on the continent, mid-tier cities outperform city regions. Of course there are gains in VFM from scaled-up connectivity, but there are also significant diseconomies: congestion, pollution, labour crowding, the high cost of housing and travel-to-work times. These can affect city region productivity, just as the difficulty of integrating services horizontally—for example, between housing and social services—the added tiers of management and the logistics of travel and communication can all affect the quality of service provision. For example, after the 1974 reorganisation, which I fought as a local councillor, education, social services, highways and planning were removed from urban authorities to their shire county—bigger was better—whereupon they had promptly to be devolved back down again, either as local offices, now without any local accountability, or as agencies, with all the confusion for the public of who was responsible for what.
My own research showed that there was no right size for local government. Every service, from community centres, which are small-size, housing, which is medium-size, and highways, which are large, to secure accommodation for severely disturbed children—the very large—has a different optimum size. The education mafia used to insist that councils had to be for at least 250,000 people to run education, but academies have shown that to be a questionable assumption. With purchasing and partnership arrangements, size matters far less. What really matters, and here I agree with the noble Lord, Lord Heseltine, is identity, distinctiveness, a sense of place and, above all, political will.
The metro cities, with their balanced and self-sustaining local economies, are great but theirs is not the only model. Mid-tier cities do not especially claim self-sufficiency; rather, their strength is in their diversity and their specialisms. Sunderland, Coventry, Doncaster and Derby have strong manufacturing economies; Plymouth, Hull, Portsmouth and Southampton are ports; York, Peterborough and Milton Keynes service their regional economies; Blackpool, Bournemouth, Southend and Bath are visitor economy cities. Many are also knowledge economies, especially Oxford and Cambridge, while Brighton and Norwich support large travel-to-work areas, with thriving digital and creative industries. Their politics are diverse with Conservative, Labour and all possible NOCs in between. Many are not only county but regional centres, often surrounded by highly rural district councils. Most, but not all, are unitary authorities, but they all drive their local economies with a reach far beyond their notional boundaries and with a huge multiplier effect.
I hope that defeating Middlesbrough in the play-off final does not mean that Norwich is in the bad graces of the Secretary of State, who is from Middlesbrough. Norwich, with its universities, theatres, cathedrals, internationally renowned science park and international airport, and as the home of the eastern regions of the BBC and ITV and of Archant newspapers, not surprisingly provides half of Norfolk’s jobs. After all, Norwich’s is the largest district council in the country and larger than at least 12 other unitary authorities. It provides the shopping, culture and recreation for three counties. However, as a district council denied unitary status by Mr Pickles, it has to service the county and lead the region—1 million people look to Norwich—on the not-very-large revenues of a rural district council. We cannot do it.
Essentially, those key cities help to rebalance the national economy by closing the productivity gap between Britain’s regions, as ResPublica has argued, precisely because they are concentrated centres with a clustering of specialist firms, including advanced manufacturing and knowledge-based industries. They offer what the EU calls smart specialisation, which it favours. They can diversify their expertise into further specialised niches and offer the UK greater resilience in the face of economic shocks.
These key cities cannot embrace the false god—the fetish—of size. Most cannot become combined authorities with adjacent rural districts without diluting their focus, flexibility, entrepreneurship, distinctiveness and identity. The cities face issues of density; rural areas, issues of sparsity. We can offer services and enter specific partnerships with our neighbours, which is good, but we cannot be amalgamated and homogenised into a sort of anywhere, thinned-out, national suburbia. If we lose our sense of place or our notion of the community to which we belong, we are all losers and no longer have local government.
If mid-tier cities are to help drive economic growth while also offering much-needed services to the neighbouring authorities—their rural neighbours—then they and we need a tailored version of the finances, powers and resources offered to the core metro cities. So what do we need? Not a series of one-off deals with the Chancellor, but more general devolved powers which we could then draw down and deploy as best suits our communities. For example, instead of having the useless government work programmes—they really are useless—councils need to run education, skills and training in conjunction with schools, local business and local FE colleges. Our chambers of commerce beg us to do it, but we cannot. In that way, the community would own them.
Secondly, we need commissioning powers for a much wider range of public services, working with the private sector and other public agencies. For example, if we were responsible for transport, we could build better transport for travel to work, limit congestion and attract people off private transport with things such as Oyster card offers and the like.
We need to bring all the publicly held land within a city into a single property board to make best use of development sites. On finance, we need five-year funds to plan transport, housing, skills and training. We need more from the business rate to fund investment in local enterprise. We want more local revenues—stamp duty, perhaps VAT and, certainly, additional bands of council tax.
I hope and believe the new Secretary of State understands this agenda. I welcome him and think he is good news. In his words,
“over-centralisation has been such a disaster for urban Britain. Over-mighty and over-extended, central government has, for decades, robbed our cities of their trump card: their ability to do things differently”.
I agree with every word of that. Local government is about that difference, which is why devolution belongs to us all. We will work with him, if he will work with us, to achieve it.
Lord Goddard of Stockport (LD)
My Lords, I rise with a sense of déjà vu from those who remember my maiden speech, where I admitted to getting lost in this Chamber, and sitting on the wrong Benches over there. I now sit over here, so I am working my way round the Chamber.
I have no embarrassment in returning to the subject of my maiden speech, which was devolution. I believe in devolution. It matters—and the Minister agrees with me on that. A long, long time ago, before the city deals, the growth funds and a lot of things that have come, when we had only the Association of Greater Manchester Authorities, we had one meeting where Sir Howard Bernstein brought in a fresh-faced young chap to talk to us about city size, productivity and globalism. That was one Jim O’Neill—now the noble Lord, Lord O’Neill. He spent an hour and a half with us and really opened the eyes of the leaders of Greater Manchester. That was a number of years ago but it was when we began to realise the importance of combined authorities and working closer together to deliver the objectives of us all: the economic regeneration of all 10 of our boroughs. That is the reason we have been at the forefront of this. It was perhaps just lucky that the noble Lord came to Greater Manchester rather than going to Hull, Cornwall or Leeds. To our good fortune, he came to us.
I welcome the inclusive nature of this legislation, which provides cities across England with the opportunity to draw down similar powers and responsibilities to those set out in the Greater Manchester devolution agreement signed in November. It is important that all parts of the UK are able to secure greater devolution to ensure that they are able to take responsibility for growth and their own reform. The 10 Greater Manchester local authorities have run for a long time and have an unrivalled history of collaboration. We had a seamless transition from a “voluntary” federation to a formally integrated governance system to a combined authority. We always believed in a bottom-up approach, evolving over time to meet the needs agenda of Greater Manchester, and also the needs of each and every borough within it. As long as the bottom-up approach carries on, I can give some succour and faith to those noble Lords who feel that the homogenisation of combined authorities is a bad thing. It is not: there is an ability to retain your identity while being part of the bigger team thinking.
However, I have two concerns regarding the Bill. One is around accountability of the elected mayor; the other is around scrutiny. I can be very quick on the elected mayor, as that argument has been had with government. In reply to the noble Lord, Lord Heseltine, I say that there was no referendum in Liverpool because the Government offered Liverpool more powers if it did not have one. In a negotiation, that is a pretty powerful argument. I think that the noble Lord did the right thing in taking more powers without the referendum. A similar thing was offered to Greater Manchester. Greater Manchester did not, in principle, want an elected mayor but the deal was that if it wanted full powers then that was the price. Looking at the full deal, the 10 leaders felt that it was a price worth paying. For the avoidance of doubt for anyone else, I say that you will get limited powers from the Chancellor. If you want full powers, the caveat is that an elected mayor is the cornerstone of that. I am afraid that that is the top and bottom of it.
In Greater Manchester, we managed to get a deal where we appointed a mayor for 18 months who will represent us until we have a full-blown election. Mind you, we still managed to nearly mess that up. It was a quite simple contest between Peter Smith—the noble Lord, Lord Smith of Leigh, who has been a leader of AGMA, the combined authority and the city deal growth fund—and Tony Lloyd, the ex-Manchester MP and police and crime commissioner. The 10 members had to pick the winner and move on. There were eight Labour members, one Liberal Democrat and one Conservative. Two and a half hours later, at 5-5, we were still locked in a room. It took the Conservative leader changing position to ensure that Tony Lloyd is now mayor of Greater Manchester. To me, that does not bode too well. If this was a company that had the business turnover of Greater Manchester, the board wanted to elect a new chairman and it was 5-5 after two hours, I think they would have to reopen the process of selection—but they did not in this case. I wish Tony Lloyd well. I have known him a number of years and he is quite a good operator, clearly. My commiserations are with the noble Lord, Lord Smith.
One or two points from the devolution Bill will give comfort to some noble Lords—such as the right reverend Prelate and the previous speaker, the noble Baroness, Lady Hollis, who spoke about homelessness—because it gives powers to borrow in respect of the combined authority functions, subject to compliance with the prudential borrowing code. It provides a combined authority with the flexibility to issue a levy or precept in respect of expenditure relating to combined authority functions, thereby providing a more secure basis for borrowing. At present, for the combined authority to take forward any arrangement which requires borrowing, one of the constituent councils has to take responsibility for that. That is unsatisfactory, administratively burdensome and inconvenient. An example is the £300 million Greater Manchester housing investment fund, which will deliver up to 15,000 new homes across Greater Manchester but is underwritten solely by Manchester City Council.
The transfer of transport powers and funding to the elected mayor are a major step forward in creating an integrated transport network that will improve connectivity and support residents to access key employment areas and the jobs that are created. The devolution of addressing skills and worklessness will ensure that service provision is delivered more efficiently and effectively to improve outcomes for residents and meet the needs of employers. There are more innovative mechanisms to invest in low-carbon infrastructure. All these details in the Bill will make real differences to people in the conurbations.
However, I would also welcome a debate around more fiscal devolution. Without more tax retained locally or more local flexibilities, it will be impossible for all parts of the country to achieve their maximum economic potential and the rebalancing of their economies. Examples could include more flexibility in the way stamp duty is applied or exploring differential rates of air passenger duty, which could have a significant impact on business growth and the development of new routes in overseas markets. We have made a start with the retention of growth on business rates. The public consultation is now taking place. I think the result of that will be that we should have full localism within a stable setting as soon as practicably possible.
I heard some noble Lords ask why we need combined authorities of such size. Size matters—and more so than ever before. Firms now need access to increasingly deep pools of human capital. When these big jobs are created, we need people close by with good transport links to get to those jobs. People of talent and ambition want to live in places with great schools, good jobs, fast transport, sport and culture. That is why our cities are now filling up again. Economic evidence shows a powerful correlation between city size and the productivity of its inhabitants. The top 600 cities in the world contain just 20% of the global population but contribute 60% of global GDP. That was the powerful thinking behind the City Growth Commission that the noble Lord, Lord O’Neill of Gatley, led with such imagination. It is the thinking behind the collaboration of the local authorities—which works.
Within 40 miles of Manchester, you have Leeds, Sheffield, Liverpool, Cheshire and—a bit further—Hull. That conurbation has in excess of 10 million people, more than Tokyo, New York or London. We must harness that talent. Yes, I will go back and see Sir Richard Leese. We have HS2 but just as important to the people of Greater Manchester is the link spoken of by the noble Lord, Lord Prescott—from Liverpool to Leeds. If that access from Liverpool to Leeds was made available as a priority, it would unleash the real northern powerhouse. I leave noble Lords with one thought. If the top 15 metros were to realise their true potential, that would generate an additional £79 billion for the UK. That is the real prize for getting this Bill right first time.
Lord Wigley (PC)
My Lords, I am delighted to follow the noble Lord, Lord Goddard of Stockport. I spent three very happy years in Manchester, at university, and follow the fortunes of that city and its football teams with much interest. To take up the theme of the auction of how many years we have been in local government, it is 43 years ago to last month that I was elected on to Merthyr Tydfil County Borough Council—but, unfortunately, it was done away with within two years by the Local Government Act 1972.
In principle, I would not oppose any Bill that brings decision-taking closer to the people and the communities impacted by those decisions. So I welcome very much this devolution in England and am glad that all parties at last are signed up to it, but in practice I have one or two reservations that this Bill is another piece of ad hoc devolution that will result in a complex patchwork of government. It could create confusion and a lack of clarity and, at worst, could frustrate efforts to achieve a coherent UK-wide solution, which we heard about at Oral Question Time today and which I suspect is widely sought.
As noble Lords may well imagine, my first issue on which I seek clarification—and I shall come back to these points in Committee—is whether this Bill applies directly or tangentially to Wales. Clause 12, the extent clause, says of course that it applies to England and Wales, but I realise that that may refer only to the jurisdiction as opposed to the geographical applicability. That wording can sometimes be misleading. In that context, I draw attention to the fact that Clause 10 specifically refers to England only, but the implication of that is that other clauses might not be restricted to England only. Are they relevant where local authorities co-operate, for example, on a cross-border basis? I think of the co-operation that is potentially going on between Cardiff and Bristol, for example, or between Merseyside and Clwyd. There needs to be clarity in those matters, and if it is a matter of having parallel powers within the National Assembly, I would be interested in knowing whether that is being facilitated.
