Levelling-up and Regeneration Bill (Tenth sitting)
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 5th July 2022
(1 year, 9 months ago)
Public Bill CommitteesLevelling-up and Regeneration Act 2023 View all Levelling-up and Regeneration Act 2023 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 5 July 2022 - (5 Jul 2022)
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
Alex Norris
It is a pleasure to resume proceedings with you in the Chair, Sir Mark.
These seven clauses deal with a significant change in policy, because they enable the fire and rescue functions and the footprint of the county combined authority to be transferred to the Mayor. I think that significant change deserves debate and recognition. Many of the arguments about clause 30 and the similar delegation of police and crime functions read across to fire and rescue functions, so I do not intend to duplicate them.
I am not sure that I have detected a huge demand for the transfer, nor a sense that fire authorities are not doing what they are supposed to be doing. If there is local enthusiasm to take on those functions and consensus can be built on that, it is for those communities to argue for that rather than me. I would be interested to learn from the Minister what the business case for such a change looks like. Part of the problem of the lack of an impact assessment is that we do not know the impact of the proposed change, nor the upsides that we can expect from it. What is the take-up?
My questions to the Minister are similar to those that I asked about clause 30, and I hope that I will receive similar answers. I take it that this is about local choice and that any change can only be made where there is local consensus. May I take it that the same proviso about geography applies in this case as did under clause 30? Generally, will the arrangement operate according to coterminosity, and work elegantly, rather than trying to make something fiddly work which is not likely to succeed?
Clause 31(2) refers to the involvement of the chief constable of the police. In recent years, it has been a Government policy decision to blur the distinction between fire and rescue and the police. I am keen to hear the Minister’s answer about that involvement. What safeguards will be in place to handle those two organisations, which have separate functions, so that there is at least some sort of distinction between them, certainly in the finances but also, in some senses, on the policy? A case needs to be made for any such involvement because I do not think it is automatically a good idea.
The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Neil O'Brien)
Clause 31 enables the Secretary of State to make regulations to allow the Mayor of a combined county authority to whom police and crime commissioner and fire and rescue functions have been conferred to delegate fire and rescue functions to the chief constable of the police force for the area. It further allows the chief constable to delegate those functions to both police and fire and rescue personnel, and through it enact what is known as the single employer model.
Those provisions are designed to provide the option for Mayors of CCAs to exercise fire and rescue service functions under the single employer model where they also exercise PCC functions, if they feel that allowing the chief constable to run both operational services will help them to have a stronger role in public safety and to deliver more effective emergency services for their local area. That is the rationale that the hon. Member for Nottingham North is seeking.
It is an equivalent provision to section 107EA of the Local Democracy, Economic Development and Construction Act 2009, which made that option available to Mayors of combined authorities when Parliament approved its addition via the Policing and Crime Act 2017. The change is basically about enabling the benefits of blue light integration between the two services.
Question put and agreed to.
Clause 31 accordingly ordered to stand part of the Bill.
Clauses 32 to 37 ordered to stand part of the Bill.
Clause 38
Mayors for CCA areas: financial matters
Rachael Maskell (York Central) (Lab/Co-op)
I beg to move amendment 52, in clause 38, page 33, line 32, at end insert—
“(c) for and about alternative funding streams (including grants from the Secretary of State) for fire and rescue services if constraints on revenue-raising mean that there is a threat that fire and rescue safety standards may not be maintained in the area.”
This amendment enables the Secretary of State, in circumstances where mayoral revenue raising powers are insufficient for the provision of a safe Fire and Rescue service, to make alternative provision to fund the services, including a grant from the Secretary of State.
I think it is right to declare a number of things. First, North Yorkshire is in deep discussions about a devolution deal. We want to see that progress successfully, but at the same time we face a real challenge with our fire and rescue service. I want to talk about the reality of what we are debating, to ensure that we place it with the right safeguards, which are absolutely essential.
North Yorkshire was one of the first authorities in which the fire and rescue service combined with the police and crime commissioner function. At one point there were just four authorities in that position. Therefore, North Yorkshire has probably the best experience of how that combination works. I must say to the Minister that there have been some benefits from such a combination, such as cost savings, in particular arising from back office integration. That helps with public funding, which must be a positive because that is public money. However, when we look at the reality of what is happening now in the service, we have a very different story to tell.
My amendment is designed to keep the public safe and ensure that there is sufficiency in the service to retain sufficient fire appliances, to operate them safely and to have crew in the vicinity. This is about making sure that the funding flows work. Right now, I am expecting a meeting with the Home Secretary to discuss the matter. If the authority is devolved, I may be looking in a number of different directions to achieve the sufficient funding required to keep my community, and others, safe.
To highlight the challenges ahead of us, we are looking at the removal of night-time cover from Harrogate and Scarborough fire stations, as well as the removal of a second fire appliance. In my community, Huntington’s fire station may be pared back because of funding deficiencies. That means that response times will increase by seven minutes and 59 seconds—eight minutes of burning fire could cause a lot of damage. It is important to consider the issue in the context of today’s debate, because if it takes 16 minutes in total to reach a fire in my constituency, 31,000 residents will be impacted as a result of that change. That is quite significant.
Colleagues will be pleased to hear that I do not intend to go into all the ins and outs of the North Yorkshire Fire and Rescue Service, but the sufficiency of the service will be subject to constant challenge. We will be looking ever more at how we can share resources and integrate roles, but there comes a point when the very viability of the service is challenged, and the public is put at risk. That is the point we are at now. If we are to see this integrated into a devolution deal, the money will have to be ringfenced and the community safeguarded, or else we could see a disaster.
