Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority (Election of Mayor) Order 2016

Tuesday 12th July 2016 Grand Committee

Considered in Grand Committee

17:09

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority (Election of Mayor) Order 2016.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, this draft order was laid before this House on 8 June 2016. If approved, it will create the position of mayor for the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority—also known as the Liverpool City Region Combined Authority—with the first election to be held in May 2017, and set the first mayoral term for a duration of three years, with the next election in May 2020, with subsequent four-year terms.

The Conservative Party committed in its manifesto to,

“devolve far-reaching powers over economic development, transport and social care to large cities which choose to have elected mayors”.

To give effect to this commitment, the Government passed the Cities and Local Government Devolution Act earlier this year. As I set out to the House during the passage of that enabling legislation, the Government have introduced clauses to allow directly elected mayors for combined authorities because devolution of the ambition and scale set out in the manifesto requires strong and clear accountability and leadership. It is therefore considered necessary that where major powers and budgets are being devolved, local people know who is responsible for decisions. Mayoral governance offers a proven model for effective local leadership, which has worked around the world.

Turning to the Liverpool city region, this order is a milestone in the implementation of the two devolution deals agreed between the Government and local leaders. It follows the establishment of the combined authority on 1 April 2014, from which time it has been serving the Liverpool city region, bringing together across the area the closely interconnected issues of transport, economic development and regeneration.

On 17 November 2015 the Government and the combined authority announced a devolution agreement which provided an offer of powers and budgets from the Government on the basis that the area will deliver certain reforms and measures, including adopting a directly elected mayor covering the whole combined authority area. This agreement included that the mayor for the Liverpool city region would individually exercise some functions in relation to transport and strategic planning.

The combined authority has taken on responsibility for: devolved funding—£30 million a year over 30 years for the Liverpool city region; control of the devolved 19-plus adult skills funding by 2018-19; joint responsibility with the Government to co-design employment support for harder-to-help claimants; and a devolved approach to business support from 2017, to be developed in partnership with the Government. On 16 March this year, the combined authority and the Government additionally agreed: early adoption of the government pilot for 100% business rate retention in the combined authority’s area, starting in 2017-18; additional new powers over transport; and further commitments for the area and the Government to work together on children’s services, health, housing and justice.

In delivering the full range of commitments in the devolution deal, the Secretary of State intends, subject to statutory requirements and parliamentary approval, to make further orders to implement the deal. Subsequent orders will include the transfer of budgets and powers in planning, transport, education and skills.

On 24 June 2016, the Liverpool City Region Combined Authority published a governance review and scheme, which sets out the constitutional changes to the combined authority and the functions of the mayor as the area assumes control of additional budgets and powers from the Government. The combined authority is currently consulting local citizens and stakeholders on the contents of these documents and will issue a report on its findings to the Secretary of State later this year.

The draft order establishes a mayor for the Liverpool city region and sets the dates of elections and the first and subsequent term lengths. It is laid before Parliament following the statutory process specified in the 2009 Act, as amended by the Cities and Local Government Devolution Act. As required, all the constituent councils have consented to this order being made and the Government have laid the draft order, having had consideration of the statutory requirements. As required, we are now seeking Parliament’s approval before making the order.

The order is about delivering devolution and empowering local authorities to set their own policy agendas. The order provides enhanced local leadership in the form of a directly elected mayor with a strong democratic mandate and independence from the combined authority. The mayor will work closely with local leaders, who will sit on the combined authority board, and together they will drive forward the economic opportunities presented by devolution, with the mayor acting as chairman of the combined authority and providing a single voice for the area that can be both prominent nationally and help drive the devolution agenda.

As noble Lords may recall, during the passage of the enabling legislation there was debate on the necessity of mayors in devolving powers to local areas. The Government have made clear their stance on the necessity of mayors. However, they are not alone in this belief. Research commissioned by the Centre for Cities in May 2016 found that members of the public across five devolution deal areas supported the notion that directly elected mayors should have greater powers than council leaders.

17:15

With that said, it is important to note that no one area has been required to adopt the mayoral model. The Government’s position is that if an area is to have a mayor, it will be because that area, through its democratically elected representatives, has chosen to have one. However, the Government view devolution as two-way, and it is our clear intention that the accountability offered by a mayor is desirable and therefore forms part of the devolution deal that has been agreed between government and local leaders.

The Government have made excellent progress in implementing their devolution agenda. An order establishing the position of mayor in Greater Manchester was made on 28 March 2016. Orders have now been laid to establish the position of mayor for the Tees Valley, North East, Sheffield City Region and West Midlands combined authorities. All of these are scheduled to hold their first mayoral elections on 4 May 2017.