One significant example of uncertainty is in Clause 3, which refers to the possible transfer of answerability of police commissioners to mayors by adding provisions to the Local Democracy, Economic Development and Construction Act 2009. Responsibility for police commissioners or the police in general has not been devolved to the National Assembly for Wales, but local authorities, of course, have been totally devolved to the Assembly. So there is a question of how the interplay of those two dimensions comes together. Are the powers provided by that part of the Bill deemed to be transferred or transferable to the National Assembly? If not, English cities will have more powers than the National Assembly on these matters, clearly with anomalies arising out of that. Assuming that the powers conferred by this Bill are not intended to apply to Wales, can we assume that, by implication, the National Assembly has the power enabling it if it so wishes to introduce parallel legislation in Wales in a parallel or a quite different form? That is a particularly relevant question in matters relating to the police commissioners.
Can we assume that significant powers will be devolved to Manchester and elsewhere by this Bill without the need for a referendum? I take it that that is the reading of the Bill that we have heard about today. Noble Lords will recall that in Wales we had to go through two referenda, in 1997 and 2011, to get full powers over matters such as housing, health and transport, which are being devolved today. Can we assume that we shall not be subject to further referenda in Wales relating to the devolution of powers that may come for the police and, possibly, taxation powers?
This issue touches on the question of funding. The Conservative Party strongly emphasised in the recent election campaign in Wales that meaningful devolution must entail financial responsibility and that devolved authorities must have responsibility for raising at least part of their resources as well as the responsibility as to how it is spent. The Bill before us today is very light on questions of giving the devolved authorities any new taxation powers, and it explicitly refers to the mayor as not having borrowing powers, in line 26 on page 4. So if the new responsibilities currently exercised at Westminster are to be devolved, is it the Government’s intention to amend or replace the Barnett formula with regard to funding or introduce new funding mechanisms? If so, what will be the impact of those on Wales, Scotland and Northern Ireland, or will it be handled by other legislation devolving new taxation powers? Clearly, there needs to be the ability for authorities in areas as large as Greater Manchester to have a wide degree of taxation powers if they are to get to grips with the application of the powers being given in the areas under question.
All these questions will need answers. So far, with UK devolution, development has been uneven and incoherent over recent years. The noble Lord, Lord Teverson, raised the question of how we ensure that rural England does not fall behind in the race to make sure that the city regions have the power that they clearly need. We need to see changes in the overall balance within the UK, but it has to be a balanced package between Wales, Scotland, Northern Ireland and England itself—but also within England, if the thing is to make coherent sense and to work.
Lord Moynihan (Con)
My Lords, some of us speaking in this debate will watch with interest as the Government provide metro mayors with a strong political platform while retaining firm control over the public purse, both through the direct funding of services and the level of the precept. That combination can have consequences, one of which is to allow a city or region, or more recently a country, to harness political support and immediately be ready to blame Westminster and Whitehall for failing to provide sufficient resources. In part, I believe that the noble Lord, Lord Teverson, answered this. It is key to embed the model with transparency and local accountability—devolved power, yes, but devolved accountability as well, building in transparency to the process.
We have an experienced and excellent Minister and an understanding Secretary of State in another place who—it should not go unnoticed—listened attentively to much of the debate this afternoon. The fact that four out of the 25 Bills announced in the Loyal Address sought the beginning of the biggest retransfer of power in history from Westminster and Whitehall is also significant. The challenge is to unleash the economic potential through these changes without providing financial control to the new combined authorities to run up the debts of profligate councils that some of us remember from the 1980s or benefit politically from blaming Westminster, as I have mentioned.
Key to the delivery of this Bill is the decision that some of the functions of local authorities will be able to be transferred to the relevant combined authority by order of the Communities Secretary. My speech today builds on the consensus of the right reverend Prelate the Bishop of Derby and the noble Lord, Lord Prescott, who raised a subject that noble Lords will not expect me to ignore—the vital importance of sport and recreation. My hope is that this will be one of the powers requested by the new authorities. It is my strong belief that every local authority should produce and take responsibility for a robust and comprehensive strategy for sport and physical activity to respond to local needs and, where possible, take the powers to manage this process and grasp the huge opportunities available in this context, not least politically.
We have heard of the importance of embedding pride and local ownership. One need only look at the work done and undertaken by the Mayor of London, working cross party with Kate Hoey in this context, that has managed to begin to transform sport and recreation in London. It is interesting to note that in the United States this is a really critical issue for the metro cities. The economic rationale for those cities willing to lead on sports facilities was revealed in the campaign slogan for the new stadium for the San Francisco 49ers: “Build the Stadium—Create the Jobs!”.
There is strong evidence that sports facilities can improve the local economy in four ways: first, building the facility creates construction jobs; secondly, new sports facilities provide the opportunity to generate new spending in the community, expanding local employment; thirdly, a team—if that is indeed the principal purpose of the facility—can attract tourists and companies to the host city, further increasing local spending and jobs; and, finally, all this new spending has a multiplier effect as increased local income causes still more new spending and job creation.
In addition, it is important to reflect that another important objective of the Conservative Party manifesto was to build on our Olympic and Paralympic legacy. From a study of the international cases, combined authorities with their wider representation are well placed to consider requesting oversight of sport and recreation provision to be added to the powers to be transferred for the following reasons. Sport and recreational provision and the promotion of major new facilities would best be achieved by the proposed authorities that cover the total catchment area concerned and could benefit from the municipal bonds that my noble friend Lady Wheatcroft mentioned. Sport and recreational centres could be funded by a direct transfer of Treasury funding for the area, coupled with a geographical allocation of lottery funding, which is currently biased towards London. Greater opportunities for co-financing with the private sector will also come into force. To this can be added the proposal for a precept under the 2009 Act to concentrate the attention of those living in the relevant combined authority area on facilities too big to be funded by their local council and yet beneficial, not least for the health and physical well-being of the wider population to be served by the new sport and recreation faculties.
Above all, we are, through the Conservative Party manifesto, committed to a sports legacy from the 2012 Olympic and Paralympic Games, but the reality is that the current position and organisation of the funding make for gloomy reading. More than £42 million has been axed from councils’ sport and recreation budgets since 2010, according to a major BBC survey published recently. Among the regions which saw the biggest losses was the north-west of England, which saw cuts of more than £12.3 million. Concern was expressed by athletes that cutting facilities was short-termism that could impact on communities’ health and fitness levels. Liverpool City Council closed Woolton Baths. In the West Midlands, we saw cuts of £9.6 million. The region’s only 50 metre pool—in Coventry—was among the facilities to face the axe. In other regions, Sheffield lost the Don Valley stadium, where Olympic heptathlon champion Jessica Ennis-Hill trained, while Newcastle-upon-Tyne saw the closure of its city pool in 2013.
Ultimately, if we are to reduce obesity among young people, we cannot just have clubs and volunteers doing all that work. Once a facility is lost, on the whole it is gone for ever. When you come out of recession, it is very difficult to rebuild it. Emma Boggis, chief executive of the Sport and Recreation Alliance, which has already done so much valuable work on this issue, said that she had some sympathy with local authorities given the extreme financial pressures they are under. However, she said:
“Reducing investment in sport and in leisure facilities is storing up problems for the longer term … Limiting access to leisure facilities will result in greater inactivity and bigger costs to the NHS in terms of tackling conditions like diabetes, cardiovascular disease and depression”.
I argue in closing that the main reason for this has been the fact that spending on sport and recreation by local authorities in England, unlike in Scotland, is discretionary, not compulsory. The problem is compounded because the spend is centrally controlled. As part of the manifesto commitment, coupled with the objectives of the Bill, I hope that the Government will grasp the opportunity to change this trend. The percentage of our population participating in sport continues to fall year on year, as it has every year since we won the right to host the London 2012 Olympic and Paralympic Games, despite the inspiration that the Games managed to elicit in the country as a whole.
If combined authorities, be they Greater Manchester, Essex, Cornwall or any of these authorities, focus on applying to devolve the power of spend and take oversight of sports facilities and policies, we can and should reverse this trend. That would be in the interest not just of those who wish to participate in sport and recreation but of the development of centres of excellence in the regions to raise the priority we should be attaching to the health and welfare of the nation. I hope that that participation and the development of excellence, so necessary to ensure that we improve the health of the nation and match the success of Team GB in London 2012 when we come to future Olympic Games, will inspire not just Londoners but everyone throughout the regions of England. I believe that this Bill is one step towards achieving that objective.
Lord Woolmer of Leeds (Lab)
My Lords, I shall first say a word or two about what is occasionally referred to as “Leeds”. I say this because this is not about individual cities, but groups of cities in our metropolitan areas. When noble Lords in this House and the media talk about Leeds in this context, they really mean Leeds, Bradford, Huddersfield, Halifax and Wakefield. It is a red rag to a bull for some people in those other cities and towns to be regarded as Leeds. It is a conurbation of some 2.2 million people.
Some years ago, when the Government asked local authorities to get together and form city regions, Leeds City Region was formed. It includes not only West Yorkshire but Barnsley in South Yorkshire and York, Harrogate, Skipton and Selby in North Yorkshire. That indicates the problem for the noble Lord, Lord Teverson, who is not in his place: that bringing LEPs in line with other bodies is rather difficult in some parts of the world. North Yorkshire certainly does not want to be under a Leeds mayor, if you will excuse the expression. At the moment in Tyneside, in the north-east, I believe that Northumberland and Durham are in some relationship with the Tyne authorities.
These are very substantial conurbations with enormous potential and people working together. The first time I recall them working together was under the metropolitan counties. I had the pleasure of being the leader of West Yorkshire Metropolitan County Council. The two features I remember are that, for the first time, the towns and cities of West Yorkshire met and talked with a sense of coherence. Secondly, it was the first time that the counties of North Yorkshire, West Yorkshire, South Yorkshire and Humberside met regularly. So these things have been a long time in gestation.
Although I warmly welcome the Bill because it provides the possibility of selective devolution, I bear in mind that past attempts to engage in devolution have not always been successful. The metropolitan counties were formed after a lot of discussion, inquiries and differences of views, but they were abolished fairly quickly. The regional development agencies did a very good job in Yorkshire, but they were also abolished. This is a new measure, and I hope that it has staying power.
Because it is an enabling Bill, a framework Bill, it inevitably raises questions. Usually I ask a series of questions along the way and make observations. The first is to understand how this Bill fits into government thinking on the devolution of powers and of fiscal powers certainly within England and within Wales. What is the Government’s thinking on this? They appear to be saying, “Let’s let some local authorities get together and bid for some powers, and that’ll be devolution”. If that had been said to Scotland, we would have got a rap round the ear for it. So I do not understand the thinking behind the framework for devolution in England not only of powers but of fiscal powers. You cannot have real devolution without finance. It is no good finance being controlled by the Treasury—that is not devolution—and there is no sign in the Bill that fiscal devolution is genuinely under consideration. The Treasury would no doubt be fighting like mad if it was.
That leads me to the question of what powers are actually being devolved. There have been many eloquent speeches, not least by the noble Lord, Lord Heseltine, to whom we have all owed an enormous debt over the years for always making sure that this issue was at the forefront of awareness in government. I am not entirely sure what powers are being devolved. Some powers currently held by local authorities are being taken over by a mayor or a combined authority, but not many. Critically, the Minister referred, rightly, to health and social care in Greater Manchester; that would truly be a significant step forward, but that is not being talked about for the vast majority of parts of England and Wales.
That then leads to the question of mayors and the decision on them. I happen to believe that mayors would be very helpful, and I support the idea, although I have to say that in West Yorkshire there is a lot of doubt about them. The local authorities work very well together under a leader-in-cabinet model—the five leaders of the local authorities meet and take decisions within a legal framework—and if this is about devolution to local areas, why do the Government insist that they must have mayors? Why is that devolution? There is no fiscal devolution. The authorities are being told how to run themselves from the top, so I do not really understand this.
The Chancellor has made a commitment on this. A few days ago in a private briefing with the Minister, I understood that it was not compulsory, but it appears again today that it is essential that a mayor be appointed. If it is essential, at least in a metropolitan area, what powers will they be given, for which they can judge whether the price is worth paying? Do they have to go through the process of bidding for them and getting a counterbid? If the Government are clear about what it is essential to have a mayor for and what powers would tip the balance, they should be able to say. If local authorities are left in the dark, each one will bid a different thing. If each asks a different question, they might get a different answer. That makes no sense. If the Government are clear that a mayor is essential, at least in the large metropolitan conurbations, I would like to be much clearer, certainly in Committee, about the tipping point—the critical power that the local authorities would get that led to a mayor being appointed.
I have asked in this debate, and no doubt will ask in Committee, what fiscal and borrowing powers the Government will be willing to devolve, and whether that is a serious proposition. How far do they feel that fiscal powers need to be devolved, and what will that mean for the power of these authorities? Certainly in my experience of local government, if you do not have the money or the resources, you can have all the powers in the world on paper, you can talk to everybody and persuade people—and that is not unimportant; your relationship with business and communities is critical to the success of your area—but eventually people get fed up with talking. What is the Government’s thinking? Have they set their mind against serious consideration of fiscal powers? If they are prepared to consider them, they cannot consider them in ad hoc discussions with individual authorities. It would have to be a central government decision, a parliamentary decision, on what fiscal powers are going to be devolved.