In North Yorkshire—this also applies to other Members’ constituencies—we have a mixture of urban and rural. The reality is that North Yorkshire is the biggest county by geographical area, which puts stress on the service. It is not all bad news. The Home Secretary came forward with a fix to this for eight authorities that had kept their reserves. They got additional flexibility around the precept and so were able to fully fund their services and have sufficiency and some headroom for protection. North Yorkshire had spent its reserves and so was not awarded that precept flexibility.
Because of the geographical nature of North Yorkshire, it is now just about the worst-funded fire authority in the country. If there is no flexibility from the Home Secretary and Government, the result is that my constituents’ lives will be put at risk. Their homes could burn. Across North Yorkshire it can get tinder dry at this time of year and we see fires breaking out. It could have a catastrophic impact and put firefighters at risk, as well as the environment and so much more. Who will be responsible for bailing out a service is a serious consideration. Because we will not have proper governance over the funding of the service, as it will be under the new authority, will we keep cutting and cutting, increasing the risk to the public and ultimately placing them in danger?
It is part of a devolution deal, whether the police and crime functions and fire and rescue come together in one role and how that will work out, but it is important to consider where that funding is going to come from. I am really concerned. That is why my amendment is so important. With the scale of the outstanding deficits, if we are going to pare back now, we will see increased energy costs, higher maintenance and issues around salaries, which have not yet been negotiated. The service needs new equipment, uniforms and insurance—the list goes on. That all has to come out of a zero balance. Therefore, being able to get the assurance that when there is devolution there will be sufficiency is going to be really important to ensuring that there are protections.
It could be argued that for a few years there will be greater cost savings. That could be the case, although I am not sure much more could be got out of the service. But the cuts in York, Scarborough and Harrogate will have a significant impact. In fact, only Cambridgeshire and Essex are now worse funded, and actually they have more reserves than North Yorkshire. That is the financial situation.
We need a resolve. The resolve comes in my amendment, which seeks to utilise the efficiency savings we can gain. That has clearly already been done—as has the back office shared facilities and the usual reserves. At that point, do we put the public at risk? Under a devolved authority, what we are talking about is the very homes we are trying to build being put at greater risk. That seems somewhat ironic within itself. Or do we provide that ring of protection around our fire and rescue essential service—emergency services, as we know it? Putting those constraints there is absolutely important.
My amendment would add one paragraph to the Bill. It highlights that if there are constraints around the funding, there will be means of revenue raising that will ensure that the safety standards are maintained in an area. That would essentially be either a grant or flexibility around the precept. That precept flexibility has already been exercised for eight authorities, so we know that is a mechanism that could be triggered. However, that was determined by Whitehall. If it is to be determined by a devolved authority, what would that look like, or will a Mayor have more opportunity in order to protect the community? I would like to understand how that would work functionally, and how we keep those communities safe.
Tim Farron
The hon. Lady makes an excellent point. We are the wettest bit of England. We need to be, because of the lakes—we have to keep them topped up. Nevertheless, Members will remember that in the past few months there were flash fires at Cartmel Fell, which raged for a full weekend and took many pumps to get under control. I am massively grateful to those who got those fires under control.
With that changing weather, we can go from very damp weather to very dry weather for long periods. In areas with lots of forestry and agriculture, there is the potential for flash fires, which can cause death and damage to wildlife, livestock, homes, businesses and families—human beings. We therefore need to be all the more aware of the fact that we cannot allow the technicalities of funding formulas to get in the way of keeping our people safe.
Neil O’Brien
I am extremely sympathetic to hon. Members campaigning on local services. I know that the Home Office has been engaging with the North Yorkshire fire and rescue service specifically on these issues. In 2022-23, the North Yorkshire fire and rescue authority will have core spending power of £33.5 million, which is an increase of £1.4 million or 4.5% compared with 2021-22. As of 31 March 2020, North Yorkshire held £4.9 million in resource reserves, equivalent to 60% of its 2020-21 core spending power. According to its draft 2020-21 accounts, total resource reserves increased by £8 million by 31 March 2021, an increase of £3.1 million or 62%. The issues that the hon. Member for York Central has raised, which are very important, are certainly being looked at.
Alex Norris
I promised the Committee a debate on alternative mayoral titles when we were talking about changing the names of county combined authorities, and I would never knowingly not keep a promise of such magnitude. I will be honest: I am not very excited by alternative mayoral titles, whatever the right hon. Member for Pudsey might say—not least because I have a lot of confidence in the collective wisdom of the British people. Being a proud Nottinghamian, I know that if someone were to become the Mayor of Nottingham and Nottinghamshire and then pursue an alternative title that was too grand to befit their status, they would face significant judgment from some very straight-talking people. In the end, it would not work out well for them. I have confidence that title inflation is not something that the British people are likely to look at fondly.
I do not want to detain the Committee for long, but I have three questions for the Minister. Frist, will he indulge us by letting us know what demand there is for alternative mayoral titles and what conversations he has had with communities that wish to have them? I understand that some demand might result from having different geographies and make-ups, and I am interested to hear about that.
Secondly, we had the first part of this debate when we discussed clause 15, which relates to county combined authorities changing their names. Clause 15(2)(c) has a requirement for the CCA to vote by a two-thirds supermajority for a change of name. Under clause 39(3)(c), the resolution to have an alternative mayoral title needs to pass with a simple majority. I did not have a lot of interest in the first proposed usage of the supermajority. A supermajority does have it uses, but only by exception. I am not sure that clause 15 makes a compelling case for one, but that has been disposed with. Why, however, has the Minister chosen to diverge in this way?
Finally, clause 39(2) provides a list of alternative titles, including county commissioner, county governor, elected leader and governor. Clause 39(2)(e) then introduces the possibility of having
“a title that the CCA considers more appropriate than the alternative titles mentioned in paragraphs (a) to (d), having regard to the title of other public office holders in the area of the CCA.”
