Levelling-up and Regeneration Bill
Monday 20th March 2023
(1 year, 9 months ago)
Lords ChamberLevelling-up and Regeneration Act 2023 View all Levelling-up and Regeneration Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 84-VII Seventh marshalled list for Committee - (20 Mar 2023)
“Disposal of landIn section 123 of the Local Government Act 1972 (disposal of land by principal councils), after subsection (2B) insert—“(2C) Police and crime commissioners and the Mayor's Office for Policing and Crime are to be treated as principal councils for the purposes of this section.””Member's explanatory statement
This amendment amends section 123 of the Local Government Act 1972 to confer a power on police and crime commissioners and the Mayor’s Office for Policing and Crime to dispose of land held by them in any manner they wish. This power is subject to the requirement of Secretary of State consent if the disposal is made for less than best consideration.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, government Amendment 165 and the consequential Amendments 508 and 509 seek to give police and crime commissioners, including mayors who exercise these functions, and the Mayor’s Office for Policing and Crime the same powers to dispose of surplus land as local authorities.
The Government’s general principle is that public bodies should dispose of surplus land at the best possible price reasonably obtainable. However, we recognise that selling land at less than best consideration can sometimes deliver wider public benefits, which is why there is a long-standing framework under Section 123 of the Local Government Act 1972 for enabling local authorities to dispose of their land for less than best consideration. Under this framework, the Secretary of State’s consent is required, but there is a general direction granting consent if the undervalue is below £2 million.
Prior to 2011 and the creation of police and crime commissioners, police authorities were covered by Section 123, but that is no longer the case. While police and crime commissioners now have broad powers to dispose of land as they see fit, there is no specific provision relating to disposal at less than best consideration. This perceived gap in police bodies’ powers was raised in the other place, and I know that this matter concerns the noble Baroness, Lady Pinnock. Having now explored the issue further with the Home Office, the Government agree that police and crime commissioners should have the same disposal powers as local authorities. Therefore, this amendment extends the scope of Section 123 of the Local Government Act 1972 to cover these elected police bodies.
These amendments will give police and crime commissioners greater certainty that they can dispose of land at less than best consideration where doing so will deliver wider public benefits. It will further empower police and crime commissioners to act in the interests of their local communities. The associated consent framework—with consent to be given by the Home Secretary in the case of police and crime commissioners —will increase transparency and public accountability.
For the reasons I have outlined, I hope that these amendments are welcome and that noble Lords will support them.
Baroness Pinnock (LD)
My Lords, I thank the Minister for introducing the government amendment, which concedes a principle of public bodies—the police—being able to use less than best consideration for land no longer needed. I am unashamedly seeking to extend that, as a result of the MP for Twickenham, my honourable friend Munira Wilson, introducing in the other place the idea of enabling public bodies to dispose of land for less than best consideration. That was already available in a limited form but the idea here is that it is out of date because of the change in land valuations—that is what the Minister said.
The Lord Bishop of Worcester
My Lords, I support the amendment from the noble Baroness, Lady Pinnock, to which the right reverend Prelate the Bishop of Chelmsford has added her name. She regrets that she is unable to be in her place today; I wish to make some points that undoubtedly she would have contributed had she been here.
As already indicated by the noble Baroness, Lady Pinnock, the Government’s tabled Amendment 165 is very welcome. The review of Section 123 of the Local Government Act 1972, and the correction of the omission of the Mayor’s Office for Policing and Crime—and of police and crime commissioners generally—are necessary and positive steps. However, there remain ways in which the general disposal consent 2003 could be improved to better allow public bodies to dispose of assets for less than market value for social, economic or environmental benefit. We believe that such measures would be very much in line with the Bill’s desired outcome: levelling up communities across the country.
Noble Lords will be well aware of the significant variation in land value across the nation’s regions. The introduction of a percentage value discount would help ensure that local authorities, no matter where they are in the country, could offer the same level of discretion when selling sites for community good. I hope that the Minister will therefore accept the proposal from the noble Baroness, Lady Pinnock, for an adjacent percentage value to take into account varying land prices in different regions.
I also echo calls for the Minister to confirm today that the Government commit to launching a consultation on a new directive to update the current consent order on the disposal of public land. I am aware that Munira Wilson MP, who has been active in these matters in the other place, has received a letter from the new Housing and Planning Minister in which Mrs Maclean confirmed that the Government will take forward a consultation on a new direction with higher thresholds after the passage of the Bill. Is the Minister able to reiterate this commitment on the Floor of the House?