I conclude with remarks that were provoked by my good friend, my noble friend Lord Prescott, who unfortunately is not here—it is probably to my benefit that he is not behind me shouting at me. I do not think that the Minister referred to the northern powerhouse. It is the first speech from a Minister that I have heard since months before the election that did not mention it. The noble Lord, Lord Heseltine, was the first speaker today to mention it. Will the Minister say what the Government really mean by “the northern powerhouse”? What is it? Where is it? Is it from the north of Newcastle to Sheffield, from coast to coast, from Hull to Liverpool? If it is, and I suspect that it must be in reality if it is to make economic sense, it is extremely important that the individual metropolitan areas such as Greater Manchester, Leeds, which I cannot call Greater Leeds or I will be shot, West Yorkshire, South Yorkshire—these conurbations across the north of England, east to west, north to south, and these are big distances—work together.
This is not just about their getting powers but about working together. The single most important thing that central government can do for the northern powerhouse—and this also applies eventually to a Labour Government, hopefully, if there is a change of government—is to deliver not just HS2 but HS3. Those communication links are absolutely critical to the north of England. Without them, we will have created maybe big pockets, but pockets none the less, of metropolitan strength, but that will not lead to northern-powerhouse strength. That, I honestly believe, is a tremendous opportunity which this Government have at least seized as their electoral slogan. I do not mean that as a slight, because I regard it as a triumph of vision. It is very important that that goes ahead.
Baroness Pinnock (LD)
My Lords, the principle behind the Bill is to be thoroughly welcomed. Devolution to areas of England has long been an aim with cross-party support. It is even more frustrating, therefore, that this Bill as currently described is such a missed opportunity.
It is positive that the Bill enables different approaches to be developed across England, but this is completely undermined by the authoritarian demand that adopting a mayoral model is the only form of governance that is acceptable for the full range of powers on offer.
I thought it would be helpful if I analysed how the situation as currently presented would affect my own West Yorkshire. I thank the previous speaker, the noble Lord, Lord Woolmer, for raising the issues that are of particular concern to West Yorkshire, and remind him that we are talking not about Greater Leeds but about Greater Huddersfield.
I served on the board of Yorkshire Forward, which was one of the regional development agencies that had tremendous success in bringing economic development and world-class industry to Yorkshire, including bringing Siemens to Hull, which the noble Lord, Lord Prescott, mentioned. I served on that board for 10 years so can claim to have some experience of what can be achieved by people coming together with the specific aim of bringing economic development, jobs and prosperity to local people.
Yorkshire has a lot to recommend it: world-class universities and hospitals, an industrial base that includes world leaders in chemicals and engineering and, in Leeds, a financial centre of huge significance. Sadly, this is not matched by the quality of transport infrastructure, the ability to plan strategic economic development and the level of skills to meet growing demand. The latter challenges are of course linked to the lack of appropriate powers and responsibilities for the area.
Does the Government’s proposal provide the means to respond to these great challenges and open up the opportunities for growth? To expand on just one issue, connectivity has to be greatly improved if West Yorkshire is to attract inward investment. I sat for some years on the Northern Way board, which has also been mentioned today. One of the key decisions that that board made was that more important than bringing high-speed rail from London to the north was to have a trans-north link of high speed and high quality to link the two great ports of Liverpool and Hull in order to open up the economic development provided by the links, on the one side, to the American economic base and, on the other, to northern Europe. It is deeply to be regretted that HS3 has not been pushed forward as a primary objective rather than HS2.
We need greater connectivity. I have to tell noble Lords that the offer in the face of that huge challenge is totally inadequate, both in the size of the public investment required and in the strength of the democracy in the governance structures on offer. If West Yorkshire is to be enabled to meet the challenges, it will need a far greater level of resources than currently expended by Whitehall, and the means to raise the additional resources needed is ignored by the Bill. So that is a missed opportunity.
Throughout today’s discussion on devolution, the implication is somehow that these resources from Whitehall are being devolved to the city regions, or combined authorities—call them what you will. In fact, it is our money that we are getting back; it is the VAT that people in West Yorkshire spend which should be retained there, as should the business rates raised there. Let us have a think about this devolution by flipping the coin and saying, “Actually, that money is being raised in taxation from the people in that area and should be spent by them”. If we started thinking of the matter in that way, we would see it less as the wonderful Government giving us powers to spend our money and more as us saying, “Come on, this is our money that we’ve raised. We have a responsibility and a duty to spend it in our area ourselves”. That for me is the issue of finance.
The current governance proposals for these vital strategic decisions is to have a mayoral model that has already been decisively rejected in a referendum in each of the five metropolitan council areas, serving 2.2 million people, as the noble Lord, Lord Woolmer, has explained. We have to remember when we talk about city devolution that West Yorkshire has three great cities—Bradford, Leeds and Wakefield—while the West Yorkshire Combined Authority area includes another great city, York, which is not contiguous with West Yorkshire; the North Yorkshire district of Harrogate and Selby comes in between. So the proposal raises concerns about geography and having an area that is not cohesive, if nothing else.
The governance of this combined authority is also likely to be contentious. The composition of the governance of the area under the current proposals will probably establish a single-party state. The five West Yorkshire council leaders are all Labour, the leader of York is currently not Labour but the holder of that post often is and, if a mayoral model is forced upon us, that is also likely to go to Labour, judging by the results from the last election. Some noble Lords might think it would be a good idea to have all those people from the one party but we all know that that is not a healthy form of governance. We have seen examples of what happens when there is basically single-party local governance in Doncaster and Rotherham, to name but two. To have healthy governance you need strong challenge and accountability and, I am sad to say, that is not on offer in the model presented to us; the proposed scrutiny committee could also be dominated by people from the same party. I have already asked the Minister in the briefing whether it would be possible to constrain the chairs of that committee to be members of a party other than those forming the combined authority, to give it some improved accountability.
The conclusion has to be that this model of governance and offer of finance is a completely inadequate response to the demands of people in Yorkshire who are looking for bold devolution in line with that given to Scotland and Wales—perhaps even a Yorkshire Parliament. Effective devolution releases the energies and creativity of local people; what is on offer just eases the straitjacket. In the light of this analysis, I am left wondering what is motivating the Government. What is the driving force behind their desire to devolve constrained NHS budgets and increasingly poor-quality roads and rail links? As Virgil wrote 2,000 years ago:
“Timeo Danaos, et dona ferentes”—
beware of Greeks bearing gifts. Having said that, I welcome the principle that is on offer, but I urge the Government to be bolder in their scope and more democratic in their governance.
Lord Horam (Con)
My Lords, since the Bill includes some provision for local elections, before I make my brief remarks I should declare that I am an electoral commissioner, the Electoral Commission being the regulator for all elections and referenda in this country, although I am glad to say that it had nothing to do with the way in which the new mayor of Manchester emerged in some sort of puff of smoke from a back room.
That aside, I am speaking in this debate because I am a Lancastrian; I come from proud Lancashire manufacturing stock. During the Second World War, my father and his brothers and sisters—he was one of eight—made planes for the RAF near Preston, in Samlesbury and Warton. After the Second World War, he went to work for British Leyland, which unfortunately became wrapped up with British Motor Holdings and had a sad demise at the end of a long period of reconstruction. After that, a number of my family provided chemicals for the cotton industry. My noble friend the Minister mentioned Cottonopolis in her opening remarks. Perhaps she also took the journey from time to time from Manchester up to Oldham Mumps—a wonderful name—where the chimneys of all the cotton mills had their proud names written in white letters up the side. I do not know whether she remembers them: Rex, Imperator, Providence, Victorious, Cairo, Egypt. They conjure up a world when Lancashire was a supplier of cotton to the world—Cottonopolis. At that time, probably 100 ago, or at least 50, there were more millionaires in Oldham and Bradford per head of population—my noble friend Lady Eaton is nodding—than anywhere else in the country. We should not forget that rich industrial heritage.
After my youth in Lancashire I went across to be schooled in Wakefield in Yorkshire. I ought to be careful, because I am speaking after two noble Lords from Yorkshire, but I noticed that the difference between Lancashire and Yorkshire came across in the speeches today of the noble Baroness, Lady Pinnock, and the noble Lord, Lord Woolmer. People in Yorkshire are cautious. They say that Lancashire people joke about everything, while in Yorkshire they only make jokes about death and cricket. That is the sort of gut feeling I got. However, that was a welcome caution—they are right to be cautious. In Wakefield, where I went to school, there was Double TWO textiles, there were wool textiles in Bradford and there was mining—my friend’s father ran a business making pit props for the mining industry, which had the slogan, “We take the dust out of industry”. That was very much the sort of area that I was in.
After that I became the MP for Gateshead West and got to know the noble Lord, Lord Beecham, and remained a friend of his despite our different parties these days. There one could find the great engineering works such as Vickers-Armstrongs, Clarke Chapman, Swan ’oonter’s—or Swan Hunter’s, if you pronounce it that way—and others, all of it in a marvellous part of this country, which is rich in industrial history. Of course, since then it has moved on: in the north-east Nissan is doing extraordinarily well, and in Yorkshire a great financial centre in Leeds has been built up, in which we can take great pride. Yorkshire is also a great place for tourism—the Yorkshire Sculpture Park, Saltaire and places like that are excellent. I notice more and more people going up there; friends of mine go just to have a look round that great county. Then in Lancashire there is of course the BBC media centre—we are not just about “Coronation Street” but about the BBC and all that, too—the Peel Group, the science in the University of Manchester, and so on. All that shows that Manchester is humming these days.
I was able to play a little bit of a part in that, because I was a Minister for Transport a long time ago and helped to finish the Metro in Tyneside and to allow the building of the M62 between Yorkshire and Lancashire and the M60 around the northern part of Manchester. All that was quite a long time ago and it was of course all done by central government. One forgets that; I was often present in situations where the great leaders of northern cities would come down and had to beg in a humiliating way for money for their cities. I was often in the meetings where that happened and I could see that in a sense they were humiliated by that process; central government was handing out the money and they had to beg for it.
Therefore I welcome enormously the Bill. My noble friend Lord Heseltine played a great role in it, particularly with his inspirational document No Stone Unturned, which galvanised a lot of people into thinking again about that whole area; it was one of the building blocks of the Bill. I am afraid that he has a lot to answer for in the past; as a Lancastrian, I remember the Heath Government dismembering the county palatine. We lost Manchester and Liverpool, and lost Furness to Cumbria—it was a bad time. However, I am sure that he is a sinner repenting and that he has repented in spades.
I will take up one point that was raised by the noble Baroness, Lady Hollis, with whom I profoundly agree on this: the role of the medium-tier towns and cities. I know that she knows Norwich extremely well, having been in local government there, and I am glad that we have the right reverend Prelate the Bishop of Derby here, because that is another town—or is it a city? I am not quite sure—that has a proud history. As both of them said, these are often specialist cities—a particular part of industry or manufacturing is strong in their area—and they are not like the great city regions, so we need a different solution to their issues. As a matter of simple record, they have outperformed many of the city regions in this country in recent years. We should not forget that. That is not an argument against the Bill, because the Bill is saying, “Let’s have different solutions for different situations”. Indeed, one noble Lord said that we may produce a bit of a patchwork, and that is the opposite difficulty that it may have—it may go too far in having different solutions. However, it is better to have different solutions to different circumstances than to have a one-size-fits-all approach. The Government must bear in mind those great, proud citizen towns that stand outside the great metropolitan areas of our country. Therefore, there will be no Procrustean bed; that is the philosophy behind this. I wish the Bill well. Fundamentally it has support from all sides of this House and I hope that it progresses satisfactorily.
Baroness Donaghy (Lab)
My Lords, in January last year we had a debate on the local government finance settlement, in which many noble Lords here present took part. I said in my speech that,
“one of the key engines for growth in an economy is strong regional government with real powers”,
and I went on to say:
“If the Government are in doubt about this, why not try an experiment and give one of our cities the independence they had 130 years ago? Call it the Birmingham Independence Bill or ... the Newcastle Independence Bill”.—[Official Report, 9/1/14; col. 1690.]
That goes to show that you should be careful what you wish for.
I understand that northern leaders are supportive of the Bill, provided that it is enabling and permissive rather than another form of central control. I accept that they have to use whatever kit is given to them, as this is the only game in town. Only time will tell whether this is a genuine attempt to pass the powers or pass the buck. It will take place in the context of the hollowing-out of local government—a 37% reduction in 2015-16, and hundreds of thousands of lost jobs. The funding gap is forecast to increase at an average rate of £2.1 billion per year until 2019-20, when it will reach £12.4 billion. Heaven alone knows where the social care bill will come into that.
The Bill, as has been said, sets out the institutional framework within which future political deals will be made between combined authorities and central government. As the Centre for Cities organisation has pointed out, the Bill does not go into further detail on what powers that might include. Can the noble Baroness the Minister tell the House whether they will be spelt out in the regulations or through announcements in Parliament, and what areas might be covered? The Bill appears to make it clear that local public bodies, such as district councils and county councils, will cede ancillary powers only by consent. Can the Minister confirm that that is the case?