I read that as meaning “any other title”, essentially, but I am keen to hear from the Minister that that is what is meant.
Neil O'Brien
The hon. Gentleman is correct to read it as “any other title” that is locally wished for, having respect for the fact that there may be other people with such job titles in the area. He asked about where there is demand. A number of places that we are talking to about devolution deals are thinking about using non-mayoral titles, particularly in non-urban areas and where people feel that “Mayor” may not be the correct term for them. They may prefer leader, governor, commissioner or some of the titles that we have discussed.
I was hoping that the hon. Gentleman would ask why a supermajority is required to change the name of the institution but not the title of the directly elected leader. The difference is that many people will have made legal contracts with a CCA, so changing it is a fundamental and non-trivial thing to do, because it would require lots of other consequential changes. We talked in a previous sitting about the need for the stability of the institution. This is a more novel and more experimental area. I do not expect that we would see lots of constant changing and chopping of the name of the directly elected leader, but we think that that is an important part of devolution.
Rachael Maskell
I have a further question about this measure and how we could end up with such a variety of names in different devolved areas: a county commissioner in one place might be a county governor, a governor, a Mayor, or who knows what we might end up with under subsection (3)(e). That could be more confusing for the public. We have already talked about a range of powers and a range of tiers; we now have a range of names, in a whole spectrum of shifting powers and accountabilities. Does the Minister believe this measure to be a necessary step? Does he recognise that it could lead to more confusion than trying to address the very issues he probably intended it to address originally?
Neil O’Brien
I believe it to be a necessary step in the Bill. In previous sittings, I set out that our particularism, our respect of local circumstances and our bespoke nature are features, not bugs, of our devolution agenda. This clause is a further part of that, making the title of the directly elected leader reflect the desires of local people and the history of the local area, and to fit in with local circumstances. It is therefore of a piece with the nature of how we are conducting the devolution agenda.
Question put and agreed to.
Clause 39 accordingly ordered to stand part of the Bill.
Clause 40 ordered to stand part of the Bill.
Clause 41
Power to amend list of alternative titles
Question proposed, That the clause stand part of the Bill.
Alex Norris
Bearing in mind the Minister’s answer that clause 39(2)(e) in essence allows any title to be chosen, if that is the will of the county combined authority, what is the necessity of this clause? It allows the Secretary of State by regulation to change the list of those potential titles. There is an argument to say that there is not much point to having them on the face of the Bill, if a CCA can just choose what they want anyway—but perhaps it is shaping the conversation, in which case I understand that. Given the powers for county combined authorities to choose any name they wish, I find it hard to understand any value in reserving the ability to change the list by regulation. That seems very much after the fact. I am surprised and wonder why the Minister is so keen on the clause.
Neil O’Brien
It is entirely to shape the conversation, as the hon. Gentleman says. It is to give a list of suggestions that may be appropriate, while also allowing others to go for different things if they consider that appropriate locally.
Question put and agreed to.
Clause 41 accordingly ordered to stand part of the Bill.
Clause 42
Proposal for new CCA
Rachael Maskell
I beg to move amendment 53, in clause 42, page 38, line 14, at end insert—
“(c) prepare and publish a report setting out the results of the consultation.”
This amendment would require the authority or authorities submitting a proposal for a new Combined County Authority to make the results of the public consultation publicly available before submission.
Tim Farron
In looking forward to changes in the way in which local government will be organised in the future, we are bound to reflect on how things have been done in the past.
In Cumbria, we are working hard to ensure that the reorganisation to unitary authorities is a big success, and the early signs are positive. It is worth bearing in mind that there was a consultation, and that fewer than 1% of the public engaged with it. We can glean that the massive majority felt it was not necessary to reorganise local government in Cumbria. People in the southern part of Cumberland object to being lumped in with Westmorland and split from the rest of Cumberland, and people think we would be far better off with smaller units of local democracy. After all in Scotland, where it is an entirely unitary local government landscape, there are unitary authorities with as few as 17,000 people living in them. In England, there is no recognition of the similar rurality need for smaller authorities.
Many people also thought, “We are going through a pandemic, what a stupid time to be rearranging the deckchairs.” If there is a need for local government reorganisation they thought that surely now was not the time to do it. We are where we are, and we will make a success of it—we are determined to do. These are important amendments, because they remind us again that we need to scrutinise the motivation behind the Government’s proposals. Who are these proposals for? The Government are minded to reorganise local government to bring in new CCAs, Mayors and all the rest of it, but unless we are clear that the public want those changes and the Government are responding to that, it is yet more evidence that this approach to local government reorganisation is about fixing Whitehall’s desire for control and convenience, rather than about listening to local people anywhere in the country.
Neil O’Brien
We discussed in a previous sitting the new combined county authority model and the associated consultation requirements. At that time, I set out our commitment to ensuring that whenever a CCA is established, its boundaries change or, if it is being abolished, that the local public are consulted on the proposal.
Clauses 42 to 45 set out the requirements, including public consultation, associated with establishing, changing or dissolving a CCA. They include the preconditions for any regulations with those effects to be made. One such condition is for the area or CCA to undertake a public consultation on the proposal to establish, amend or dissolve a CCA. A summary of the consultation responses must be submitted to the Secretary of State alongside the proposal, and the decision to submit it must be taken at CCA or council meetings, which are held publicly. As such, that summary of consultation results will be publicly available.
Another condition is the specific duty on the Secretary of State to consider whether, prior to making regulations, further public consultation is needed. Indeed, the absence of a public response to an earlier consultation might give rise to further consultation—that addresses the point made by the hon. Member for Westmorland and Lonsdale. If the Secretary of State makes such regulations, they must publish an explanatory memorandum setting out the results of the public consultation. As a result, although we totally agree with the sentiment behind the amendments, they do not add anything to the requirements that are already provided for, and I hope that they will be withdrawn.