I also hope the Minister will accept the call by the noble Baroness, Lady Pinnock, for a new disposal consent order increasing the cash value amount in line with inflation in land prices. In her letter to Munira Wilson MP, the Housing and Planning Minister recognised that the current threshold of £2 million was provided in 2003 and that land values have increased over the last two decades. Amendment 174 would increase the cash value amount that public authorities can give a discount on to £3 million. It should be noted that this is in fact a conservative estimate of the inflation in land prices over the past 20 years.
To conclude, I repeat my welcome for the government Amendment 165 and urge the Minister to reiterate the Government’s commitment to consult on a new directive, create such a directive and accept Amendment 174’s provisions for an adjacent percentage value. I hope that we can continue in this spirit of co-operation truly to level up our country.
Lord Best (CB)
My Lords, I will speak to Amendment 312A in this group, which would insert a new clause with the heading:
“Duty to optimise the use of public land”.
As this implies, the amendment attempts to ensure that the precious asset of land owned by public bodies is put to “optimal use”. The amendment tries to do two things. First, it would place a duty on local authorities to have a land use management plan for sites in their ownership to ensure that developments are brought forward for the public good. Secondly, since the duty to optimise the use of public land would very often be exercised by disposal of the land to others, the amendment also seeks to define the meaning of the phrase “best consideration reasonably obtainable”, which governs sale of publicly owned land at present.
Earlier amendments in this group would extend the current disposal regime to cover police and crime commissioners, the NHS, importantly, and all other public bodies. This amendment seeks to resolve long-standing complexities and arguments over the treatment of landholdings by public bodies. I pay tribute to the land economist Stephen Hill, who has studied this question for many years, for his preparation of the amendment. He has been aided by Keith Jenkins, the property lawyer, alongside distinguished real estate experts, academics and leading practitioners who all have my thanks for their work on this subject.
An essential feature of the levelling-up agenda is the need to improve the built environment to create better places to live and work. Securing the land for improved conditions—for affordable homes, green spaces, local amenities, et cetera—is the key to this. The amendment’s first objective, therefore, is simply to bring more public land into play. It would do so by requiring local authorities to prepare a land use management plan, demonstrating how use of their land will be optimised.
This approach was advocated by your Lordships’ Land Use in England Committee, chaired by my noble friend Lord Cameron of Dillington. Several local authorities are showing the way with land use plans. For example, the West Midlands Combined Authority has set out what is expected of public landowners; its public land charter requires those landowners to
“apply a consistent, joined-up approach to best consideration”
that aims to achieve “sustainable long-term” value for their land. Amendment 312A would spread this good practice everywhere.
However, securing the best economic, social and environmental uses when public land is sold has been constantly thwarted by public bodies’ acceptance of a higher price offered for the land by other bidders for what is often a less than optimal use. We all have stories of hard-pressed providers of public services understandably wanting to secure as much hard cash as they can from disposing of their land assets, even though doing so conflicts with efforts to improve the quality of life for local citizens.
I will use NHS land to illustrate this point. I have been involved in negotiations to acquire a redundant hospital building for an extra care housing development for older people. This use of the old building and surrounding land would lead to substantial annual savings for the NHS and care services, keeping people out of hospital and residential care as well as reducing loneliness and care needs. But the NHS trust was adamant that the sale must be to the highest bidder— in this case, a developer of luxury flats for overseas buyers—irrespective of the benefits to the NHS and care services that our extra care housing project would achieve. Very often, the reason cited by the public body for taking this line is that there is an obligation on it to secure the highest price, which gets equated with the “best consideration reasonably obtainable”. This is likely to mean the land is valued so highly that it prohibits a development that would achieve important social objectives.
Amendment 312A addresses this issue by creating the duty to go for the optimal use of the land, not the highest price offered, defining “optimal use” and interpreting “best consideration” by reference to constraints on the use of the land from predetermined local and national requirements. It spells out that this means fulfilling four imperatives: first, the requirements of the local development plan and the neighbourhood plan, if there is one; secondly, any national development management policies that will follow from the Bill; thirdly, the environmental principles in the Environment Act 2021; and fourthly, any other objectives or requirements determined by the Secretary of State.
In other words, securing the optimal use of publicly owned land must simply but definitively accord with national and local government requirements. The value of the land is thereby constrained and moderated by the need to comply with these legislative and administrative requirements. In this way, the value of the land is captured by the planning system for economic, social and environmental uses.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I support Amendment 312A in the name of the noble Lord, Lord Best. I declare my interest as a patron of the Community Land Trust Network, and a vice-president of the LGA. I apologise for not being present at Second Reading.