The Bill also makes it explicit that, should the constituent authorities provide their consent, the combined authority can assume the general power of competence, as outlined in the Localism Act 2011. This allows for local government to pursue any activity that is not explicitly prohibited by central government. Can the Minister indicate whether this power has ever been invoked and, if so, in what circumstances?
While I am on the subject of previous legislation, the Local Government Act 2010 called a halt to local authorities exploring unitary status to avoid the short-term costs of transition. The noble Lord, Lord Heseltine, who I am glad to see is still in his place and shows his staying power in this House, as well as in his political career, said in his report, No Stone Unturned, that the 2010 Act was now redundant and should be repealed. Some of us thought that it was redundant from its inception, but what plans do the Government have to repeal that Act?
If I understand the Bill correctly, there are provisions to avoid situations where one dissenting body of an existing combined authority could block the introduction of a mayor for the area. Under such circumstances, the Secretary of State would issue an order removing the non-consenting body from the combined authority arrangement. Presumably this non-consenting body had previously consented and had reason to change its mind. What would happen if its reason was valid, such as a corrupt or a joke mayor? What would happen if more than one previously consenting body changed its mind and became a non-consenting body? Would the combined authority have to break up all that for the price of an elected mayor?
I simply fail to understand—this has been mentioned by a number of noble Lords—the obsession with elected mayors. I accept the irony that I am neither elected nor representative, just like every Member of this House. I do not know whether it is an American thing or a bloke thing to think that somehow one person can speak with more authority and that somehow this is how leaders are born. To me, it represents push-button politics. I was disappointed to hear the noble Lord, Lord Skidelsky, advocate mayors in the debate on the Queen’s Speech last week. I can see the attraction, of course. Ministers would have to meet only one person rather than 12 worthy burghers. Better still, why travel up there at all? Let us invite these chaps—and they will be chaps—down from Manchester, Birmingham, Leeds and Newcastle to talk to us in London. The hard hat and high-vis outfit can then be kept for the general election campaigns.
The noble Lord, Lord Heseltine, is strongly in favour of elected mayors but his report favoured an enabling approach, not imposition. Will the Government reconsider this centralist approach of forcing authorities to have elected mayors, even though the local population have consistently rejected them? Could this not be permissive rather than prescriptive?
I note that the Bill states that, in the absence of the mayor or a deputy discharging their duties, the combined authority leaders will take decisions on a majority-vote basis. That sounds good to me; you can then cut out the two middlemen and save the taxpayer money. The most ludicrous bit is allowing the elected mayor to take on the role of the police and crime commissioner. Combining two useless jobs does not make a useful job.
Finally, the local government puzzle can be solved only if the following pieces are there: adequate funding, a fair formula for redistribution, the right balance between responsibilities and powers, and the right balance between local accountability and a more modern streamlined structure. This Bill will not solve that puzzle, but it may provide a welcome opportunity to move some powers out of London. I look forward to the debate in Committee.
Lord Palmer of Childs Hill (LD)
My Lords, the basic premise of this legislation is that elected mayors would be a better way to run our great cities or combined authorities. Coming as I do from the world of local government, I question the proof of that, as the noble Baroness, Lady Donaghy, has just done.
It could be said that the Chancellor does not want to deal with a local democratic structure. It has been said that the aim of region-wide elected mayors is that one person, with a high public profile, will have the final say and “carry the can” when things go wrong. Devolution is a good idea, but the Chancellor is apparently averse to lavishing large-scale devolution on local authority committees. Greater Manchester, for one, appears to have put aside local rivalries and has therefore got a £l billion devolution package, plus control of the region’s £6 billion health and social care budget. There is clearly a view that the ends justify the means. In other words: go for elected mayors, which is not necessarily a bad idea, and then you get the loot.
That is not a new concept. Coming from local government, I remember when local authorities’ diminishing housing stock was falling apart—bad windows, bad doors, bad everything, ceilings falling down and leaking water—but there was an answer. With the decent homes standard, the Government would lavish millions of pounds on those local authorities. That was very good but you had to pay the price, and the price was forming an ALMO, an arm’s-length management organisation. Many local authorities such as mine in the London Borough of Barnet did this and I became a director of Barnet Homes, an arm’s-length management organisation, because that was the only way in which we could get the loot to make the homes decent. However, it was a structure—just as this Bill is suggesting with elected mayors—in order to get the money. The money could have been given to local authorities by central government, and could have been ring-fenced if necessary, so that the local authorities could make the necessary repairs. There was no need to set up those arm’s-length management organisations, which became an industry in themselves.
In deciding whether elected mayors work, I ask colleagues to look at past results. In London we have had Ken Livingstone followed by Boris Johnson, both mayors with a high personal profile—perhaps I should correct that to a very, very high personal profile. There have been some successes but they have not in any way solved London’s housing crisis, and in fact I think that it has got worse. They have continued to preside over a gridlocked city. I was caught in a gridlock on the embankment only the other day—this is the result of what has happened. However, it must be said that the mayors have improved the bus service and Underground train service, as well as introducing, for better or for worse, congestion charges, but we still have too many vehicles challenging our environment. There is also the Oyster card. It is a good thing and I highly recommend it to any of the new conurbations, although little things are wrong, such as that visitors to our wonderful capital city cannot pay with money on buses and are currently confused by the fact that they have to go off and find something to do with shellfish. On the environment, how has London benefited? Are green spaces protected? I shall leave noble Lords to answer that. Are noxious fumes being better controlled? Here is an easy one: are our borough libraries drastically threatened? Yes, they are. One could say that cycling—one apparent positive note—has become more popular.
What I bring to the Second Reading is a London-concentric view. I know from contact with the City of London Corporation and some London boroughs that they support, as I do, the principle of devolution from Whitehall. However, this does not necessarily mean that elected mayors are the answer. London, in the form of the Greater London Authority already has such arrangements in place—as a previous speaker said, London is sorted. But in fact it must be remembered that the GLA was conceived as a strategic body and not a service deliverer. As we consider this Bill, we should not forget the principle that devolution should be made to the lowest possible level. In London, in most cases, this is the 32 London boroughs plus the City of London. Many people with long memories, like me and the noble Lord, Lord Heseltine, will know that the London boroughs are amalgamations of previous boroughs. Many, like me, look back to those halcyon days when, in the borough of Hendon, we controlled our affairs, rather than now, in the London borough of Barnet, the second largest borough in London with 320,000 people, where most services are contracted out to Capita and other companies. That is what has happened by giving powers to that particular borough.
To my mind, this is a long way from elected, all-powerful mayors for places such as Greater Manchester, which seems to be working, and other amalgamations. As a mere Londoner, it somewhat baffles me when I am shown that there is going to be a conurbation and authority with an elected mayor for the “homogenous” area of Barnsley, Doncaster, Rotherham and Sheffield, or for Durham, Gateshead, Newcastle, North Tyneside, Northumberland, South Tyneside and Sunderland, and the other areas that are listed in the papers and with which I will not bore noble Lords. I trust that, when the Minister replies, we shall hear how the currently democratically elected authorities in these groupings can restrain their rivalries, different local desires and needs when accepting control by one person, the new elected mayor.
In the further consideration of this Bill, I trust that we will examine the way in which powers might also be devolved to the city or town and another borough, or group of boroughs, as exercised through joint arrangements, not necessarily an elected mayor. I trust that we will be advised by the Minister whether or not that is something that could benefit from additional legislative provision or can be achieved using existing powers, through joint committees or other collaborative arrangements. Can we reflect on this as the Bill goes to Committee?
London is a capital city. Manchester and Birmingham are pretty large, but I do not know whether these groupings of local authorities have the same logic for an elected mayor as in London. It worries me that the fact that London has seen some success—in some people’s minds—means that other groups of towns and cities, all with great respect and pride in themselves, can be under one elected mayor.
To end on a positive note, I see a great opportunity for entrepreneurial mayors to act as ambassadors, bringing and encouraging business and enterprise to their area. That is a role that an elected mayor or leader—however one describes that person—can do. There is a need for that. But that sort of person needs extra-special skills and I am not convinced that the election of a mayor or mayors in these places would find the people who have those special skills to be ambassadors for the business world.
Baroness Eaton (Con)
My Lords, the Cities and Local Government Devolution Bill is a significant step towards the greater devolution that local government has long called for. I am sure that many councillors and former councillors present here will fully appreciate the importance of the changes brought about by the Bill. I commend the Government for this crucial legislation.
This Bill is of such importance to local government because it reflects the principle that decisions about communities and the services they rely on are best made in those communities. The Bill is the first step to giving cities and counties the freedom they need to join up services and infrastructure and the powers they need to compete globally. The LGA—I speak as one of its vice-presidents—has called the Cities and Local Government Devolution Bill a positive step, as it will give combined authorities the range of powers they need to,
“create jobs, build homes, strengthen healthy communities and protect the vulnerable”.
Many groupings of local authorities, such as the ones in West Yorkshire that I know best—the metropolitan district councils, referred to earlier, of Wakefield, Kirklees, Huddersfield and Bradford—have worked together closely for many more years than I can recall, in spite of political differences. They realise that expanding the functional scope of combined authorities will allow them to work together on a wider range of services in the interests of local residents and businesses, not just on economic development but on transport, skills and other vital public services.
The extension of the general power of competence to combined authorities is an important and needed change. The LGA’s recent report, English Devolution: Local Solutions for a Successful Nation, identified that devolution could bring £20.6 billion in potential savings. However, the benefits of devolution are not solely about financial savings. The social value of these devolution deals should also be fully recognised. Taking decisions closer to the people affected by them will improve the quality of public services and make them more responsive to the needs of the community.
This is true for all communities, not just great cities. In last year’s Autumn Statement, the Chancellor said that,
“my door is open to other cities who want to follow their cross-party lead”.
I am glad that the Chancellor listened to the representations of the LGA and the non-metropolitan commission and has opened the door to England’s counties as well. These areas account for half our country’s population and economic growth. Their economic contribution, and their potential growth, is as significant for the nation as that of the big cities. Even so, the language of devolution remains centred around cities. It would be helpful if the Minister would give an assurance that substantial devolution deals will be available to county areas. People in rural communities stand to benefit just as much from devolution as people in big cities. I hope that Ministers in this House and in the other place will commit to work with the LGA to explore how best devolution deals can be opened up to our great counties.
I have spoken in this Chamber before about the need for local areas to have not just greater decision-making powers but also greater financial freedom. The Independent Commission on Local Government Finance called for a number of changes to the local government finance system to ensure the sustainability of our public services. Clear multi-year settlements would allow for more effective long-term planning for local authorities. This has real potential to enable efficiencies and more strategic commissioning for everything from road maintenance to children’s services. Devolving powers to set rates and discounts for council tax and business rates would give flexibility to respond to the needs of local communities. The Independent Commission on Local Government Finance recommends going a step further, giving all councils the right to retain 100% of business rate growth. The LGA fully supports this proposal. These reforms would set councils on the path to greater self-sufficiency. They would give councils greater financial certainty in their futures and greater ability to plan for the long term.
Although the huge powers to be exercised by metro mayors worry many—a point reflected in the rejection of the mayoral model by electors in many areas—there is much to be positive about in the Bill. But one area where local government is seeking clarification is on the role of the Secretary of State. The Bill creates a number of new powers for the Secretary of State in order to grant the devolution of powers to combined authorities. Where the Bill gives the Secretary of State power to alter local structures or the delivery of public functions, the decision-making process must be transparent. We need clear criteria and a route for appeal and I would welcome the Minister’s clarification on that point.
As a principle, it is always best that these changes are made together with local government, and not done to it. By working together, we can make sure that changes are appropriate for the local area and at a pace at which they can be implemented. I am sure that the Government will ensure that the devolution deals are a collaborative process and treat local government as an equal partner.
Lord Snape (Lab)
My Lords, it is a pleasure to follow the noble Baroness, Lady Eaton. I hope that she will forgive me if I am not quite so enthusiastic about some aspects of the Bill as she was, but it was certainly a pleasure to listen to her. I will explain my reservations in the course of what I have to say. I apologise to the Minister for not being present at the meeting that she held last week when I understand that some of the questions I will put to her today might have been resolved. I was away all last week, so I hope that she will forgive me if some of the things that I say during the course of my speech she could have answered had I been able to make the meeting.
One issue on which I would be grateful for some further explanation from the Minister is the extent to which areas other than combined authorities can seek to obtain the powers described in the Bill. Looking at the Explanatory Notes that accompany the Bill, it appears on the one hand that these powers are reserved for combined authorities that seek to go down the road of electing a metro-wide mayor—I share the reservations voiced by the noble Baroness, Lady Eaton, about some aspects of that—yet paragraph 1 of the Explanatory Notes, says:
“The Bill takes forward a number of reforms which are intended to allow for the implementation of devolution agreements with combined authority areas and with other areas”.
Perhaps the Minister can clarify these other areas and tell us under what circumstances these other areas, not including a mayor, would be able to enter this brave new world of devolved powers.
My other question relates to timing. It would possibly be a few years before an elected mayor could be up and running and managing his own kingdom, or—out of deference to my noble friend Lady Donaghy—her own queendom. Greater Manchester is of course further down the line and much preparation has already taken place, as we heard today, from the exchange at Question Time. But the Bill is littered with order-making powers which will be made, perhaps necessarily, in a piecemeal way. Perhaps the Minister will say that that is the very essence of devolution—local solutions for local problems. But we could end up with lots of bits of legislation passing through both Houses of Parliament at various times.