Rachael Maskell
I appreciate the contributions that have been made by hon. Members. The points about accountability were absolutely right. We have seen a reorganisation of local government in North Yorkshire, and the districts were not supportive of it and felt that it was very much imposed from the centre. Being able to see the rationale and the thinking is important, and that is what these simple amendments would allow. I am happy to withdraw the amendment for now, but I reserve the right to bring it back at a later stage. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 42 ordered to stand part of the Bill
Clause 43
Requirements in connection with establishment of CCA
Alex Norris
I beg to move amendment 40, in clause 43, page 39, line 23, at end insert—
“(5A) When the Secretary of State makes regulations under this section they must publish an accompanying statement stating—
(a) whether or not the CCA has access to the fullest conferred powers, and
(b) if not, the reasons why not.”
I will be brief, because this is a counterpart conversation to discussions that we have had before. The amendment would enhance the clause by putting in a requirement to report on whether a combined county authority has access to the fullest conferred powers, and if not, an explanation for why. That would help the Government to maintain their stance in the White Paper, in which they seemed to want to offer such measures by 2030. It would perhaps be a positive step if we did that a little quicker.
Neil O’Brien
The amendment is not appropriate for two main reasons. First, it uses the term “fullest conferred powers”, which is undefinable and incalculable. Our devolution framework does not provide a minimum offer, and our local leadership mission and desire to deepen devolution mean there is no upper limit to the conferral of powers, nor should we seek to impose one.
Rachael Maskell
On a point of order, Sir Mark. Could the Minister speak a bit slower? I do not know whether it is the acoustics in the room, but I am finding it quite difficult to hear what he is saying.
Neil O’Brien
Are some people finding this not thrilling? That is absolutely outrageous—we are getting to the really exciting bits. I will try to enunciate better. It is perfectly reasonable that the hon. Lady asks me to do so.
It will be appropriate for different CCAs to have different functions due to the different circumstances and priorities in their areas. We have had that same argument a number of times in Committee. Whatever functions are to be conferred will be done by regulations, which will be considered by Parliament and cannot be made without parliamentary approval. In considering the regulations, to rehearse some of the points already made, Parliament will have an explanatory memorandum and other explanatory documents explaining why the powers are conferred, the views of the consultees and how the conferral meets the statutory test of improving economic, social and environmental wellbeing.
I hope that given those explanations, the hon. Member will withdraw the amendment.
Alex Norris
I am grateful to the Minister for that answer. I got a little more than I bargained for. I admire the Minister’s characterisation of the Government’s devolution agenda as “incalculable”. I have some doubts about that. I argue that the Minister has set out quite defined and calculable strata in the White Paper, so I am slightly surprised that it would be impossible to know whether a combined county authority had the maximum powers. That is possibly a point of difference. We are in the strange position that our alignment with the White Paper is greater than the Government’s, but I am sure that point will come up again. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 43 ordered to stand part of the Bill.
Clauses 44 and 45 ordered to stand part of the Bill.
Clause 46
General power of CCA
Question proposed, That the clause stand part of the Bill.
Tim Farron
I wonder if I could crowbar something in? Within the combined county authorities there will be housing powers. There is reference of course to a lack of borrowing powers, and I want to push back on that. On both sides of the House, we often talk about the chronic need to build more affordable and social rented homes. Many councils retain ownership of council housing, and I was pleased that one of the upsides of the new authority in Westmorland and Furness is that, because Barrow never got rid of its council houses, our new authority will have a council housing department. That is really positive.
I know that there are fingers on the public sector borrowing requirement, and there are reasons why the Government are reluctant to give authorities’ council housing departments the ability to borrow in order to build the homes we need, but that is clearly wrong. If the Government want to empower local communities to build the houses we desperately need, they are going to have to give housing authorities the power to borrow to build them.
Neil O'Brien
In general, the hon. Gentleman’s question takes us a bit beyond the scope of the clause. However, the narrower part of it, which connects up with the good question put by the hon. Member for Nottingham North, gives me an opportunity to explain what the clause does and does not do.
The clause does not give a combined county authority unbridled power. It gives it the power necessary to do anything it considers appropriate for the purposes of carrying out any of its functions—its “functional purposes” in the law. That might include undertaking a feasibility study as a preliminary stage to an infrastructure project. The clause sets out boundaries and limitations for a combined county authority’s exercise of its powers.
These are therefore broad powers, but there is still a requirement in law that they are related to the carrying out of its actual functions.
Question put and agreed to.
Clause 46 accordingly ordered to stand part of the Bill.
Clause 47 ordered to stand part of the Bill.
Clause 48
Power to make provision supplemental to section 46
Alex Norris
I beg to move amendment 41, in clause 48, page 43, line 11, leave out paragraphs (b) and (c).
This amendment would prevent the Secretary of State from conferring different general powers on different CCAs.
Tim Farron
I add my support to Labour’s approach. I am not fixated on symmetry in terms of what devolution looks like across England, but like the hon. Member for York Central I am obsessed with symmetry of opportunity. The amendments would help to raise the bar and raise the expectations of all authorities so that they can see what powers they can aspire to.
If we do not have something like the amendments, and some communities, because they have a Mayor or for other reasons, are offered greater devolution—it is often more delegation than devolution—more powers and more responsibilities, that is not levelling up. It is quite the opposite: it is building privilege into some parts of the country over other parts of the country, and institutionalising privilege. Broadly speaking, it will be institutionalising privilege for urban and metropolitan areas that have city deals, Mayors and the highest levels of devolution and delegation of responsibility. Not allowing all parts of the country to opt in to having the greatest level of devolved powers, should they so choose, is a recipe for creating the need for a different kind of levelling up some time not very far in the future.