The Tees Valley mayoral order was laid before the House on 13 June. If approved, it will create the position of mayor for the Tees Valley Combined Authority, with the first election to be held in May 2017, and it sets the first mayoral term for three years, with the next election in May 2020 and with subsequent four-year terms.

As I have just set out, the Government are committed to devolving powers to places that have chosen to have directly elected mayors. I reaffirm the Government’s view over the necessity of mayors where powers and budgets are being devolved, as they provide this clear accountability and leadership.

As with the Liverpool city region, this order is a milestone in the implementation of the Tees Valley devolution deal that was agreed between the Government and local leaders on 23 October 2015. The first step in implementing the deal was made on 1 April 2016, when the combined authority was established, with functions over transport, economic development and regeneration. The deal provided an offer of powers and budgets from the Government on the basis that the Tees Valley would deliver certain measures and reforms, which included a directly elected mayor covering the whole of the combined authority area. The deal included that the mayor would hold responsibility for a consolidated transport budget and a multi-year settlement from government, as well as being able to exercise the function of creating mayoral development corporations.

The combined authority would take on responsibility for: creating a Tees Valley investment fund, bringing together funding for devolved powers and delivering a 30-year programme of transformational investment in the region; it would take control of a new £15 million-a-year funding allocation over 30 years, to be included in the Tees Valley investment fund and invested to boost growth; it would also take on the leadership of a comprehensive review and redesign of the education, skills and employment support system in Tees Valley; and it would take responsibility for a devolved approach to business support from 2017, to be developed in partnership with government.

The draft order uses the same enabling legislation as the previous draft order concerning the Liverpool city region. It establishes a mayor for the Tees Valley and sets the dates of elections and the first and subsequent term lengths. It has received the consents of all constituent councils; we are now seeking Parliament’s approval before making the order.

My previous introduction to the situation in Liverpool set out the role of the mayor and the opportunities that can be driven forward through a partnership of the mayor and local leaders. I repeat that the Government view devolution as a two-way process and that the Tees Valley leaders have chosen to adopt this model in order to agree a substantial devolution deal with government. As with Liverpool, the mayor will be the chairman of the Tees Valley Combined Authority, and as such will provide an important voice for the Tees Valley at a national level.

As I stated previously, further draft orders will follow to establish the position of mayor for other combined authorities and I look forward to bringing them before the House. It will be a major milestone for the Tees Valley and for the devolution process there. I commend both draft orders to the Committee.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

It may benefit the Committee if I make the point that the Minister is asking the Committee to consider the Tees Valley order at the same time as the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral order. If the Committee agrees, I will put the question on the second order formally after we have completed the first debate.

[Lord Shipley (LD)]

My Lords, I thank the Minister for introducing this order. As she rightly pointed out, this is one of the stages in the establishment of mayoral combined authorities.

First, will the Minister confirm that, once this order is agreed by Parliament, there will be a mayoral election on 4 May 2017? I ask because, as the Minister herself said, paragraph 7.8 of the Explanatory Memorandum states that:

“The Government will seek Parliament’s approval later in 2016 to further secondary legislation necessary to devolve the powers and budgets to the Combined Authority, as agreed in devolution deal”.

Can she confirm that there will be a mayoral election even if there is no agreement on the content of the devolution deal? It presupposes, first, that later this year the authorities making up the combined authority will finally agree with the Government and that there will be no changes by the establishment of a new Government, and, secondly, that Parliament itself will agree to the orders. I would like clarification on that.

The Minister will recall that, in our debates during the passage of the Cities and Local Government Devolution Bill, a great deal was said about the scrutiny and audit arrangements. Those grew in importance between Committee and Report and between Report and Third Reading. It was generally agreed that the arrangements initially proposed in the Bill were inadequate and some improvements were made. I draw the Minister’s attention to the report of the Public Accounts Committee of the House of Commons, Cities and Local Growth, published on 1 July, just a few days ago. In the summary, on page 3, it states that:

“There has been insufficient consideration by central government of local scrutiny arrangements of accountability to the taxpayer and of the capacity and capability needs of local and central government as a result of devolution”.

I also subscribe to that view. Is it possible for the Government to set out the reply they will make to the Public Accounts Committee alongside the next stage of parliamentary approval of the detailed arrangements of powers and resources for both mayoral combined authorities? Recommendation 8 of the Public Accounts Committee says, very specifically, that:

“Government should set out by November 2016 its plans for how it will ensure that local scrutiny of devolved functions and funding will be both robust and well supported”.

I would like to think that, when we get to the next stage of considering the arrangements for these combined authorities, we will have a response to this very specific point which the committee raised.