I also notice that the majority of the statutory instruments that can be made under this legislation will be subject to the negative resolution procedure. We will be introducing sweeping changes in local government throughout the country with only the bare minimum of parliamentary scrutiny. I do not necessarily complain about that, but I hope that the Delegated Powers and Regulatory Reform Committee of your Lordships’ House will look carefully at what is proposed.
It would be churlish not to pay tribute to some of the intentions behind the Bill. The Minister, in an exchange earlier today, did not mention transport. In my decade or so’s membership of your Lordships’ House, I have largely confined my remarks to local government and travel and transport matters, so I am concerned. Will we see a separate Bill for transport, a Bill for delegated powers so far as local passenger train services are concerned and a separate buses Bill or, indeed, will these matters be combined? I spent some time many years ago on a passenger transport authority and more recently as chairman of a bus company, and there is a great deal of uncertainty within the bus industry about what will happen—whether there will be reregulation and what powers over bus services will be given to the mayor. The longer that that uncertainty persists, the more likely it is that investment in the industry will be held back until we see exactly what the Government’s proposals are and how power over these matters is to be devolved.
In a way, we have been down this road before. The noble Lord, Lord Heseltine, mentioned, in an unjustly self-deprecating way, his own efforts to be involved in local government reform 40 or so years ago. I have never actually forgiven him for abolishing the Bredbury and Romiley Urban District Council with his legislation all those years ago. I know that it is a long time to bear a grudge, but I wanted to get that off my chest. We formed the larger authorities at that particular time under the 1972 Act, and the metropolitan county councils as well. Again, there was a lot of sense in the formation of the metropolitan county councils. Matters such as planning and strategy ought to be devolved to a wider area such as that. They cannot be properly resolved at a purely local level. I think that the noble Lord, Lord Heseltine, had moved on when it was decided to abolish the metropolitan county councils a few years later. The cynics among us—the ex-councillors, thanks to the noble Lord, Lord Heseltine—decided that those authorities had been abolished because the Conservative Party could not win them very often. But perhaps that is with the benefit of hindsight.
Lord Heseltine
Just for the sake of accuracy, I was responsible for helping to create the metropolitan county councils in 1972, but I also got rid of them in 1992.
Lord Snape
Well in that case, I will half forgive the noble Lord.
The only major worry I have about the proposed legislation is of course the vexed question of money. When legislation such as this is greeted with such enthusiasm by the Treasury, and the Chancellor tours the country telling everyone how anxious he is to devolve all these powers, I am inclined, perhaps due to my experience as an ex-Whip in the other place, to start counting the spoons. It worries me a great deal that these powers will be devolved without the necessary financial backing to meet them. Again, at Question Time earlier today, the Minister said—if I may say so, somewhat airily—that there will be a mayoral precept. There will have to be a whacking great mayoral precept to take care of all the powers envisaged in this particular Bill.
The noble Baroness, Lady Eaton, quite rightly said that these devolved authorities should surely be able to retain the 100% business rates in their areas. But those two combined will not finance all the matters that are to be devolved. The Government have a duty and responsibility to say exactly where the money will come from. The worst of all worlds would be for some future Government to face questions either in your Lordships’ House or the other place about deficiencies in these matters in a local authority area and for the Minister to say, “That’s nothing to do with me: these matters have been devolved”, due to the Bill that we are discussing today.
I finally turn to the question of what to call these authorities. Again, my noble friend Lady Donaghy, in her very able speech, talked about the “freedom for Birmingham” Bill. One thing you could not call it in the West Midlands is Birmingham, whether greater or otherwise. The great cities of Wolverhampton and Coventry, to name but two, would have something to say about being absorbed into anything called “greater Birmingham”, let alone the boroughs of Sandwell, Dudley and Walsall, to name another three likely objectors. Of course the Minister might say that the leafy suburbs of Trafford and Sale in Greater Manchester, and perhaps my home town of Stockport, would be more prepared to vote for an elected mayor than the city of Manchester, although she will have a job persuading many of us that that is the case, if that is her argument. But while the name of Greater Manchester seems to be acceptable in the north-west, “greater Birmingham” would certainly not be acceptable to those of us in the West Midlands.
With those few provisos and reservations about the Bill, I await the more detailed legislation after your Lordships’ House and the other place have given these matters the scrutiny they want and deserve.
Lord Lyell (Con)
My Lords, it may startle my noble friend the Minister if for once I declare two interests. First, it is odd to have a Scot—I declare my interest as a member of the Institute of Chartered Accountants of Scotland—heading south of the Border to dabble his toes in devolution for the cities of England. The other interest I have to declare is my interest in sport. We heard the speech of my noble friend Lord Moynihan, who alas is temporarily absent from his place, about the importance of sport. As far as my sporting activities are concerned, in 2006 I took a nasty turn, as we say in Scotland, but for 34 years before that I was a member of the Lords and Commons Ski Club, which may also be known as Monty Python’s Flying Ministers. I combine those two aspects when considering the Bill in front of us.
For many years my interest in sport has been more of a sedentary than passionate activity. My attention in the autumn, winter and a good bit of the spring is drawn towards the great city of Liverpool. There are two aspects of sport in that city. One is a very great institution that I deeply respect, while the other institution I both respect and am passionate about; I love it. I went to a prize-giving ceremony at one of these sporting institutions and I visited the redeveloped waterside. I hope that my noble friend the Minister will forgive me for repeating something I mentioned in an earlier speech. I was astonished by the modernity of the waterside development, and above all by the enthusiasm of everyone working there. I am also aware of the colossal newly improved port that is to be developed in Liverpool, but what I was not aware of is the fact that the Minister in an earlier incarnation was the chief executive. It is for that reason I will restrain myself and not call her “Baroness Digger Williams”, because she did most of the preparation work for that enormous port. When it has been completed, we will see what she and many others have done for the city of Liverpool.
We have heard a number of speeches about the area today, and while I enjoyed the crack from the noble Lord, Lord Snape, about greater Birmingham, I understand that there is something called the Greater Manchester Combined Authority. Some briefing that I have received tells me the authority is comprised of 10 local authorities of varying size and importance. The authorities originally came together last year and have been granted full powers for transport. As I have found in Edinburgh and Glasgow, there are railway carriages which take people to and from Manchester Airport, which is one vital aspect. I have also discovered from the briefing that the Greater Manchester Combined Authority has pooled all the funds of the 10 authorities. It has managed to find £300 million for a separate form of housing which is particularly relevant to Manchester and the north-west. A further £500 million is to be used to invest in the technology skills of boys and girls, pensioners and many other people in the area, giving them specialist advice and a good start. This will perhaps improve their career chances which they may not have had because the systems that they would be using might not be as relevant in London or elsewhere in the country.
The total health budget for the area covered by the Greater Manchester Combined Authority is £6 billion, which has provided the authority with enormous flexibility. A point which was stressed by my noble friend Lord Heseltine was the need to look at how to spend the money well and properly. I understand that this has given a huge boost to both social services and health services. Perhaps I may add one particular personal aspect. It concerns the Royal Manchester Children’s Hospital, which is dear to me thanks to some sporting connections that I have. I became interested in the Royal Manchester Children’s Hospital and its use of specialist facilities to treat young, frightened and sick children. I am thinking of a particularly gutsy young lady who had a difficult handicap. However, she is just one among the thousands who have been helped by the hospital. It has the flexibility to do things its own way. I am sure that the other similar massive institutions such as Alder Hey Children’s Hospital in Liverpool and Great Ormond Street Hospital in London are excellent, but the Royal Manchester Children’s Hospital is able to spend money in a particularly effective way.
I have declared my interest as a member of the Institute of Chartered Accountants of Scotland, whose motto is “seek the truth”, and there is another motto that I use myself: KISS. It has nothing to do with embraces or anything like that, it stands for “keep it simple, stupid”—but we will cut out that adjective. I hope that my noble friend and the Government will keep those two mottos in front of them. First, seek the truth about the money that you are able to spend, and secondly, keep it simple and see that it is spent wisely. I think that the Bill before us today will certainly outlive many of us here in your Lordships’ House in its effectiveness for regenerating the belt covering the whole of the north from Hull to Liverpool. I wish it well.
Baroness Henig (Lab)
I want to draw the attention of noble Lords at the outset to the fact that I served as a Lancashire county councillor for more than 20 years, alongside the aunt of the noble Lord, Lord Horam—the redoubtable Aunt Marjorie. She was a wonderful advertisement for the power of local government in those distant days. I should also say that my son is currently the leader of a very large northern combined authority, and he was most anxious for me to point out to your Lordships that any views I express on this Bill are my own personal views, which I am happy to do.
I start by welcoming the Government’s professed aspirations in introducing this Bill. As we have heard, it aims to decentralise power in England, to contribute to advanced economic recovery, and to enable cities particularly in the north to work together more closely and compete more effectively with London. Who could argue with those aims? Moreover, one can only admire the marketing genius who dreamt up the strapline, the “Northern Powerhouse”. It conjures up a strong image of a northern renaissance, but it is only an image; it is a marketing ploy. I have to say to noble Lords that the current realities are very different. Both in terms of economic power and political decision-making, as many noble Lords have already pointed out, London is the pre-eminent centre of the country.
The gap between London and the rest of the country, even the 10 biggest cities, is huge and has been growing even since 2010. That gap is much greater than the comparable situation in any advanced or developing country. London is the third-fastest growing city in the world and now accounts for nearly 22% of our total economic output. Therefore, the effort required to achieve any meaningful dispersal of economic power and activity away from London is enormous. While I share absolutely the desire of the noble Lord, Lord Heseltine, to bring about this historic shift, it will take a prodigious effort to do that, given the situation as it exists. I fear that the measures outlined in this Bill will go nowhere near to closing the economic gap between London and the rest of the country, which is increasing even as we debate here today.
At the same time, in terms of political governance, England is about the most centralised state in Europe, if not in the developed world. All political power flows from Whitehall, and all major policy decisions are taken there. As we have already heard, in the past 30 years there has been a one-way transfer of powers and responsibilities from local to national government. When I started in local government in the early 1980s, the county council together with district councils oversaw schools, further education colleges, council house building, policing and much more. It enjoyed considerable flexibility in setting levels of business and domestic rates.
Year on year, under all Governments, local councils have lost a range of powers and responsibilities, and continue to do so. Even as we are considering this Bill today, another swathe of schools is being earmarked for academy status and therefore will move from local authority supervision. As we know, local authorities face further cuts in funding, with formulae which seem to aid and abet the transfer of resources from the north to the south. It is notable to me that successful administrators move from local government to government departments—some even come to this House—but no one moves in the other direction. For a civil servant or a special adviser, being sent out of London is even worse than being exiled to Siberia, but there is little prospect of a return.
However, in recent years, the devolution of powers to Scotland and Wales has transformed Edinburgh and Cardiff into growing and increasingly powerful regional centres. The reason, of course, is that they house the Scottish Government and the Welsh Assembly. Therefore, they are developing as political, administrative and economic hubs. In England, although we have regions, we do not have regional government or, any longer, regional development agencies. That is now a problem because, if the Government want to devolve power, it is by no means an easy or straightforward process because of that lack of a clear, regional tier of administration.
For starters—it is not covered in this Bill—there surely has to be much greater investment in regional infrastructure, particularly transport, as some noble Lords have already pointed out. I am not thinking so much about high-speed rail links or accessible and efficient airports, important though they are to the development of the local economy. Your Lordships have only to compare the frequency and diversity of local transport and its availability to people who live in and near London with the situation in most of the rest of the country to see the size of the problem. While local authorities are fully aware of the pressing need for better local transport, all they can do, as I am sure noble Lords will know, is to bid every year for resources from central government to improve their services, but they have no certainty of success. Providing more resources to enable people in the regions to move about on public transport more flexibly and easily must be high on the Government’s priority list if they are serious about delivering on the devolution agenda.
How will this Bill help to deliver the Government’s professed aim of decentralisation of power to cities and to local government? It is, we know, an enabling Bill. My problem is that I cannot see how the provisions within it do much more than pay lip service to the Government’s stated aspirations. Here, I have to say that I share the scepticism of my noble friend Lord Woolmer. The combined authority is to have a directly elected mayor. That assumes that all constituent elements support this in principle and co-operate with the successful leader, once elected. Both assumptions seem to me to be questionable, especially bearing in mind what the noble Lord, Lord Goddard, told us so frankly earlier.
Even if the metro mayor has full support from across the area, what resources will she be able to deploy? What levers will she be able to pull to generate economic growth and sustainable development? I see no measures to bring about meaningful devolution of finance, no proposals to allow the mayor to raise finance locally or no suggestion that the iron grip of the Treasury over public spending is going to be relaxed in any way. It is all very well exhorting cities in the north to work together more closely on housing, strategic planning, health, social care and skills training to compete more effectively with London. I would argue that in many parts of the north, there is already much greater collaboration between councils than there is in Whitehall. I thought that the noble Lord, Lord Heseltine, made the point extremely effectively that if a businessperson wants to deal with Whitehall, there is no obvious place for them to go. Whitehall is nowhere near as joined up as many of the local authorities we are talking about. It is important to bear that in mind. The reality is that without access to sufficient, regular and reliable funding, combined and metro authorities will face an uphill struggle to catch up with London, and it is almost certainly doomed to failure.