Neil O'Brien
This is indeed a continuation of the debate we have been having over several days now. We have stated our belief that one-size-fits-all arrangements of the type provided for by amendment 41 are antithetical to different areas having different functions and progressing at different speeds.
The effect of amendment 41 would be that, regardless of the functions conferred on different CCAs, unless the CCA has had conferred on it the broader general power of competence under clause 49, the conditions imposed on what can be done in pursuit of those functions will have to be the same. That would be an overly rigid approach, in practice requiring all CCAs to be at the same level before any conditions could be changed. That outcome, however unintentional, would not fit with our area-led and bespoke approach to devolution.
The general power of competence, introduced for local authorities by the Localism Act 2011, would allow a CCA to do anything an individual can do that is not prevented by law. For example, if a CCA does not have housing powers, the general power of competence would enable it to buy a house on the market, but it would not enable it to compulsorily purchase that house.
Amendment 42 would require the offer to all areas, implicit in this clause, to confer the general power of competence, if it is appropriate to their circumstance and if they want it, to be restated wherever it is so conferred. That requirement is unnecessary.
We have been clear that if a good case exists for any power to be conferred to any area as part of a devolution deal, we are open to proposals to do so that are in line with the devolution framework. Further, it could be unhelpful and inappropriate to be required to make an unconditional offer that might not be universally appropriate. To date, only three combined authorities have asked for this to be conferred, which we have done.
Both amendments seek to bind matters that should always be the subject of an individual agreement between the area and the Secretary of State, which Parliament will then have to approve. All variations will be public knowledge and the rationale for them will be subject to parliamentary debate informed by explanatory memorandums.
Rachael Maskell
I was very taken by the Minister’s comments about an area-led process. It does not feel like this is area-led; it feels Secretary of State-led—the Secretary of State will determine what the powers will be. Would the Minister consider an amendment that facilitated a more area-led approach at a later stage of the Bill? If there were a more à la carte opportunity and authorities were ready to take on greater powers and responsibilities, could they assume those powers, as opposed to having to renegotiate a deal, which could be quite a bureaucratic process? They could access what other authorities have accessed, in a timely way. Would that be a suitable amendment to the Bill that was palatable to the Government as we move forward?
Neil O'Brien
Without wishing to repeat all the arguments we have been making over the last several days, I would argue that this is the à la carte approach. We are resisting a one-size-fits-all approach in which, if a power is offered to one area, it must be offered to every single area, and in which people can move only at the speed of the slowest. For all the reasons I have already set out, we will continue to resist that approach.
Rachael Maskell
I do not think this is about a one-size-fits-all approach by any means. It is recognition that different authorities will be—
Rachael Maskell
Thank you, Sir Mark. I was building my case, but I appreciate your guidance. I simply seek a different mechanism by which authorities could take on greater responsibilities, because it seems it is either full negotiation or a denial of being able to pick to expand. I wonder whether there is a halfway house that could be palatable to the Minister.
Neil O'Brien
As Members will have noticed from us having done six or seven devolution deals to continue to deepen deals we have agreed, and from the fact that we are working on deepening the devolution deals for the West Midlands and Greater Manchester Combined Authorities, we are prepared to go further all the time. That brings me to the end of my remarks.
The Chair
Neil O'Brien
I will have to write to the hon. Gentleman. Clauses 50 to 54 are basically technical provisions needed to make the CCA model work. Clause 50 grants the Secretary of State the power to make incidental, consequential, transitional or supplementary provision in support of regulations made under this chapter. I am happy to set out some examples for him in slow time.
Question put and agreed to.
Clause 50 accordingly ordered to stand part of the Bill.
Clause 51 ordered to stand part of the Bill.
Clause 52
Guidance
Alex Norris
I beg to move amendment 43, in clause 52, page 45, line 16, leave out “may” and insert—
“must, within 6 months of the day on which this Act is passed,”.
This amendment would require the Secretary of State to produce guidance on the establishment and operation of CCAs within 6 months of this Act receiving Royal Assent.
We are about to reach the end of chapter 1 of part 2, which relates to the formulation and mechanics of combined county authorities. Much of what will pass in the rest of part 2 is consequential and not much to debate, so this will be the last opportunity to make some points. I did not want to miss that opportunity, particularly on guidance.
The discussions we have had, and the mechanics of the organisations as laid out by the Minister, show that the CCAs are fiddly entities. There is much to be established, with Mayors, deputies, changing geographies, changing names, police functions, fire functions and much more. As detailed in the White Paper, at least 10 places are foreseen as potential partners for combined county authorities, so there is likely much to be understood in guidance.
I hope that my amendment is not necessary. It changes the provision allowing the Secretary of State to give guidance to one compelling them to give guidance. I hope that the Minister will tell us that the intention is to have guidance, because clearly there will be a need. I have suggested “within 6 months” of Royal Assent. That is not something to fall out over, but I am keen for a commitment that guidance will follow and to know when it might do so.
Neil O'Brien
The clause grants the Secretary of State the power to issue written guidance about anything that could be done under or by virtue of chapter 1 of the Bill by a combined county authority, combined authority, county council, district council or integrated transport authority. The relevant authority must have regard to any guidance given in exercising any function under this chapter.
The amendment, as we understand its intent, is misplaced. The reference to guidance in the clause relates to the requirement for an authority to have regard to the guidance in exercising a function conferred or imposed by virtue of chapter 1. I can undertake that areas wishing to establish a CCA will be made familiar with the processes required of them during their devolution deal negotiation. We will help them to do all those things. Officials will continue to work closely with area officials to ensure the successful implementation of deals and the establishment of CCAs.