As always the noble Lord, Lord Best, has fully set out the rationale behind this amendment, which is quite complex. He gave an example of a redundant hospital which could have been used for extra care. When considering disposing of land they own, local authorities and other bodies feel that they have to get the best price possible. This often means that local communities are cut out of the equation, even when they may have excellent plans for a site or building. The inclusion of this proposed new clause introduces the duty to optimise the use of public land, which is quite different from getting best value or best consideration.
Often, local community land trusts are formed specifically to provide housing in areas which are either unviable for developers or on small and difficult sites. The local community has, however, identified a need for housing that may be of mixed type and tenure. For example, there may be young families wishing to stay in the area and, equally, there may be older people wishing to downsize but there is nothing of the right size in the area; it could also be for single young people wishing for a space of their own. The price of land is expensive and local authorities are obliged to get best value, which means going with the highest bidder, although this may not always meet the needs of the community. If local authorities are permitted to make the optimal use of public land, this opens up the availability of land for communities to have the facilities and homes that they need. I will try to explain this by giving an example. If a council has policies in certain areas—such as increasing social housing and achieving net zero—the council could then say, “How much would it cost somebody to develop homes on this site to achieve net-zero standards? What would the homes sell for or what would the rent be?” If this cost is deducted from the value of the land, you arrive at the correct valuation that will achieve the optimal use for the site.
It may be that a community is looking not for homes but to enter into a community shop run by volunteers. Both small rural shops and pubs have closed at an alarming rate over recent years; communities are now discovering what a valuable asset they have lost in terms of shopping at a convenient local venue and a venue where they could meet for a coffee and a chat. Perhaps a small local school has stood empty for some time, and it could be attractive to a developer. At the same time, it could be the saviour of the community in bringing residents together to create a much-needed facility for use by all ages. Levelling up is surely about the examples that I and others have given.
This is a complex subject but one that the Government are aware of. The Secretary of State received a letter in December 2021 on it and there has been subsequent correspondence with DLUHC. There were over 34 signatories to the original letter and the amendment is supported by various luminaries of the planning and real estate profession, including Yolande Barnes, professor of real estate at UCL, and various chairs and former chairs of the Royal Institute of Chartered Surveyors, including members and fellows.
The credentials of what is proposed have strong foundations. The noble Lord, Lord Best, has made a strong and lucid case for this amendment, which will make a real difference to the way in which local authorities, mayoral development corporations, Homes England and others approach the issue of best consideration for land, which should be a great asset to all communities. I strongly support the noble Lord, Lord Best, and other speakers on this group of amendments.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Baroness, Lady Bakewell of Hardington Mandeville, and to join her in commending the noble Lord, Lord Best, and his expert collaborators on tackling a huge issue for communities up and down the land, but particularly for some of our most disadvantaged communities. It is important that we put this in the context of where we are now. Since the late 1970s, about half of all public land— 2 million hectares in total—has been sold from public to largely private hands. That means that local government has 40% less landholding than it did four decades ago; the NHS estate is down by 70%.
What we have seen, as we have heard from other speakers in this group, is not just a loss of land—people might or might not have ideological views about that—but a loss of capacity, facilities, access for local people, and the simple destruction of what had been a public resource. I think of one of these that I visited a few years ago on the Isle of Wight, a particularly tragic tale. The Frank James Hospital had been donated as a charity—a beautiful, big piece of land. It was a public facility that over decades—the best part of a century—the public had raised money for and put money into, but was sold 20 years ago to a developer and is still sitting there rotting.
Closer to us here, some noble Lords may know of Caxton Hall, which was a huge centre of historical interest and a place to hold public meetings in the vicinity of Westminster, at one point fairly affordably—something that anyone who has tried to organise one of those will know is a very rare breed indeed these days. Now it is, of course, private flats.
The noble Lord, Lord Best, has hit on something really important here, and I offer to do what I can to work with him if he wishes to take this forward into the next stage of the Bill. We have lost space for political campaigning. We have lost space particularly for our young people—those public spaces were often where young people gathered and where they were not surveilled, overseen, and expected to spend money; they were just a public space for young people to gather. So much of that has been lost. As I think the noble Lord, Lord Crisp, said through the ventriloquism of the noble Baroness, Lady Pinnock, this is very much a levelling-up issue. When you go to the poorer communities around our country, the public spaces have been sold off, but they also do not have even private spaces that you could rent because there is not enough money to support that kind of private space. This is a crucial issue to pick up in the Bill.