The Minister will recall that, during the passage of the Bill, I and my colleagues made a number of comments about the scale of responsibilities for an elected mayor within a mayoral combined authority. It is a big geographical area and it is a wide set of responsibilities. We queried the capacity of an individual person to do so much across all the areas that the Minister has described; in this case, it is transport, strategic planning, adult skills, employment support, business support, a business rate retention pilot, joint working with Her Majesty’s Government on children’s services, health, housing and justice. That is a very wide range of tasks for one person to be formally responsible for, even though the combined authority as a whole will have some shared responsibilities. Is the Minister confident about the structure being set up, not least because of the concerns of the Public Accounts Committee? It has identified a range of issues that in most cases we considered during the passage of the Bill some months ago, and the problems and the questions have not gone away.

I welcome the Tees Valley Combined Authority (Election of Mayor) Order and I congratulate Tees Valley on getting on with the process of devolving power to its mayoral combined authority, and in particular for overtaking the North East Combined Authority, which seems to have suspended discussions with the Government pending the election of the new Prime Minister. That is now going to be sooner than perhaps the authority had anticipated. I noted in the Minister’s introduction, unless I misheard her, that a number of further orders for areas such as South Yorkshire and the West Midlands are said to be forthcoming, but I do not recall any mention of the North East Combined Authority in that list. Assuming that I heard her correctly, can she clarify what the position is given that the order has been placed before Parliament for consideration? Is it delayed, over what timescale is it delayed, and is there still any potential, given the legal requirements, to hold a mayoral election in May if it is delayed much longer?

I have raised a number of issues for the Minister to respond to. Devolution is a positive thing, but she will understand that throughout this process we have expressed a whole range of doubts about the structures which are being established and the democratic accountability that lies within the process.

[Lord Beecham (Lab)]

I would like to inform the noble Lord, and possibly the Minister, about the situation with regard to the North East Combined Authority. It was originally thought that we would be taking that either this week or next week, but now it will be taken in September. It is not quite ready, as it happens, so next week would be difficult. My understanding is that it will be taken in September during the two weeks that we are back.

[Lord Shipley]

I thank the noble Lord for that clarification. I hope that we will have a chance to consider the plans for the North East Combined Authority in the House of Lords.

[Lord Alton of Liverpool (CB)]

My Lords, like the noble Lord, Lord Shipley, I think that devolution is a positive thing. I like the constituent boroughs that are designated in the order—Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral—and I support the Motion before the Grand Committee today.

For 18 years I served in another place as a Member of Parliament for a Liverpool constituency, but before that, from 1972 I served as a member of Liverpool City Council, and from 1973 as a member of the now defunct Merseyside County Council. I have always strongly supported subsidiarity and decentralisation along with the devolution of powers. I believe that robust decision-making done at the closest possible level serves democracy well. Moreover, it helps to address the disconnect that we see between our elected representatives and the communities they are supposed to serve. Noble Lords would expect someone who cut his teeth as a community politician to say that, but the municipalism of Joseph Chamberlain and Disraeli’s dictum that centralisation is the death of democracy illustrate that there is a distinguished and long tradition of men and women who have served and believe in local government, and some of them are present in the Committee today.

17:30

In 1997, having stood down from the House of Commons, I helped establish the Liverpool Democracy Commission, and served with a small cross-party group as the commission examined the state of local democracy on Merseyside and what might be done to revitalise it. Your Lordships will recall that in 1981 the city had experienced riots—during which 1,000 police officers were treated in hospital—followed by control by the Militant tendency, which led to the city being used as a battering ram against central government, and then the disqualification of city councillors and the real danger of a commissioner being appointed to run the city. Out of these ashes, I am glad to say that not only did the city recover but regeneration initiatives and stable local government breathed new life into the heart of the conurbation. Along with the noble Lord, Lord Storey, I was happy to have played my part in that.

It was against that backdrop that in the late 1990s our commission examined the structures of local government and its inability to guarantee quality in the delivery of services. We concluded that the traditional idea of the local authority as simply the monopoly provider of local services was no longer viable or adequate, and that councils must be willing to be more flexible in their approach to service delivery and the expectations of citizens. We argued that local government needed to become more outward-looking and willing to work with partners if it was to deal more effectively with complex, cross-cutting issues. We said that this would mean embracing profound cultural change, with the council defining its role and its relationship with the people of Liverpool.

We made a number of recommendations about how local government in Liverpool could get closer to the community that it serves, and redefine and add value to the role that councillors play in governance, improving local leadership and re-engaging citizens. Among other things, we called for the introduction of US-style open primaries to select council candidates and a directly elected mayor—both of which had impressed me during an assessment I made of how those things worked in the United States.