The Secretary of State has no immediate plans to issue guidance. The ability to do so via this clause provides maximum flexibility should the issuing of such guidance ever be appropriate. I hope that reassures hon. Members.
Alex Norris
I am a little surprised that the intention is to provide guidance in a kind of ad hoc manner directly from officials to area officials. It would seem to me valuable for that to be a common and publicly shared thing, not least so that the public can understand it and get the sense that these processes are being done transparently, rather than in phone calls that they do not have access to. I am a bit surprised by that. I will not labour the point by pressing for a Division, but perhaps the Minister will reflect on it. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 52 ordered to stand part of the Bill.
Clause 53 ordered to stand part of the Bill.
Schedule 4 agreed to.
Clauses 54 to 70 ordered to stand part of the Bill.
Clause 71
Capital finance risk management
Question proposed, That the clause stand part of the Bill.
Neil O'Brien
The Government recognise the importance of prudential borrowing and local capital investment for economic growth, improved public services, and meeting local priorities such as housing delivery. That is why we need a robust system that supports the benefits of local decision making and allows for sensible investment, but also that safeguards taxpayers’ money and protects the local government finance system.
In recent years, a small minority of local authorities have taken excessive risks with taxpayers’ money: they have become too indebted, or have made investments that have proved too risky. To give some examples, local authorities have engaged in investment activities in markets they know nothing about, such as energy companies, and lost tens of millions of pounds of taxpayers’ money. Some have not had the governance structures in place that would enable them to make, or assure themselves of, investment and borrowing decisions. Some have borrowed up to £1 billion when they have only had a core spending power of just over £10 million, and others have not set aside funds to pay off their debt when it becomes due. The National Audit Office reported that 20.8% of local authorities’ property acquisitions in the period 2016-17 to 2018-19 were outside of their region. In summary, there have been a number of problematic activities, which clause 71 seeks to address. The Government have been consistent and clear in their messaging that they will take action to address such activities as needed.
The National Audit Office and Public Accounts Committee have reported on the risks to the financial system, and the need for urgent action to address them. The Government are making changes to the capital system to support good decision making and constrain risk, but they must also have the powers to directly address excessive risk where necessary and appropriate. The changes will provide a flexible range of interventions for the Government to investigate and remediate issues where capital practices have placed financial sustainability at risk.
To be clear, the Government have no intention of restricting the activities of local authorities that operate responsibly. We are clear that measures must be as targeted and proportionate as possible to protect local services and taxpayers, while letting the Government mandate remedial actions where needed.
However, as the examples I have given show, the need for action is pretty clear. The metrics and thresholds that will underpin the new powers will be set in regulations, as the hon. Member for Nottingham North said, and we will of course engage with sector experts and local authorities and consult widely as we develop those regulations to ensure they are fit for purpose. That is exactly our intention, as the hon. Gentleman suggested, and it is why I hope the Committee will support the clause.
Alex Norris
I am grateful to the Minister for his answer, and for the oblique references he included in it—there was a well left Easter egg, which I was able to find very easily. In return, I might say—equally obliquely—that if such local authorities had not been more than £60 million worse off in real terms over the past four years, some of those decisions might not have been made. I also say that such concerns have not stopped Ministers in the Department, or indeed the Minister himself, from seeking to bestow more powers and resources on those local authorities, so there must be some limit to the concern that the Minister would have in such cases, were they to occur. I would also suggest that significant mechanisms are already in place, as the Minister has hinted at and as I know very well myself.
However, the Minister has given a generous assurance, one that will be welcomed by the sector, which will be very keen to take part in that process. On that basis, we are happy to support the clause.
Question put and agreed to.
Clause 71 accordingly ordered to stand part of the Bill.
Clause 72
Long-term empty dwellings: England
Rachael Maskell
I rise to support amendments 61, 62 and 63 and speak to amendments 78 and 81. The rural economy has been eloquently described, but I want to talk about my city of York, which is a centre for visitors—we had 8 million pre-pandemic and I am sure we will climb back up to that number again.
The staycation economy has driven a new clientele into our city. In what we are calling an “extraction economy”, investors from London and the south-east are purchasing properties as second homes—whether for private or Airbnb use. Already we can see the inequality building. What is happening is not levelling up. Investors are extracting not only properties from people in my city but the money they get from the properties, which goes back to London and the south-east.
We are left all the poorer, and that means that many in my community are without any housing whatever. In fact, people have been going door to door offering cash to residents in social housing. They say that if the residents purchase their homes under right to buy, they will buy the house from them. I have heard stories of people paying up to £70,000 more for a property that is then used in the investment economy, rather than for people in our city.
The housing crisis could be controlled if the Government put curbs on such activity and ensured that properties were not only developed—we will come to that—but were available for people locally. I have the same challenge to the local economy that we have already heard about in this debate. The hospitality, retail and tourism industry is so strong in York that we do not have enough people to work in it—not least because the pay is low. The overpricing of properties is heating up the market and then pushing people out. |On top of that, there is the problem of the reduction in available stock.
The issue also impacts our public services. We cannot get the social care staff or recruit to our NHS because there is nowhere to live. Families and young couples trying to buy their first home save up for their mortgage, only for that opportunity to be snatched by someone sweeping in and buying up the property. They are having to save up more and more but never realise their aspiration of owning a home.
We are beyond a crisis point: this issue is impacting on the economy, pushing families away, gobbling up residential housing for purposes for which it was not developed in the first place, and destroying communities and the infrastructure. People can now walk down streets in York where four, five or six properties are either second homes or holiday lets, and that, of course, is breaking up the community.