The measures outlined in the Bill may be helpful for some areas. Clearly they will not work everywhere, as we have already heard. The cynic in me says, “Perhaps that’s the point of this Bill. Perhaps the only real aim is to provide the vehicle for doing deals between the Government and Manchester, and maybe the Government and one or two other northern cities”. Perhaps that is what it is all about. I sincerely hope that that is not the case and that the Government have wider aspirations. If so, it is important for this Bill to provide a permissive legislative framework, as my noble friend Lady Donaghy, said, and not be prescriptive. For me, there is an even more important word beginning with P: a meaningful partnership. There has to be a partnership in play between central government and local authorities, not the sort of hierarchical relationship—I am sure that the noble Baroness, Lady Eaton, remembers it as well as I do—whereby local government leaders are summoned to London to be issued with the Government’s latest proposals, and instructed to adhere to them and do as they are told, or else. The noble Lord, Lord Heseltine, candidly admitted that there was an element of that in decades gone by.
It is abundantly clear that over the past 30 years, central government has not trusted or respected local councillors or their capacity to make decisions on behalf of their local communities. If this Bill is a signal of intent that the new Government want to work more co-operatively with some of the major elements of local government, such as combined city and county authorities, obviously we all welcome that. It is just that part of me still remains to be convinced. I would like to see more tangible proof of that resolve, which is why there are so many detailed questions to be asked about what impact the measures in this Bill will have; whether, and if so what, new clauses need to be added; and how the Bill can be tailored to deliver powers more effectively for a wide range of county, district and combined authorities, not just for a handful of northern cities. I look forward to participating further in Committee to turn what is at the moment quite a sketchy enabling Bill into something more meaningful for local government.
Lord Sherbourne of Didsbury (Con)
My Lords, I have very much enjoyed the debate today and it has been a privilege to hear speeches from two former Deputy Prime Ministers. I very much enjoyed hearing them both claim that they are in some way the godfather of the proposals in this Bill—and justifiably so. My noble friend Lord Heseltine showed what local leadership can do when, in the 1980s, he championed the cause of Liverpool. It is testament to what he achieved in that city that my noble friend, a Conservative Peer, was awarded the freedom of the city of Liverpool by a Labour council.
My noble friend spoke about this being a process of evolution. He is right, because when the noble Lord, Lord Prescott—who is not in his place—was in office, we had the Urban Task Force, under the chairmanship of the noble Lord, Lord Rogers of Riverside. It was set up to,
“identify causes of urban decline and establish a vision for our cities”.
I looked back at what the noble Lord, Lord Rogers, said just over 10 years ago in reviewing progress. He talked about the change of culture in favour of towns and cities, and about people moving back into city centres. He produced an incredible figure, which I presume is true:
“In 1990 there were 90 people living in the heart of Manchester; today”—
that was in 2004—“there are 25,000 residents”.
He went on to say:
“English cities have established themselves as powerhouses in the UK economy and centres for cultural innovation”.
But he was also clear that the job was far from done and that there was much more to do.
That brings me to the Bill. For years now we have talked about the north/south divide; urban regeneration; how to decentralise power; bringing decision-making closer to people; the need for greater accountability; encouraging greater investment in transport; and, more recently, about achieving greater co-ordination between healthcare and social care. The Bill sets out to deal with all these issues. It is about providing leadership and more effective local governance of city regions, and about keeping decision-making simple and straightforward. We are not proposing regional talking shops.
I know that there are some worries about whether the Bill’s provisions will lead to another layer of bureaucracy. I believe that the fears are misplaced. As my right honourable friend David Davis put it a few days ago, the Bill is about providing maximum power with minimum bureaucracy. Of course, as the Bill’s provisions roll out across the country we will need to respond to the different circumstances of the city regions, as many speakers have said. We will need flexibility. We do not want a one-size-fits-all Bill.
This is a big Bill with big objectives, but I want to focus briefly on one issue. It is a big one: the need for transparency and public scrutiny. As the noble Lord, Lord Shipley, and the noble Baroness, Lady Pinnock, pointed out, the Bill could lead to a concentration of power in the hands of one political party. We have seen all too recently—I am thinking of Tower Hamlets—what can happen when too much power is put in the hands of one person without effective scrutiny. The Bill seeks to deal with this by the establishment of overview and scrutiny committees. These committees will have the power, to quote the Bill,
“to review or scrutinise decisions made, or other action taken”.
It is not immediately clear—at least to me—what the difference is between reviewing a decision and scrutinising it. I also note the use of the past tense: these committees will be reviewing or scrutinising decisions already made or action already taken—in other words, only after the event. It is true that the committees will be able to recommend that a decision is reconsidered, but if action has already been taken it may well be too late.
To be fair, the committees will have the power to make recommendations to the mayor. This could perhaps allow them to keep a watching brief on decisions in the making. However, although the Bill gives them these powers, they are not bound to exercise them, or to do so in an effective and, above all, open way.
Here we come to the role of the Secretary of State. According to the Bill, the Secretary of State will be able to issue guidance on the exercise of these powers. This could be crucial, so I hope that when we come to consider the proposals more closely in Committee the Minister will be able to tell us more. We do not want debate and decision-making behind closed doors. But, having said all this, I strongly support the Bill.
Lord Whitty (Lab)
My Lords, the widespread support for the central concept of the Bill is proof indeed that something fairly drastic needs to be done. The Bill is a very thin Bill, but it covers a very big concept. It attempts somehow to tackle two very big problems in our society and in our nation. One is the disjunction of economic development—the south-east against the rest—and the other the general alienation of citizens and businesses from the degree of centralisation of decision-making that we have seen from Governments of all hues over the past few decades.
Those two problems are distinct. The latter suggests that this ought to be part of what many of my colleagues are calling for—a constitutional convention—as it addresses the same problem that devolution to Scotland, Wales and Northern Ireland addresses: the remoteness from decision-making here in Westminster and the administrative centralisation in Whitehall. That is felt not just in our metropolitan cities. As I have put it before in this House, it is felt in Cornwall and Cumbria as much as it is in Birmingham and Bradford. The populations in the regions of England have much the same feelings as those in Scotland and Wales, which have been so obvious in recent years. This is an attempt to do something structurally and politically in England that addresses those twin problems.
The structure of English local government remained, broadly speaking, the same for a long time—from William the Conqueror to the noble Lord, Lord Heseltine. However, since then we have changed the structure quite significantly in terms of powers and the way that we expect local authorities to do business. That was in a context where central government took more and more decisions to itself and restricted the freedom of local authorities more and more—whatever their boundaries, size and structures—to take decisions for their communities. Against that background—even with the current Government or the previous coalition Government—we have seen more centralisation, with things effectively being taken off local authorities, education being the obvious example. Housing is also no longer a clear and effective local government responsibility.
To reverse that, we need to take the initial steps that the Bill suggests. I understand why it has to be a framework Bill, but, as my noble friend Lord Snape suggested, the danger is that we then have a plethora of secondary legislation specific to the individual areas covered, which will not receive adequate scrutiny in this House or in the local authority area that it is supposed to cover. A bit of history again: this is the exact opposite approach to that adopted when I was a Minister in this House, under the general direction of my noble friend Lord Prescott, when we set up the GLA. The noble Lord, Lord Tope, clearly remembers this. The then GLA Bill was the largest in living memory —larger than any other non-financial piece of legislation apart from the Government of India Act 1935, which was never fully implemented. To give the Government a few hints, we got the GLA Bill through the House of Lords only because we split the Opposition: the Liberal Democrats wanted an assembly without a mayor and the Conservatives wanted a mayor without an elected assembly. We got the structure and everything else that went with it through that way; the glory we now see at City Hall is as a result of that very detailed Bill. Some of that detail, or the issues that it raised, will have to be faced up to when we legislate or administrate for Greater Manchester, the West Midlands, Merseyside, or whatever we are going to call the new combined authorities.
In the great days of municipal innovation from the 19th century through to perhaps 50 years ago—from Joe Chamberlain, if you like, to Herbert Morrison—local authorities at that level operated with much greater freedom than they have now. Local authorities themselves drove a lot of economic development and were entrepreneurial, comprising gas, light and coke companies in the 19th century, transport bodies at the beginning of the 20th century and housing bodies from the 1920s onwards. The assumption was that, provided they could raise the money, local authorities could do pretty much what they liked or what was not expressly forbidden by statute. However, key to that was, of course, the ability to raise their own money. They could determine their own domestic and business rates at that point and could go to the private market and borrow money on various terms, and did so to a greater extent than many sovereign states during that period. They were not subject to the detailed Whitehall restrictions on ring-fencing how they spent that money or even determining what the basic standards were.
Now local authorities are not even able to borrow against investment and certain future incomes without coming up against the Treasury rules. That means they cannot address some of the basic problems of housing and infrastructure within their own areas, let alone take steps in partnership with the private sector to revive their local industry. We need to get back to a degree of freedom which is not quite that of the 19th century—we require different forms of accountability—but one which we have abandoned to our cost over the last half century.
Incidentally, I was also responsible for taking through this House the Local Government Acts of 1999 and 2000, which provided the options of structuring local government in a number of ways, including for elected mayors. As others have pointed out, the option of elected mayors did not prove hugely popular. Indeed, it was not popular in Manchester, among other places.
Lord Whitty
Pretty well anywhere, but not quite anywhere. However, I have my doubts whether the concept of a directly elected mayor at a combined-authority level will prove any more popular. One of the problems with the rhetoric on the Bill, particularly from the Chancellor and those who are briefing on his behalf, is that it is suggested that the full range of powers will go only to those combined authorities opting for a directly elected mayor. Some of the comments that the Minister made in a briefing meeting and today suggest a bit more flexibility in that regard. As we go through the Bill, I should like to ask how much flexibility we have area by area.
It will be important for us to recognise the different requirements and priorities area by area, but also to recognise the different existing structures area by area. As my noble friend Lord Snape said, it is not just a question of whether you call the relevant area “Greater Birmingham”, to everybody else’s offence, but rather of looking for a combined authority and a directly elected mayor to cover the cities of the East Midlands. We have an elected mayor in Leicester. That is fine. However, Nottingham very firmly rejected the elected-mayor principle. If we were to bring those together with the counties surrounding them, we would experience some difficulty if we were seen to be imposing a particular structure as distinct from particular powers, responsibilities and resourcing.
Questions will be raised on the Bill as we go through Committee but I think the central one is: in what context will it operate? Will it operate in a context in which we free up the financial flexibility and availability of funds for local authorities, or one in which we try to compensate in some way for ever-squeezed formal public expenditure commitments, but not by allowing local authorities to raise their own resources to deliver the economic development we are looking for through innovative partnerships with the private sector and the financial sector?
London does not seem to be covered by the Bill. The London councils say that they could do with some of the powers in the Bill. Will the Minister indicate, either now or in Committee, what powers could be devolved to a combination of London boroughs and the GLA?
My last, and perhaps flippant point, concerns Wales. This is called an England and Wales Bill yet virtually none of it applies to Wales because local authority structures are a devolved matter for Wales. However, as I say, it is called an England and Wales Bill in the appendix. When we discuss English votes for English laws, I would like to know whether this is indeed an English Bill or an England and Wales Bill. That is a minor point in some ways but probably not considered so in Wales. The bigger point is: will the powers and resources really match the rhetoric that surrounds this Bill?
Lord Tope (LD)
My Lords, it is always a great pleasure to follow the noble Lord, Lord Whitty, although I think on this occasion a rather dangerous one as he tempts me into reminiscing too much about the many happy hours, days, weeks and, indeed, months we spent in 1999 on the Greater London Authority Bill. He is right to say that it was extremely long on detail—mostly about what the Mayor of London could not do; it was extremely short on the detail of how to do it. However, the one thing I do not recall having any difficulty with was what we were going to call Greater London. We had some difficulty over whether it was an authority or a council and most people still referred to it as the GLC, but it was still Greater London.
Before I forget, I must declare my interest as a vice-president of the Local Government Association.
This has been a very useful, interesting and stimulating debate with a wide measure of agreement on the things we do agree about and agreement on the concerns that I think are widely shared on all sides of the House. It was made clear by the previous five speakers on these Benches that the Liberal Democrats welcome the Bill’s principles and intentions. Indeed, how could we do otherwise, as most of us have argued for the whole of our political lives for greater devolution? The first Liberal Party publication I ever read back in the 1960s was entitled Power to the Provinces, so at last, to quote the noble Lord, Lord Heseltine, we are perhaps at an historic moment. The noble Lord has featured frequently throughout the debate and has been present throughout to hear all the comments. We very much welcome that, as he has shaped the thinking on these issues for a very long time.
Noble Lords on these Benches have made clear that we welcome the Bill but have a number of concerns. We are very concerned about democracy, accountability and scrutiny, particularly as regards the city areas—the combined authorities to be created over this Parliament —as there is a very real danger of their becoming one-party states in a way that may matter to some on this side of the House. It does not matter which party is involved, a one-party state is not good for democracy, challenge or scrutiny. I hope that is something to which we can give more attention.