I will briefly comment on the Government’s Amendment 165, which broadly concerns the principle of choosing to dispose of land for “less than best” consideration. It is an excellent idea. The example that comes to mind is of a police and crime commissioner deciding to give at very low cost, perhaps even at peppercorn cost, a piece of land that might be used to build a youth centre on—that facility that we have lost so terribly in most parts of the country. That would clearly be a very good thing for a police and crime commissioner to do, directly serving their mandate.
What worries me a little about this is the Secretary of State consent element, which is just one more centralisation. I wonder whether there should not be a range of local and regional bodies having an input, rather than it coming down to Westminster. None the less, I applaud some degree of progress.
Baroness Taylor of Stevenage (Lab)
My Lords, this has been an interesting debate on a number of important amendments. It is, of course, essential that these new combined county authorities and constituent local authorities should be able to use land in their ownership and negotiate with partners to use land resources to create facilities, regenerate their areas, and make best use of the scarce land resources we have. The other reason this is so important is that making best use of these brownfield and previously developed sites affords the ability to make environmental protections to those parts of the country where we do not wish to see development. That is another reason for doing this. The amendment in the name of the noble Lord, Lord Best, also takes into consideration the fact that there may be attempts to frustrate development. That certainly struck a chord with me, as the saga of the development of my town to the west of the A1(M) has dragged on for over 27 years without resolution—but that is enough about my personal pain.
I welcome the Government’s amendment on the issue of there being no specific provision relating to disposal below value. This is a big issue for local authorities whenever we are looking at these things. I think there is a degree of misunderstanding about it in local authorities, where a lot of arguments go on between the legal side and the policy side about how the power of environmental, social and economic improvement works, in conjunction with the audit side of having to achieve best consideration. I hope that these amendments will help to resolve some of these issues. The ability to empower PCCs to include considerations other than monetary value alongside local authorities is welcome, although I will come on to some of the issues around that in a moment.
The noble Baroness, Lady Pinnock, rightly pointed to the very steep price rises and the 160% inflation that is currently linked to valuations. The words of the noble Lord, Lord Crisp, channelled through the noble Baroness, Lady Pinnock, raised the issue of the assets available to more deprived communities and what we do about making sure that we do not exacerbate that rather than using the powers of the Bill to level up. Using the power of land to provide preventive facilities—as in the example the noble Lord, Lord Best, used—which will do long-term good for the community and potentially save long-term revenue funding for the public bodies concerned is a really important way forward for determining how the value of land is determined in the first place. If it is going to provide facilities for that community and save revenue for the public body in the long term, surely that ought to be one of the considerations we can take into account.
The right reverend Prelate the Bishop of Worcester highlighted the outdated nature of the figures currently used. This has been one of the common themes of the data used that we have highlighted throughout the consideration of the Bill. We must get up-to-date data here, otherwise we will end up giving ourselves problems that we should not need to have.
Turning to the amendment in the name of the noble Lord, Lord Best, he made a very clear exposition of why the need to be able to make best use of public land—and therefore improve the built environment—is crucial to levelling up, and how the use of public land charters could help. It was interesting to hear that the work of the Select Committee had looked at that closely and determined it.
We cannot blame hard-pressed public bodies, which are so desperate for cash, for sometimes having to go for the option that will give them the most funding when looking at valuations on their land. Of course, the long-term solution to that is to fund public bodies properly in the first place—they would then not have to make those tough decisions—but we are where we are with that.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I am grateful to all noble Lords for having participated in this debate. A lot of interesting subjects have come up, some of which will be discussed in greater depth as we go through the Bill.
Amendment 174 in the name of the noble Baroness, Lady Pinnock, seeks to give NHS bodies and police and crime commissioners the same powers as local authorities to dispose of surplus land. Government Amendment 165 already addresses this issue in relation to police and crime commissioners, but NHS bodies are accountable to the Secretary of State for Health and Social Care and there is a separate disposal regime in place for NHS land that enables disposal at “less than best” consideration where it brings public benefits. We do not therefore consider it necessary for those bodies to be included in Section 123 of the Local Government Act. Equally, general disposal consent is granted by way of a direction issued by the Secretary of State. As such, primary legislation is not required to amend it.
On what the noble Lord, Lord Crisp, might have wished to say, as enunciated by the noble Baroness, Lady Pinnock, I believe that it is broadly in line with what the Government are trying to achieve. In fact, having listened to all the contributions, I think that we all share the same objectives; the Government just do not believe that we need to legislate quite so much in order to achieve them. So, although I appreciate the sentiment behind this amendment, for the reasons given above we do not consider that any further changes beyond government Amendment 165 are necessary.