The worst situations that I am hearing about are of families pushed out of the city by section 21 notices. They have to take their children out of school and go to live miles away. What is happening across our communities is really destructive, so we need to put the right deterrents in place. We may have to go further than even these amendments are calling for to try to fix the challenge.
I would argue that a council tax rise of 200% or 300% in the first instance is a modest measure. Wales is the first place to have introduced this kind of rise in council tax, but it still has not been sufficient to deter people from purchasing second homes in Wales. Often the purchasers are asset-rich people who saved a lot of money during the pandemic, so having to pay an additional £3,000 or £4,000 a year is something they build into their costings. Those who go into other sorts of property—for example, leasehold property—are already paying thousands of pounds a year in management costs for the right to live in the property, so actually these are small measures compared with the excesses and headroom that the purchasers of these properties are expecting. The measures will provide resources for local government, for which this is a win-win—both getting the money in and creating a sufficient deterrent. That is why we should give local authorities the powers to decide, should they have need, to impose the additional levy on second homes and ensure that it works for their community. Of course, we would argue that local authorities do not have to do that, but having the option available is important.
Amendment 78 is about how to better determine the duration of occupancy that applies, taking it down from one year to six months. The housing market is moving fast at the moment, so this option should be considered as a way to address the issue far faster, especially in properties that are not primary residences, and to benefit the community by deterring the purchase of second homes. Pacing it, making the increased council tax not mandatory but optional, is really important. Shortening the timescale is appropriate.
Clauses 72 and 73 provide definitions around empty properties. We know that there has been some latitude in how that has worked for businesses that have emptied their property to avoid business rates, but it also works for residential dwellings. It is important that we maximise the opportunity to bring the properties forward and implement the curbs and protections needed in the local area.
Amendment 81 would enable a billing authority to make its determination in six months, rather than a year, so that the authority could see the financial award in-year. That will be important to balancing finances while giving local authorities enough revenue to inspect the properties to determine whether they are occupied or unoccupied, which will enable them to ensure that they get the right levy on the properties to pay the additional council tax for which the amendments call.
Neil O'Brien
I am sympathetic to many of the points made by Opposition Members. The Bill tightens the tax treatment of empty second homes to free up those homes for use by the community. The question is one of balance, of course.
Broadly speaking, the amendments would make the premium paid on second or empty homes more punitive. I absolutely understand the issues that the amendments raise, but they risk unintended consequences for our communities. For both second and empty homes, the amendments would shorten the time before a premium could be applied, and increase or bring forward the maximum that the council could choose to impose. We all want homes to make a positive contribution to the community, but we need to get the balance right between dissuading behaviours that none of us want to see and accidentally catching legitimate uses of properties that benefit communities. The Government believe that homeowners should have sufficient time to take steps to bring an empty property back into use. There is no hard and fast rule for calculating that period, but our judgment is that 12 months gets that balance right. A reduction to six months, as proposed by the hon. Member for Nottingham North, would create a number of challenges where there are very good reasons for a property being empty for a reasonable period, such as substantial refurbishment or a delayed sale. Often, family life is complicated, hence our judgment that 12 months gets the balance right.
For the same reason, an empty property has different impacts on the local community, depending on why and for how long it has been out of use. The Government believe it is appropriate to allow councils to increase the council tax premium in stages that reflect the length of time a property has been left empty, rather than imposing it immediately at the six-month point. We understand and sympathise with the point that a high concentration of second homes can hollow out communities, but they can also benefit local economies and tourism, allowing people to work in and contribute to the local economy and return to a family home in another part of the country.
Neil O’Brien
I will give way in a moment, but I will make some progress first. We have already introduced a higher level of stamp duty for the purchase of second homes, and the Bill could double the council tax bill for those properties, providing additional council tax income for councils to invest in local services and communities. We are investing £11.5 billion in the affordable homes programme, delivering up to 180,000 affordable homes. The Bill includes provision for the Secretary of State to adjust the level of the second homes premium in the future, but we need to see the impact and assess the evidence before considering different arrangements in the council tax system.
Wales has been mentioned a couple of times. So far, only three authorities in Wales are using the 100% premium, and the 300% premium will start only next spring. The hon. Member for York Central said that it was not a sufficient deterrent to stop purchases. The truth is that we do not yet know that because it has not come into effect. We do not know how many authorities will use it and what its effects will be. She talked about these being small measures, but it is useful to talk about what it means in cash terms—pounds, shillings and pence. If, in a place like North Norfolk, we took a typical council tax band D property at roughly £2,000, going to a 300% second homes premium would mean a council tax bill each year of £8,120. In Scarborough, it would mean a bill of £8,386. In South Lakeland, it would be £8,242, and somewhere like Dorset it would mean an annual bill of £9,160. These are not trivial sums of money, and it is right for us to consider the impact of the initial measures of the 100% precept before we decide to go further.
Tim Farron
We are contemplating radical measures, and we are dealing with a catastrophe. We are doing our very best—surely we should be—to get the stable door shut before all the horses bolt, and if we ponder and contemplate our navels any longer, there will no horses—no community—left whatever. The problem will have solved itself by fulfilling the terrible prophesy of where I fear we are heading. If the Minister is taking this incremental, cautious approach, might he consider letting national parks be the pilots? I have asked both the Yorkshire Dales and the Lake District national parks. They are both up for it. They would bite his hand off if he offered them the opportunity through their constituent local authorities to double or triple council tax on second homes just within their own boundaries.
Neil O’Brien
My fellow Minister, my right hon. Friend the Member for Pudsey, is doing roundtables to explore the different possibilities on that point. I am sympathetic to what the hon. Gentleman says about the scale of the problem. We are seized of it, and there are multiple things we are looking at to tackle it. On the numbers I read out, if someone has a £9,000 council tax bill for a band D property—never mind an expensive fancy property—that is a non-trivial sum of money. That is quite a lot of money for a band D property.