At the time, I suggested that just as the boroughs surrounding Manchester saw every benefit in describing themselves as Greater Manchester, we needed to convince the four neighbouring boroughs that constitute Merseyside that seeing themselves as “Greater Liverpool” would help them and the city sub-region. Perhaps because of the experiences of the preceding 20 years, the neighbouring boroughs wanted to keep as much distance between themselves and Liverpool as possible, but this was a tragic missed opportunity. No body can function without its heart, and all of a body’s organs need to function together.

For 40 years or more I have argued that only by breathing new life into Merseyside’s heart can there be long-term prosperity for all. If these orders are to achieve that objective—perhaps learning the lesson of Brexit about the disconnect between the political class and the people—it is vital that the boroughs and their leaders take real ownership of this initiative. They need to enthusiastically explain it to the people resident within their areas. Just down the road, Manchester has stolen a march on Merseyside, and if this challenge is not embraced with enthusiasm, our city region will fall behind competitor cities and its economy will suffer.

In this context, I particularly welcome last week’s launch, at the Finding True North conference in Salford, of ResPublica’s A Manifesto for the North, its vision for the region’s future, which envisages harnessing further devolved powers to enable the region to become culturally vibrant, with the benefits of economic growth accruing to all. At the launch, the right honourable Greg Clark MP, Secretary of State for Communities and Local Government, said:

“This is an important and thought-provoking Manifesto … The Government will work closely with partners across the North to devolve more power to people”.

Surely that is to be welcomed, and is the point of these orders today. ResPublica argues:

“There have been too many platitudes written about the North, and too many partial and piecemeal policies that have done little to reverse the decades of decline. For years, a combination of indifference and fatalism has left local leaders with a monopoly on power content to administer decline, and thus they must share some of the blame”.

It says, and I agree, that the city region devolution deals should be seen as an opening, not a final offer from central government—with the decentralisation of investment decisions greatly expanded in scope and scale.

When she replies, perhaps the noble Baroness, Lady Williams of Trafford, who has done so much to press the case for the north in Motions and orders such as these, will say whether she will support the following key recommendations in the ResPublica report, which are all matters in which city regions like the one proposed in this order will have a stake. How will the Government devolve Transport for London-style powers to elected city mayors? Will they allow regions to control housing development, giving northern cities and localities the right to control regeneration? How would they respond to, for instance, the introduction of a northern teaching premium to attract and retain the best teachers in the area, helping with their housing and student debts, or the creation of a northern wealth fund from any money generated, for instance, by shale gas exploration in the region? If the city regions call for the establishment of a northern digital service, how will the Government respond to that? The planned northern digital service would provide a shared platform for automating council services that all cities and councils could use—an entirely sensible and, I would have thought, eminently doable proposition.

Will the Government respond positively to proposals to devolve cultural assets and funds to the cities? Perhaps the Minister will say a little more about the £30 million that she mentioned in her opening remarks and how the Government believe that should be accessed and used in areas where council leaders complain all the time about the reduction of local funding and the implications for the running of existing local services. Much greater decision-making on public policy and the funding of cultural assets and infrastructure should be made within city regions such as the one proposed here. I have personally argued that instead of HS2 we should first connect the northern cities from Liverpool to Hull via a trans-north rail line. Is this something the Minister will be talking to the northern city regions about?

I support the order, with an open mind, so long as it has some real powers and real teeth. I will conclude by entering one simple caveat, which echoes something that the noble Lord, Lord Shipley, said a few minutes ago. The most obvious difference between arrangements for the new city region mayors and London is that nothing resembling the London Assembly is proposed. At the minimum surely there should be something like a mayoral senate. As things stand, the accountability and scrutiny arrangements are virtually non-existent. I would like to hear the Minister’s assessment of that significant deficiency.

[Lord Storey (LD)]

My Lords, I was interested that at the beginning we were talking about Tees Valley, but for the Liverpool city region we talk about the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority. I cast my mind back to the coalition Government, when the noble Lord, Lord Alton, and I argued for the Liverpool city region to have that title, as it wanted. The then Secretary of State was adamant that this was not going to be the case. The then Minister said, “What’s in a name? If you want to call yourself the Liverpool city region, feel free to do so, but the official title will be the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority”. Perhaps we could revisit that at some stage.

[Baroness Williams of Trafford]

Oh no!

[Lord Storey]

Names are important to localities. Names are places.

I want to pick up on the point made by my noble friend Lord Shipley. I am sure the Minister is familiar with the Public Accounts Committee’s Cities and Local Growth report. As the noble Lord, Lord Alton, rightly said, it is really important that we get accountability and scrutiny right. To reiterate the points that have been made, because I think they need underlining, the report says about the current arrangements with the combined authorities:

“We are not confident that existing arrangements for the scrutiny at local level of devolved functions are either robust enough or well supported. Robust and independent scrutiny of the value for money of devolved activities is essential”.