Reference has been made to the need to devolve fiscal powers, and I hope more reference will be made to that. Unless these authorities have the power actually to raise funds, they will not have real power. I hope we are reaching the stage when central government is willing and brave enough to tackle those issues.
I hope that we will say more about the relationship of the new authorities with their local communities, not just or particularly the political communities, if I can call them that, but the business communities, which I think are generally welcoming but, perhaps understandably, a little suspicious of what may be coming. So that is important.
Lastly, as has been mentioned by a number of speakers, the Bill starts by calling itself the cities Bill and then goes on to say “local government”. We must ensure that we do not talk and think only about the cities, important though they are, but that we remember what is actually the greater part of the rest of England—the non-metropolitan areas and the rural areas. I hope we will pay considerable attention to those.
Our aim during the remaining stages of the Bill will be to try to prompt the Government to think more about some of the very important details in these proposals, to tease out some of that thinking and debate it, and to look at how we can amend what is and must remain an enabling Bill so that it gives the right degree of guidance without being too prescriptive. That is something that we will have to pay some attention to.
There have been references to London throughout today’s debate. Many of those were quite properly references to the economy but quite a few were also to government. As someone who has been a London borough councillor for 40 years, until last year, I say to your Lordships that, in government terms, the London more usually referred to as Whitehall or Westminster is at least as distant from the London Borough of Sutton or the London Borough of Enfield as, for instance, Newcastle or Manchester. It is important that devolution applies to and within London as elsewhere.
I know that the Bill does not cover London specifically, for structural reasons we know and understand, but I hope the Minister can say something in her reply to give encouragement to the mayor, the GLA and the London boroughs that although they may not be covered by the provisions of the Bill, the Government are at least ready to hear proposals from the mayor and the London boroughs that respond to the encouragement that the Bill gives elsewhere. I know that that is something that both the GLA and London Councils have been working on and are looking forward to being able to promote. They are rather anxious that the Bill might actually set that back rather than encourage it. I hope the Minister will be able to give us some reassurance there.
I have just mentioned my 40 years as a London borough councillor. As it happened, the first 12 of those years were with the Greater London Council. During the next 14 years we had no strategic authority for London—unless you regard central government as the strategic authority—and we tried to work on a London borough basis. It was not a good time but one of the really good things that came out of that period was the growth of real co-operation between London boroughs, which we had not previously known and which still exists. Of course, my last 14 years were during the period of the Greater London Authority. Most relevant perhaps was that I became a London borough council leader almost on the same day that the GLC was abolished, and I stood down from the leadership in order to stand for election—a successful election—to the London Assembly, of which I was a member for its first eight years. I mention all that not because it is a declarable interest, which it is not, but because I think that a lot of that experience has some bearing on the points we are going to consider. I understand, of course, that the structure of London government is different in many ways from what is proposed now, but I think that there are lessons we can learn from the experience in London, good and bad, of having these arrangements.
We have spent a lot of time—perhaps too much time, and I fear that will continue—talking about elected mayors. London had the first elected mayor, as I am sure I do not need to remind people, particularly on this side of the House. The noble Lord, Lord Whitty, will know that he spent most of his time as the Minister responsible trying to put things into the Bill to ensure that the first Mayor of London did not have too much power, as he had when he was leader of the GLC. In a way, that is my point. I think we are getting too obsessed with elected mayors. I am not and never have been a fan. I do not understand why this Government are so keen, as the previous Government were, to have them and why we do not simply have them on a permissive basis—if people want them, fine, let us have them; if they do not, they do not.
The only argument put forward today in support came from the Minister and was that people need to know who is accountable. I have no idea of Ken Livingstone’s view as to whether he was more accountable as leader of the GLC or as Mayor of London. I would suggest that at the time he was at least equally well known as either and most Londoners really did not know or care what title he had; it was what he was doing that was rather more of concern. Similarly, we learned in the recent election that a very large number of people, not only in London, think that Boris Johnson is the Prime Minister and not the Mayor of London, so I just do not buy that argument. In my experience, and as the noble Baroness, Lady Hollis, said, if council leaders are any good, they have at least as much power as any elected mayor, if they use it properly and effectively. So I simply do not understand that. My concern is that we will spend too much time on that issue and not enough time on what, frankly, are more important issues. I urge the Government to think about whether it is really necessary to impose elected mayors as a condition of getting the powers and funding that people want—in other words, bribery.
There are other issues. We have talked about accountability and scrutiny. If we are to have elected mayors and strong combined authorities, it is crucial that the scrutiny function, the challenge function and the accountability must be equally strong. It is a very important part of democracy and democratic accountability. There is a real danger that we will not have that. Again referring to the GLA, there is a strong mayor and a weak assembly. The only power the London Assembly has is to amend—and it is a fairly limited amendment power—the mayor’s budget if there is a two-thirds majority. In the first 15 years of the Greater London Authority, the mayor has never had a majority for his budget but equally there has never been a two-thirds majority to amend it. The mayor has always known that and the power is therefore useless. So the scrutiny function needs to be stronger and it needs to be effective. I hope we can pay some attention to that.
I mentioned earlier the relationship with communities. It is very easy, and I think it will be even easier with these combined authorities, for local authorities to become too inward-looking, talking too much to themselves and the people closely around them. It is very important that they build a relationship with all the communities—the geographical communities and the interest communities, and particularly the business community. Again, I hope we can give some attention to how that is going to happen.
I conclude with just one warning. I am and always have been a strong advocate of devolution but it has also been the case—in too many cases—that devolution has paradoxically led to greater centralisation. I would give Scotland as an example. We have devolved a lot of power to Scotland, to the Scottish Parliament and the Scottish Executive. Actually, within Scotland it has become very much more centralised. Ask anyone of any party in Scottish local government and they will tell you: it is more centralised now than it was before we devolved power. That does not automatically have to happen. It should not happen and we must ensure that it does not.
We welcome the Bill and its principles and intentions, and we will try to ensure that it leaves this House a better Bill.
Lord Beecham (Lab)
My Lords, first, I refer to my local government interests in the register. By my count, we have had nine former council leaders addressing the House today, including the Minister. One of those is the noble Lord, Lord Shipley, and I am sure the House will join me in congratulating him on his new appointment as the Liberal Democrat spokesman on local government. He and I had several years of enjoyable confrontation in the Newcastle City Council chamber when I was leader of the council and he was leader of the opposition. He subsequently served also as leader of the council and had a very distinguished local government career. I imagine that in the noble Lord’s new post, he will not be one of the roughly 60 Liberal Democrat Peers who will no doubt be seeking leave of absence from the House, in accordance with their policy that representation in this House should reflect the percentage of the vote cast in the last election. That would have a significant effect on the number of Liberal Democrat Peers—but obviously the noble Lord would be immune to his party’s policy in that respect.
My late wife Brenda was none too pleased when, for our summer holiday in Spain in 1969, I took along Maud—that is to say, the Maud report, the first of many such reports which, in the 48 years that I have served as a local councillor, have helped to shape successive reorganisations of local government. From that report’s recommendations were born the metropolitan county councils, which were referred to by the noble Lord, Lord Shipley, established by the Heath Government—no doubt under the influence of the noble Lord, Lord Heseltine—and abolished 12 years later by the Thatcher Government, alongside the Greater London Council, which had of course also been created by a previous Conservative Government. Since then, a variety of reorganisations, both structural and of governance, have followed at fairly regular intervals.
The present Bill needs to be seen in the context of this history, which in many respects casts an ironic light on its proposals and the philosophy which animates them. But let me be clear that I very much welcome moves to devolve decision-making, providing that they are accompanied by a respect for community identities, a needs-based system of local government finance and an effective partnership at local level across the public sector, involving government departments, agencies and the community itself.
It is ironic that some of the functions which feature in the Government’s thinking, and in the Greater Manchester Combined Authority agreement, were among the very same functions exercised by the metropolitan counties—notably, economic development and transport —although it will be recalled that the Thatcher Government eventually forced the sale of local authority-owned and managed bus services, except in London. Even now, the Tyneside Metro is run by Nexus, a local authority body involving the councils currently involved in the North East Combined Authority. Similarly, Newcastle Airport was developed and is still partly owned by local councils—and all this without an elected mayor.
As I reminded the House during the debate on the Queen’s Speech, the Local Government Association conceived the idea of Total Place, under which we had hoped to see much closer working at local level across the public sector to ensure a more integrated and cost-effective deployment of resources, both local and national. The concept was adopted by the Treasury and the Department for Communities and Local Government, but little enthusiasm was evinced, perhaps unsurprisingly, by other departments or agencies, secure in their Whitehall silos. Little progress has been made on that concept in the last five years.
Quite apart from other concerns raised in this debate, I do not believe that even the best intentioned Secretary of State—and I think that Mr Clark probably fits that description—will succeed in overcoming the institutional inertia and narrow vision of departments and their Ministers unless a very serious Minister, as the noble Lord, Lord Prescott, was when he was Deputy Prime Minister, is charged with oversight of the process. I recall very clearly the meetings that we used to have in local government with the Central-Local Partnership, as it was then called, chaired by the noble Lord and involving other government departments and Ministers. That was a very useful mechanism.
In addition, I repeat my call for the reintroduction of government regional offices, which could help significantly in this and other respects. They would also help to meet the point made in this debate about having a central point of contact between the local authorities in a given area and government itself. It is much easier to do that through a regional office than by having to connect directly or indirectly with Whitehall, and it would apply whatever structures are operating at local level.
One of the major difficulties with the proposals in the Bill is the apparent insistence on the requirement of an elected mayor before significant powers can be granted, without any test of public opinion. The case for elected mayors is much overstated anyway, even from a democratic standpoint. Even in the London mayoral elections, with all their massive attendant media coverage, turnout is not significantly higher than in ordinary local elections. It was 38% in 2012. But there are also concerns about vesting so much power in a single pair of mayoral hands, as many of your Lordships have said, augmented under Clause 3 by the hands of the deputy who he or she appoints, or any “member or officer” he chooses—including, presumably the political adviser whose appointment the Bill prescribes, unless the Secretary of State orders otherwise.
These concerns are, in my submission, substantially augmented by the possible transfer of the police and crime commissioner role, established with such a fanfare by the Government three years ago and treated by the electorate with unparalleled indifference when it came to voting for them at the ballot box. Such a concentration of power in this sensitive area is highly questionable. The very suggestion underlines the concern that many of us share about the degree to which this single individual could be accountable, especially in areas which are not natural entities but which comprise distinctive communities. It is not for me to comment on other areas but, as the person who suggested the formation of the Northern Regional Councils Association, now the Association of North East Councils, in the 1980s, I have some experience of the sensitivities. To progress the idea, I circulated a paper anonymously through the medium of the then leader of Northumberland County Council, knowing that if the idea had been seen to be conceived in Newcastle, other significant councils in the area would be much less likely to support it. This, after all, was the area where the leader of Gateshead Council in the 1960s said of the prospect of local radio being established in Newcastle that nobody in Gateshead would be interested in listening to it.
Happily, such extreme manifestations of tribalism are now much rarer. However, the North East Combined Authority extends from Berwick on the borders to the boundaries of Darlington and Teesside—a distance of approximately 85 miles—and from just east of Carlisle, in the west of the region, to the North Sea coast. It comprises five metropolitan districts and two counties— one of them, as we have heard, led by the very able son of the noble Baroness, Lady Henig—with substantial rural areas. It has a population the size of that of Northern Ireland and two-thirds the size of that of Wales. The notion of accountability vesting in a single pair of hands for such an area is unreal and unacceptable. One wonders whether the siren voice of Nick Boles, who proclaimed that elected mayors were the only route back for the Tories in Manchester, has influenced the Government’s approach, especially in the light of the rejection of the concept in all but one of the cities which, as we have been reminded several times today, were subjected to referendums only three years ago.
There is no reason why the mechanism of combined authorities, backed up by well-resourced scrutiny and the active participation of public sector partners and their private and community sector counterparts in appropriate policy areas, should not operate effectively and accountably. They should have their own audit committee, or public accounts committee, independently chaired. I must say in parenthesis that I regret even more in this context the abolition of the Audit Commission, an egregious act of spite by the former Secretary of State.
Mention of the Audit Commission brings me to the contribution of the noble Lord, Lord Heseltine. It is such a great pleasure to see him in his place today. Neither of us may be too happy to admit it but we go back a long way. Newcastle under my leadership was one of the first councils to be penalised by the Conservative Government, within weeks of the 1979 general election, but that did not prevent our working with that Government when it could benefit the city—notably during the noble Lord’s two terms as Secretary of State for the Environment. On two occasions, I received invitations from him. The first was when he invited me to join the Audit Commission as a member. I declined because I did not think that this was compatible with my position as the then chair of the Association of Metropolitan Authorities. The invitation was useful, however, in helping me rebut charges of profligacy by Conservative members of Newcastle City Council. The second invitation I accepted with, I must confess, some trepidation. It was for dinner in the Tower of London. It was not held in the Beauchamp Tower but it included the noble Lord, Lord Levene, and the late and much lamented Sir Peter Hall. I remember that it was a very useful discussion about local government.