Neil O’Brien
The hon. Gentleman says, “brilliant”, but the people who made a long-term commitment to those communities and who face a £9,000 tax bill would be unlikely to have the same reaction. However, as the hon. Gentleman says, they are one local stakeholder, and there are others as well.
However, as the hon. Gentleman says, they are one local stakeholder, and there are others as well. Our argument, which I think he understands, is that although we will have the powers in the Bill to go further and to do the 300%—we will not need to legislate again—it is sensible to look at the effects of things before making further adjustments. [Interruption.] I think he is keen to speak before I turn to amendment 63.
Tim Farron
I simply want to say that a large sum of money would act as a disincentive, and given the crisis that it would tackle, it is worth considering; it is worth looking at pilots to do this in the first place.
Neil O'Brien
I think the hon. Gentleman has in a sense answered his own question, in so far as there are indeed multiple policy tools that we can use to tackle something that we regard as a very serious issue. We are absolutely seized of the fact that, in particular parts of the country, there are hotspots that need action.
I think hon. Members have heard the argument that I have set out. On this issue, we will have the power to go further in the Bill—even further than we are already going, which is pretty far—but we would like to see the evidence and make our plans in the light of evidence, rather than simply jump to that now, given the large sums of money involved.
Turning to amendment 63—
Neil O'Brien
I will just get on to amendment 63 first. Second homes are furnished properties for domestic use by someone who has their main home elsewhere. Owners may occasionally let that property out, but second homes are primarily for personal use. I think I understand what the hon. Member for Nottingham North is trying to get at with these amendments—he is thinking, I think, of some of the changes to use classes, and things like that, which happened in Wales. Again, that is something that we are actively looking at. It is a serious thing to look at.
On this amendment, there is a blurring of two different things. The hon. Member is bringing in questions about how long a second home can be let out before it should be treated as a business. He will be aware that, at present, where an owner intends to let their property out for short periods, totalling at least 140 days in the coming year, it will generally be treated as a holiday let and liable for non-domestic rates. Properties liable for non-domestic rates would not be in the scope of the second homes council tax premium. I therefore think there was a blurring of those two different things.
Alternatively, the hon. Member may be seeking to increase the thresholds under which a property is treated as a holiday let. Following consultation, the Government have recently taken action to strengthen those thresholds. From April 2023, holiday lets must have been rented out for at least 70 days in the previous year, on top of being advertised for 140 days, to be liable for non-domestic rates. The amendment does not change that, so I am not sure that it has the effect the that the hon. Gentleman wishes.
Additionally, the recent consultation on a similar proposal in Wales demonstrated that there is a real risk that genuine self-catering businesses, making an important contribution to local economies, may not be able to meet the new higher thresholds. I am sure that is something none of us would wish to see.
Broadly, the new rules coming into force in April in England strike a balance between requiring proof of letting and marketing and protecting genuine businesses in a variety of different circumstances. There are, of course, a wide variety of circumstances. We are providing for holiday lets operating in a range of different circumstances, not just those in the most popular tourist destinations. Our rules also provide for new businesses—those just getting going—rural lets, and those with more restricted letting seasons, while protecting the system against possible abuse. We will of course keep those thresholds under review, but we should understand the impact of the forthcoming changes before we take any further action.
To summarise, we are sympathetic to many of the points that have been made and we are taking action in this Bill on many of those points. On some of the points, we will have the powers to go further, but before doing that we will want to look at the evidence. On other issues, although we are looking at the boundaries between the short-term let and the second home, we think there are probably different and better ways to get into those subjects than the amendments. We therefore hope that the amendment will be withdrawn, notwithstanding the fact that we are actively looking at many of those issues.
Rachael Maskell
I am sorry that the Minister did not take my interventions, because I had some points to make in response to his speech. First, on the assumption that the properties used as second homes are in band D, many are in band B, and therefore will be paying £1,440 in council tax. The sums he talks about could be about half, if not more.
Neil O'Brien
The hon. Lady should recognise that that is symmetrical—some of the properties will above band D; therefore the numbers will be much higher even than the £8,000 to £9,000 figures I have been quoting.
Rachael Maskell
I am talking about the impact that is having on my city of York. Many of those properties are in band B—they are smaller properties that people purchase because available properties are few and far between. Even if it was band D, we are only talking about £1,852.45 council tax. It will vary across the country, and that is why giving more powers to local authorities to make those choices is important. The financial deterrent in York will not be there with 100% council tax. As a result, those properties will continue to be purchased and the measures will have little impact. That is why it is important that the Minister has an understanding of the breadth of challenges faced in different communities.
I am looking forward to the Housing Minister coming to York for a roundtable to look at the Airbnb situation. We have specific issues and it is about the pace with which they are occurring, in a holiday destination. That is why the pilot should not just be in rural areas but in cities that are holiday destinations, because it is having a massive impact. There needs to be a bit more reality in the Government’s analysis.
The other point that I wanted to take up with the Minister in an intervention was the benefit to tourism. I would like to see the evidence of that, and to know the basis on which he made that statement. In York we now have an unregulated tourism market, versus a regulated tourism market of the traditional B&Bs and guesthouses that are losing trade at such a rate that they are going out of business. That is having a negative and incredibly destructive impact on our tourism industry. These measures will not provide sufficient deterrence against the impact on our city.
I appreciate that the Minister’s analysis may be in particular areas of the country, but it will not touch our city. That is why I urge him to carry out more research and to understand the different impacts on different communities in the country. We need to ensure that my local authority has the ability to put the right deterrent in place at the right level in order to deter this extraction economy that is, bit by bit, destroying the context and fabric of our city, our industries and people and families. For that reason, I urge the Minister to reconsider.