The report also says, on local scrutiny:

“Where powers, responsibilities and funding are devolved from the centre, it is vital that there is adequate local scrutiny of these devolved activities”.

I know that there will be independent scrutiny of the metro mayor, but I cast my mind back to when Liverpool decided to go for an elected mayor. Does the Minister know that the Mayor of Liverpool decided to abolish scrutiny and that, at a stroke, scrutiny was abolished? Before that, scrutiny was carried out by a councillor from a minority party who was on the payroll. Presumably, that member might have been looking over their shoulder and thinking, “Well, I’m on the payroll. If my scrutiny offends, will I still be on it?”.

It is vital that any scrutiny is completely separate and independent: it should not be the preserve or appointment of the metro mayor, and the person doing it should be independently appointed according to the Nolan principles so that they have the freedom to act and to scrutinise. I hope that the Minister will confirm that scrutiny arrangements will be robust. Indeed, this important report says the very same thing about the support needed for scrutiny.

The Minister referred to consultation with residents. Can she tell us how the city region is carrying out such consultation? I am a Liverpool resident and have not at any stage been consulted. I have not seen a website, a leaflet or an advertisement in the local newspapers. I would be interested to know how consultation is taking place.

My party and I have always been in favour of elected mayors, not for districts but for conurbations. The name is not important—what is in a name? It is not about whether it is a leader or a mayor. As the noble Lord, Lord Alton, rightly said, it is about the responsibilities that such a person has; it is about their functions; and it is about the finance and the funding that are made available. I hope that we might also look back at the situation we are now left with on Merseyside. In Liverpool, we could have a Lord Mayor of Liverpool, a Mayor of Liverpool and a metro mayor of the city region, which is a bit confusing. Would it not be a good idea to have leaders for all the districts and a metro mayor in their own right?

[Lord Watts (Lab)]

My Lords, it might surprise some people in the Room that I agree with what the noble Lord, Lord Alton, said. I was in local government for 25 years and a council leader before I arrived as an MP in the other place. I am in favour of decentralisation and devolution, but I have three main concerns.

The first is on democracy. It is quite strange that we are imposing a mayoral system on the people of Merseyside without even asking them whether they want one. I would have thought that with the Government’s commitment to localism the very least they should have done is give the people of Merseyside the opportunity to say whether they wanted a mayoral system. Quite frankly, we have gone past that, but I remind the Committee that the proposal does not have consent and people are suspicious about how it will work out. It would have been much better had we sought the agreement of the people of Merseyside before we entered into this arrangement.

The second concern is about accountability. The lessons from Liverpool are that great thought needs to be given to accountability within the new mayoral system. I find it strange that in Liverpool the mayor, who obviously has the powers of the mayor, is also leader of the council and the person who decides who goes on what committee, and I understand that to a great extent he is selecting councillors. That is appalling, quite frankly. To put that level of power in one individual is unacceptable, and I hope that the Government will look at the situation in Liverpool. When they are building a system for mayors in Merseyside and Manchester, they should make sure that proper scrutiny and accountability are built into the system.

I listened carefully to the Mayor of London when he made his last speech in that capacity and said that he believed that the system was open to corruption. He had obviously identified gaps in the system and wanted it to be strengthened. I hope that the Minister can say something about that today but that she will also go away and think about the sorts of powers that individuals will be given. If there is not adequate scrutiny, we will have a corruption problem in time. I hope we will address that.

My final concern is about funding. I think that people are expecting—and the Mayor of Liverpool has made great play of this—extra resources to come to the region if we have a mayoral system. We know that some of the biggest cuts that have taken place in public expenditure have been in Merseyside and Manchester. If the Government want to succeed in regenerating the north-west, and to use the mayoral system in Merseyside and Manchester to achieve that, they will have to provide some extra resources, because quite frankly they will be doomed to fail unless they have adequate resources to deal with the problems of the north/south divide and the infrastructure that needs to go in.

I share the view of the noble Lord, Lord Alton, about High Speed 2. I said in the other place when it was announced that I would be more likely to travel in the TARDIS from Manchester than on High Speed 2, because I do not believe it will ever get to Manchester. A lot of credibility needs to be built up by the Government. I hope that they will provide the extra resources that will be needed to make sure that the mayoral system is successful in Manchester and Merseyside. I wish it well and I hope we can address some of the issues I have raised.

17:45

[Lord Beecham]

My Lords, we are in the slightly unusual position of having no fewer than seven former council leaders gathered together here, including the noble Baroness the Minister. I do not know what the collective noun for such a group would be. Perhaps I may suggest a redundancy of council leaders, because—let us face it—most of us, or most of our successors, are finding their position extremely limited these days.