The noble Lord, Lord Heseltine, has of course long had a serious and constructive interest in local government and the problems and potential of our cities in particular. He was, as we have been reminded today, much moved by the plight of Liverpool in the early 1980s. He engaged with the inner-city partnership programme and launched City Challenge in the 1990s. More recently, he produced the seminal report on cities, which again has been mentioned several times today.
There is perhaps one lesson, at least, that we can learn from City Challenge—a programme which, in Newcastle, brought about £30 million to the city in its six-year life—which is that extra one-off resources, although welcome, will never be adequate if at the same time financial support for existing services is cut. The city lost more in grant during that period than we gained from that useful programme, welcome though it was. My noble friend Lady Donaghy made precisely the point that we cannot look at structures and financing without looking at the position not merely of capital investment and the like but of the revenue requirements of authorities, and the degree to which they are fairly funded by government.
This matter of a needs-based local government finance system is critical if the Government’s proclaimed aspirations are to be realised. I repeat that devolving tax-raising powers of itself is insufficient, given the variability, and vulnerability, of the local tax base. By all means devolve those powers, but recognise that there is still a need, in addition to the fiscal devolution—to which a number of Members have referred, including in particular the noble Lord, Lord Shipley—to have ample financial resources available. Fiscal devolution, like patriotism is, of itself, not enough. I was very taken with the suggestion from the noble Baroness, Lady Wheatcroft, about municipal bonds, an idea that has been floated from time to time. No Government have yet reacted positively, but it is time to reconsider that, particularly in the context of strategic authorities, whatever their precise mode of government may be.
I conclude by joining others in urging the Government not to make a fetish of the mayoral system as a condition of empowering and working in partnership with combined authorities, or with other authorities and groups of authorities, because we are not, as the Minister made clear earlier, just talking about combined authorities. There may be opportunities in particular for counties and others to have some form of involvement with the provisions of the Bill. At the very least, any structures should be backed by public support and secured by argument and debate, and not by the threat of withholding much-needed investment and the advantages of joint working. With that qualification, I and the Opposition welcome the Bill. We will seek to try and improve it and we look forward to local government and government together being able to go forward in a mutually respectful partnership which enhances and retains local accountability in a system in which, as I say, on the financial side in particular, the whole basis is one of need.
Baroness Williams of Trafford
My Lords, I thank all noble Lords who have taken part in today’s debate. It has been an excellent one and I thank noble Lords from all sides of the House for the good will that they have shown towards the Bill. It is indeed a privilege to have heard from not only two former Deputy Prime Ministers but, as the noble Lord, Lord Beecham, pointed out, nine former council leaders. I have listened to what has been said and have got a good feel from some of the contributions that have been made. I see support from all sides on the need for further devolution, and the desire to see all parts of the United Kingdom benefit from greater devolution of power and achieve their economic potential in this way. The Bill will deliver the devolution of powers and resources so that our cities, our towns and our counties can become their own economic powerhouses.
The noble Lord, Lord Tope, made a point about London. London boroughs are absolutely not precluded from coming forward with their ideas for devolution, albeit they have a mayor in place. Just as an aside, he made the point about people thinking Boris Johnson is the Prime Minister—but people think Churchill is a dog.
I will not answer every single question but I will go through the pertinent points made this afternoon. The noble Lord, Lord McKenzie, made the first, crucial point by confirming that devolution under the Bill does not just cover cities. He was absolutely right: it enables proposals to come forward from counties, groups of authorities and certainly from rural areas. Although we have been quite tied up with the concept of the northern powerhouse, there are great counties, such as Cornwall, which will be very keen to put forward some of their proposals, and the Government are very keen to have a conversation with them. He also asked about the delivery strategy; in other words, how the counties will catch the Chancellor’s eye. Will smaller proposals be left behind? Not at all. The Government are keen to hear from all areas that have proposals. That will follow a discussion with the Secretary of State and the Government. He also asked where the buck ultimately stops. In this country, the buck always stops with the electorate—they will be the ones who ultimately decide—but there is also an agreement between the combined authorities and government in terms of what government will expect.
Many noble Lords asked whether a city can have all the powers without a mayor. The Chancellor said:
“We will transfer major powers … to those cities who choose to have a directly elected … mayor”.
That does not preclude any area from coming forward with proposals, and a conversation taking place between those areas and government.
The noble Lord, Lord Shipley, talked about this being an enabling Bill, as did many noble Lords. It is, and it does recognise that one size does not fit all. It recognises that Manchester is different from Birmingham, which is different from Leeds, which is different from Cornwall, which is different from Norwich. It also recognises that medium-tier cities will have their proposals, which will be different from those from other places, and it is very keen on those. I am personally looking forward to the proposal from Norwich, which the noble Baroness, Lady Hollis, mentioned several times. Norwich has its part to play.
The noble Lord, Lord Shipley, talked about democratic legitimacy through referendums, as have several noble Lords. I said in my Answer at Question Time today that there are local authorities that have mayors without having had to go through a referendum. I can name two of them: Liverpool and Leicester. As I said today, the Local Government and Public Involvement in Health Act 2007 provided that if local authorities wanted to go straight to a mayoral model, they could do so. This is a multiplication of that provision. It is writ large and absolutely clear in the Government’s manifesto that they wish for this to take place. In that context, I am sure noble Lords would be willing to support that.
The noble Lord, Lord Shipley, also talked about an assembly. Greater Manchester has been very clear that it does not want additional tiers of government, and I am sure other local areas would feel the same. An assembly has not been considered because we want to minimise the risk of creating more bureaucracies.
The noble Earl, Lord Listowel, made a very interesting point about social housing and addressing housing issues, very neatly followed by my noble friend Lord Heseltine talking about all the funding streams that existed, meaning that it was difficult to get one co-ordinated housing plan. The Bill would help with that disparate approach to things such as housing need. Of course, going back to Greater Manchester, there is a housing investment fund of £300 million.
As my noble friend Lord Heseltine said, the Bill is dependent on detail. It is a framework, a mechanism for powers to be brought through in secondary legislation. A lot of questions were asked this afternoon about what those powers are. The Government do not want to dictate to local authorities or groups of local authorities what those powers might be. We want to hear from them. I know that that is a bit of an about-face after all the years of centralisation, but Government really want to hear those proposals. This is a partnership between Government and local authorities.
The noble Lord, Lord Prescott, talked about the Northern Way. I remember that well; it was the subject of many a document. In terms of what it delivered, I do not think it delivered anything but it certainly sowed the seeds of what we now talk about as the east-west links between Liverpool and Hull. Those links are crucial and in no way less important than HS2—HS2 and HS3 are all part of the jigsaw. I declare an interest, as one noble Lord said earlier, as a former chief executive of Atlantic Gateway. The super-port in Liverpool has significant benefits in terms of the economy and transport logistics, and really could be a game-changer in all this and for Hull.
The noble Lord also asked what the proposals from Hull look like. I know they are working on proposals there, but I do not think anything has yet come forward to government. I am sure the noble Lord would like to be part of the conversations with Hull. Leeds also has a devolution deal with government that is quite far advanced, looking at West Yorkshire. He also asked how long this takes. It takes as long as it takes for those local authorities to agree and come forward to government with their proposals and for an agreement to go forward. It is a bit like a piece of string, really. Of course, Greater Manchester has been first off the blocks here.
The noble Lord, Lord Teverson, asked about a specific road map. Whatever proposals come forward will be considered and no one proposal will take precedence over another because of size or scale of ambition. The Government are keen to hear from everybody and every group of local authorities.
The right reverend Prelate the Bishop of Derby talked about the unevenness needing to be addressed. This is actually at the heart of what the Bill does in allowing areas outside London to unlock their potential. I do not in any way, in any of the discussions we are having, want to do down London. London is an incredibly important powerhouse, but the north and other areas outside London, such as Cornwall, are capable of so much more. That is what we are trying to promote. He talked about the benefit from the international economy in London. Of course, we have benefited from that but places such as Greater Manchester want now to be net contributors to the Exchequer. We want to punch above our weight.
My noble friend Lady Wheatcroft talked about clusters of businesses. Clusters of businesses and the links between them are absolutely crucial. This effect of agglomeration is crucial to local and regional economies, as is creating this idea of a single labour market, with some connections so good that people are closer together in terms of getting to work and seeking employment. She also asked—as did the noble Lord, Lord Beecham—about the idea of a municipal bond. The Government are open to suggestions as to how financing might be raised. We look forward to any suggestions being brought forward. She also asked if the mayor will be fun and ride bikes. The answer is that I do not know. I hope that the mayor will be fun, whoever that is in whichever authority.
The noble Baroness, Lady Hollis, talked about the unhealthy dominance of London. It is dominant and in many ways that has been healthy for our economy. However, outside London we are capable of so much more. That is a point I made before. As she said, the Core Cities will be sorted but what about the others? I think I answered that point in terms of the mid-tier and other smaller groups of authorities.
The noble Lord, Lord Goddard, who is not in his place, talked about the journey of Greater Manchester. I was with him on that journey. One thing I would say about that journey is that that combined authority grew in maturity over the 30 years that it worked on a voluntary basis. Also, one thing that you could point out about Greater Manchester is that the leadership was very strong. I do not believe that these things will get through or work effectively without strong local leadership, whatever that leadership might look like. He also asked about borrowing—there are clearly provisions for prudential borrowing in there for the combined authority—and fiscal devolution. Some noble Lords will have seen some of the proposals in terms of retention of business rates and the “earn back” model that Greater Manchester seeks.
The noble Lord, Lord Wigley, welcomed the Bill but asked about Wales. It is an entirely devolved Administration; the reference to Wales in the Bill was to Wales as a jurisdiction, rather than its relevance to this Bill—so I hope that that answers the question.
My noble friend Lord Moynihan talked about sport and recreation and perhaps raising funds through a precept. Should a group of local authorities wish to come forward with proposals—a mayor may wish to take a focus on sport and recreation—it is something that the mayor could put to the combined authority in terms of the precept that they raise.
The noble Lord, Lord Woolmer of Leeds, again, talked about fiscal devolution, and I hope that I have in some part answered that question. He asked why we needed a mayor. We need maximum accountability for maximum powers devolved. He talked about HS3, and I think that I have covered that, but he also asked, “What is the northern powerhouse?”, which got me thinking. For me, the northern powerhouse is the ability of some of those great northern industrial places to reignite their greatness again. That is what I understand it to mean. Of course, we have the northern powerhouse but we also have county authorities that wish to institute growth in their areas. The northern powerhouse might mean a certain thing in terms of cities, but we do not forget our counties in all this.
The noble Baroness, Lady Pinnock, talked about resources and said that it was our money. Of course, all money raised is our money, because we are the taxpayers. In terms of the devolution of powers and funding, it gives us the chance to be masters of our taxpayers’ destinies in a more effective way and to get economic growth.
There has been a lot of talk about single-party states. No combined authority would be formed without the explicit agreement of each of its constituent parts. My noble friend Lord Sherbourne also asked about the scrutiny and accountability, and asked how you ensure effective scrutiny when a scrutiny system cannot overturn but can challenge the decision of the mayor in question. Our view is that overview and scrutiny committees for combined authorities should be chaired by a person who is not actually a member of the majority party represented on the combined authority. I hope that that gives the noble Baroness and my noble friend some sort of comfort in holding a mayor to account.
The noble Baroness also talked about some of those non-constituent parts of a combined authority. It is a very important issue, which we want to consider carefully. There are provisions in a draft legislative reform order before Parliament which would, if enacted, give greater flexibility as to what can constitute an area of a combined authority. As we take the Bill forward, we will look carefully at how best to provide that flexibility so that the governance structures, including that of a metro mayor, can provide the accountability and transparency of the decision taken.
I shall gallop through the last two pages of questions, because I am coming up to 20 minutes. My noble friend Lord Horam made some lovely points about industrial Lancashire and the cotton industry, and I think that my noble friend Lord Ashton of Hyde’s forebears’ names might have been there somewhere. He talked about leaders having to beg for funding in the old days and feeling almost embarrassed; the time has gone to feel embarrassed. Government is now reaching out to local authorities and local areas to ask what they want.
The noble Baroness, Lady Donaghy, talked about powers being ceded by consent. The answer is yes to that. She also asked what powers may be included. I think that I answered that previously in saying it was about what powers local areas would want included.
The noble Baroness, Lady Eaton, made the point about counties, and I hope that I answered that in saying that we really do want to hear from counties that might be attached to cities, et cetera.
The noble Lord, Lord Snape, asked whether the orders would go through on a negative resolution. No, they would not—they would go through on an affirmative resolution. He talked about transport needing primary legislation. That is absolutely correct and we hope to bring it through later this year.
However, I cannot finish without mentioning the noble Lord, Lord Lyell, and his love of Liverpool and the port. He is absolutely right about what a difference that port will make.
I hope that I can allay some of the cynicism expressed by the noble Baroness, Lady Henig, about Whitehall trusting local government. We shall see as time goes on. I thank all noble Lords who have taken part in this excellent Second Reading debate and look forward to continuing the arguments or debate in Committee.