We are engaged in something of an experiment. It is an interesting experiment, as most of us have acknowledged, with considerable potential but with certain concerns which have already been voiced both in this debate and on previous occasions. The issues are very broad, but they cannot be addressed simply by the imposition of a mayoral system. Many of us feel that there should have been a local decision to adopt that system. The noble Lord, Lord Shipley, and I were on opposite sides of a referendum in Newcastle for having an elected mayor for the city. His successor was the Liberal Group Leader on Newcastle City Council who I formed an unlikely coalition with and which turned out to be successful in securing a no vote. But we now have a situation where Newcastle, if the North East Combined Authority goes ahead, will have an elected mayor imposed and in the Tees Valley area we already have an elected mayor in Middlesbrough. However, we have an authority which, having had an elected mayor, then decided to get rid of him and the position in Hartlepool, and yet they are going to be faced with that requirement. It is interesting that the Secondary Legislation Scrutiny Committee asked the Government what consultation had been carried out about these proposals and the Government replied that Ministers had indicated that the:

“Passage of legislation, is founded on the longstanding tradition of representative democracy in this country. The matters covered in these Orders have been consented to by the democratically elected representatives of the people of Liverpool City Region, and of the Tees Valley”.

Accordingly they said:

“Those giving consent will have done so in the knowledge that they are democratically accountable through the ballot box to the people of Liverpool City Region and of Tees Valley, and we can be confident that they will have engaged with their constituents in such ways as they consider appropriate”.

That is a very high-sounding affirmation of the belief in local democracy. Oddly enough, the principle does not seem to extend to the decisions which councils can take about the services they deliver. They are being constantly eroded. We are now seeing further moves to distance local authorities from the provision of education and we have seen similar moves elsewhere. More particularly, of course, we have the financial position of local authorities, which are rigorously and vigorously constrained in the exercise of their functions. For example, the vaunted democracy about which the Government boast did not extend to allowing councils to increase council tax by more than 2% without a referendum. That was not a decision they were deemed competent to make. We have of course seen similar erosions of responsibility in other areas.

On the financial side in particular there is significant loss of resources to authorities involved in the devolution process. The National Audit Office report sets this out very clearly. We hear much about the additional funding, which in the case of a number of areas will amount to £30 million a year over 30 years, or £900 million, which sounds like a great deal of money. That sum will be paid into the Liverpool City region. A smaller amount, because it is a smaller area, of £15 million a year and therefore £450 million will go into the Tees Valley area. It sounds impressive, but then we must look at what is currently being spent. Total capital spending—this is what the money will be for—in the Liverpool City region now is £312 million a year. In addition, £44 million under the annual local growth fund is payable to the LEP, which is obviously also concerned with that infrastructure. Therefore the total amount in the Liverpool area is something over £350 million, so £30 million distributed between all those authorities amounts to something like 8% of what is currently being spent on capital programmes. The position is similar in Tees Valley where the total capital spend of local authorities and the LEP is just under £190 million. It will get £15 million, which obviously is something like 7.5% of what is currently being spent. The financial investment that is being made and boasted about in connection with this project is minimal.

On business rates, I think the Government are still consulting on what needs to happen with them. It is all very well to say that local authorities will be able to keep business rates, but in both Merseyside and Tees Valley areas—I suspect particularly in those areas—the business rate income will be pretty minimal relative to the population and in comparison with other authorities. Presumably there has to be some kind of mechanism for redistribution. I do not know whether the Minister will be able to indicate how far the talks have progressed, and she may not wish to tell us or not be able to tell us what the outcome will be. However, where are we as regards the timetable for coming out with a clear position on how the business rates will be redistributed, if there is a need for, as surely there has to be, an element of redistribution? As it happens, it appears that in some areas we will go into this new system and committing to it without even knowing what the timetable is for when the business rate agenda will be addressed. Surely that is extremely unsatisfactory.

The issue raised by the noble Lord, Lord Shipley, about scrutiny is valid. There has to be local scrutiny and it ought to be built into local arrangements. We provided according to my suggestion for an audit committee under the legislation which would give some measure of independent scrutiny, and those who have been calling both today and hitherto for an effective scrutiny process are obviously right to do so.

But of course there is then the question, given that business rates will be the only locally raised revenue, of what happens to the services not merely of the combined authority but also of the constituent local authorities since revenue support grant will no longer be paid. Surely the two things have to be aligned if local services and the devolved functions are to be delivered adequately. I refer again without making any apologies for doing so to the regret that I and others have voiced about the abolition in the early days of the coalition Government of regional offices of government, never mind the regional development agencies. As the noble Baroness will recall, the abolition of regional government offices changed a system which had worked well in providing a close working relationship between Government departments and local authorities. In each region virtually all the Government departments were represented, engaging with local authorities and operating as a conduit between Whitehall and those areas. Now that we are creating these potentially powerful mayoral authorities, it seems to be even more important that there should be a local dialogue which can facilitate a closer working relationship between central and local government.

I have a final question to raise about the position of police and crime commissioners. The understanding is that it will be possible—indeed, Manchester has already opted for this—to have the police and crime commissioner position combined with that of the elected mayor. The next Prime Minister in her current position, which will last for another 24 hours or thereabouts, was keen to promote the notion that fire authorities should go down the same route as police and crime commissioners. Does the noble Baroness have any thoughts or information about how that process might develop and whether the Government are currently working on proposals which would add fire authorities to the police service? Perhaps we will have to wait to hear what the new Prime Minister says, but is it the Government’s expectation, and possibly their political direction, that the new mayors will have as a matter of course that combined power or even just the police and crime commissioner power? That raises in my mind and I suspect in those of others both here and elsewhere some really strong concerns about the concentration of power in such sensitive areas in what will be effectively a single pair of hands, something that many would consider to be undesirable.

Clearly we want to see the new system being given a chance to work and we want local decision-making to be effective at addressing the different situations that face each group of local authorities, but that cannot happen in my submission without adequate financial resources and without the Government preparing not simply to offload these responsibilities, but actually engaging with what will in effect be two levels of local government to secure the improvements that they talk about wanting to see and which are desperately needed in so many parts of the country.

[Baroness Williams of Trafford]

My Lords, I thank all noble Lords who have made a variety of points on the order. Perhaps I may apologise to noble Lords for being late. I was happily having a cup of tea with the noble Baroness, Lady Hollis, and I did not hear my phone ringing to say that our business had started. I apologise to noble Lords for being a little late.

I shall start with the question from the noble Lord, Lord Shipley. He asked if I could confirm the election of a mayor in 2017. Once the order is made, a mayoral election will be held on 4 May 2017 and if further orders are not agreed, the mayor will be elected and he or she will chair the combined authority, but will have no powers to exercise individually. The combined authority will have only its existing functions; that will be the situation if further orders are not agreed from now on in.

18:00

The noble Lord also asked me whether the Government will respond to the PAC comments on a review of scrutiny when we debate the next combined authority orders. Yes, we will be happy to set out any response that we have made. He talked reasonably about the scale of responsibilities of an elected mayor in relation to the PAC comments. We are very confident about the capacity of a mayoral form of governance to undertake the functions being given to mayors. The success of the London mayor and the use of elected mayoral governance across the world’s cities lend support to this. Elected mayors provide a strong and accountable form of governance—a single point of accountability which is needed to support the wider range of powers that is now being devolved.

The noble Lord thought I might not have mentioned the north-east. I did mention it, but the noble Lord, Lord Beecham, provided some details on it. A draft of the order creating an elected mayor has been laid before Parliament. The noble Lord, Lord Beecham, gave the date as early in September and I understand that is absolutely correct.

The noble Lord, Lord Storey, talked about the name. I have a hazy memory of the Liverpool city region and the name. I do not know if this is right, but I seem to recollect that there could not be agreement on the naming of the region and there was a lot of toing and froing before the name was decided upon, which included the name of every single local authority in the city region, just to keep everyone happy. It is amazing how people can get hung up on a name and I agree that a simpler name might have been a better idea. However, the name cannot be formalised unless everybody agrees. Hence we have quite a lengthy name for this combined authority.

The noble Lord, Lord Alton, talked about the bad old days—I do not disagree that Liverpool was a particular example—and selling the benefits of the mayor. I recall that when the idea of a London mayor was first mooted, people were terribly sceptical about it and were not sure it would take off. In fact, successive London mayors have been very good leaders and there is great competition for the post. It is, therefore, important that it is both valued and sustained going forward. I agree with selling the benefits, which I hope we will be able to do across the country in due course. He talked about the fatalism of local areas and leaders. I hope that, with the election of mayors and mayoral combined authorities, people’s minds will suddenly grasp the job of being a local authority councillor or a mayor for a combined authority and see what can be achieved at local level. This is often far greater than what can sometimes be achieved in government.

The noble Lord asked about transport arrangements. I will go through a list of all of it, and I am sorry if I go on a bit. The combined authority will take on responsibility for some functions in relation to transport and strategic planning; the devolved funding of £30 million a year over 30 years; the control of 19-plus adult skills; the devolved approach to business support from 2017 and the early adoption of the subsequent agreement; the agreed early adoption of the government pilot for 100% business rates retention; additional new powers over transport and further commitments for the area and Government to work together on children’s services, health, housing and justice.

The noble Lord also made a point about HS3 versus HS2. I am such an advocate for both: the noble Lord will probably have got this from some of the things I say in the Chamber, but I do not think it is an either/or. We have to have both. The east/west links are just as important as the north/south ones.

[Lord Alton of Liverpool]

More so.

[Baroness Williams of Trafford]

Yes. We can argue about more so, but I do not think it is one or the other. We must have both. Practically all noble Lords made the point about overview and scrutiny arrangements. The noble Lord, Lord Storey, asked whether the mayor could possibly abolish them. All combined authorities, including mayoral combined authorities, must have one or more overview and scrutiny committees and an audit committee to hold both the mayor and the authority to account. We will be bringing forward an order for Parliament to consider regarding overview and scrutiny arrangements for combined authorities.

I will outline what the obligations are under the combined authorities. They must establish at least one overview and scrutiny committee. This will be chaired by an independent person or a member of a constituent council who is not of the political party of the constituent councils. Their role will be to review and scrutinise decisions made and action taken by the mayor and the combined authority. An overview and scrutiny committee may require the mayor, the members and officers of the authority to attend and answer questions before it. This requirement must be complied with. They can call in decisions and recommend that they are reconsidered or reviewed, during which time a decision cannot be implemented. Further provisions to strengthen the role of overview and scrutiny committees will be made through secondary legislation and the orders giving effect to devolution deals.

I turn to the audit committee: we have spent quite a lot of time discussing both types of committee during the passage of the Bill. The combined authorities must also establish an audit committee, which must include at least one independent member. It can make reports and recommendations to the combined authority on financial affairs, risk management, internal control, corporate governance arrangements, and the economy, efficiency and effectiveness of the use of resources. Further provisions to strengthen the roles of audit committees will be made by order.

[Lord Storey]

Who will appoint the independent chair from the minor party or parties?

[Baroness Williams of Trafford]

It says that the chair could be an independent person or a member of a constituent council who is not of the political party of the mayor.

[Lord Storey]

But who will appoint that person?

[Baroness Williams of Trafford]

I am making the assumption that they will be appointed in the usual way that public appointments are made in local authorities, in accordance with Nolan principles.

[Lord Storey]

Could the Minister write to me about that, and the funding issue?

[Baroness Williams of Trafford]

I certainly will. We discussed it at length.

[Lord Shipley]

It is a very important issue, because there is a danger that the majority party will, in reality, be responsible for the appointment of the independent chair. We are seeking reassurance that, if the Nolan procedures are to be followed, they require an open procedure, not simply a council or the leaders in a combined authority making a decision on which member of the minority parties is to be appointed as independent chair.

[Baroness Williams of Trafford]

We did discuss this and agreed that that should be the case. It would make a mockery of the process if there was any appearance or evidence of bias of that kind. If it would be helpful, I will write to noble Lords from the Committee to outline the process and will place a copy in the Library.

The noble Lord, Lord Storey, asked me how Liverpool is conducting its consultation. It is on the regional combined authority website and is being promoted locally. It started on 24 June this year and the closing date is 5 August, so the noble Lord has time to respond.

The noble Lord, Lord Beecham, asked for examples of resources being made available, in this case to Tees Valley. I understand that Tees Valley Combined Authority’s single pot provides an assurance framework for £226 million of flexible Section 31 grant funding with a confirmed five-year profile. He made the point—as he often does—about local authorities having to make ever more efficiency savings and asked how they would have enough capacity to deliver some of the things being devolved down. It is envisaged that local growth will in many ways—particularly if you look at things like the devolution of health and social care—be a big saving to the public purse and ultimately help in local authorities’ budgets. However, these are all things that are being devolved down that local authorities would not have had previously. So I am very confident that local authorities will see themselves in a better, not a worse, position. He also asked about business rates and he is right: we are currently consulting on the future of business rates and we have made it clear that there will continue to be some form of top-up and tariff. However, I think that a date for decision is yet to be determined, but I shall let him know when it is. I am assuming that it will be by the end of this year.

The noble Lord, Lord Watts, asked what the Government are doing to ensure that the mayoral system is not open to corruption, which I think is a very good question in the context of some of the things that we have seen previously in local authorities. Not only will there be rigorous scrutiny arrangements—which never existed in the 1980s—as provided by the Cities and Local Government Devolution Act, but there will be requirements for transparency; that is, meetings in public, which again did not exist back in the 1980s and were not introduced in local authorities until relatively recently. Moreover, conduct requirements, which we did not have back in the day—things like declarations of interest—will apply to combined authorities. I hope that gives the noble Lord some comfort.

The noble Lord, Lord Beecham, asked about the PCC and fire functions. It is for local areas to propose where they think it would be efficient and effective for the mayor to take on PCC and fire functions. In terms of the new Prime Minister and her previous keenness for fire functions, I really do not know. I have been asked a lot about what the new Prime Minister thinks and I really do not know. I am sure all will be revealed in the next few days.

Motion agreed.