I thank the noble Lord, Lord Best, for tabling Amendment 312A and for setting out the rationale behind it. It proposes that local authorities, mayoral development corporations and Homes England should be subject to a new optimal use duty when disposing of their land. We all want to see public land disposed of by these bodies being used to support long-term improvements to the economic, social and environmental well-being of an area. However, we are not convinced that this new duty is necessary to achieve this.
As the amendment recognises, local authorities are currently subject to Section 123 of the Local Government Act 1972, which governs their disposal of land. Under the Section 123 framework, there is already a general consent which enables local authorities to dispose of land below less than best consideration when it supports the economic, social and environmental well-being of an area. Many local authorities already use the disposal of their land as an important lever to shape and improve places for the benefit of the communities, as the noble Lord acknowledged. We are not convinced that local authorities need these new duties on them to do this. As the noble Lord said, we want the planning system, through local plans, to identify the best use for a particular piece of land. Part 3 of the Bill sets out our proposals to reform local plans to achieve this. We do not think that a separate duty on local authorities is needed. In addition, it is not appropriate for the Secretary of State to impose objectives and requirements on a local authority’s land strategy. That should be a matter for the local authority to decide.
Similarly, mayoral development corporations are specifically designated to regenerate areas using land assembly, particularly to shape and drive forward development to maximise opportunities for the public good. Where appropriate, mayoral development corporations can dispose of land at less than best consideration that can reasonably be obtained with the consent of the mayor, as set out in Section 209 of the Localism Act 2011.
Supporting the creation, regeneration or development of communities is enshrined in Homes England’s statutory objectives, and it is proactively taking action through its land programmes. Homes England is already subject to a formal general consent, granted under Section 10 of the Housing and Regeneration Act 2008, to dispose of land for less than best consideration from the Government. This provides them with the statutory powers to dispose of land at less than best value under the criteria set out in the consent. The criteria include meeting value for money requirements and the undervalue being for the purposes of delivering public policy requirements. More legislation to achieve the noble Lord’s aims is not therefore needed, but I appreciate the underlying objectives behind the tabling of this amendment.
The noble Lord, Lord Best, and the noble Baroness, Lady Pinnock, mentioned indexation and the rising inflation problems with land values. We recognise that the threshold for the general consent is out of date, given the rise in land values since it was set in 2003. Following Royal Assent, we intend to consult on increasing the threshold. I think this was the consultation the noble Lord referred to, and which the Minister in the other place committed to, so that best consideration will be increased from £2 million.
The noble Baroness, Lady Bakewell, talked about local help for communities. She is probably aware that the £150 million community ownership fund is being used to help communities across the UK value ownership of assets at risk of closure and that it is available until March 2025. On a personal note, I am delighted that through this route, in Pembrokeshire we have just brought into community ownership the local hardware store, Havards, in Newport. I hope that with that reassurance, and the knowledge that Part 3 of the Bill will significantly reform the basis for formulating local plans and hopefully reduce the time it takes to produce a local plan, noble Lords will not need to move their amendments.
Baroness Hayman of Ullock
“Long-term empty dwellings: England - estimatesThe Secretary of State must publish an annual estimate of the number of long-term empty dwellings in England.”Member's explanatory statement
This means that the Secretary of State must publish an annual estimate of how many long-term empty dwellings exist.
Baroness Hayman of Ullock (Lab)
My Lords, this group of amendments is important as it directly relates to one of the housing missions. This mission states that more first-time homebuyers will be created in all areas and the number of non-decent rented homes will be reduced by 50%. I agree that good quality housing is the cornerstone of levelling up.
We are in a severe housing crisis, with a lack of supply of affordable homes for young people and little opportunity for families to get on to the property ladder. We therefore must make the best use we can of the properties we already have and maximise opportunities for everybody in every part of the country. There are large numbers of long-term empty houses. The Bill as it stands will not give local authorities sufficient tools to start to get a grip on the situation, so despite the Government saying they want to act, this is a missed opportunity. We have tabled amendments on both long-term empty dwellings and short-term empty lets to see what we can do to help the situation.
My Amendment 166 asks the Secretary of State to publish an annual estimate of exactly how many long-term empty dwellings exist. If we are serious about tackling the issue, we need fully to understand the extent of the problem and which areas are particularly affected.
There are a number of other amendments in my name, and in the names of my noble friends Lady Taylor of Stevenage and Lord Blunkett. My noble friend Lady Taylor has tabled an amendment to increase the maximum premium chargeable on second homes from 100% to 300%. This is a probing amendment to look at where the figure should be set.
My Amendment 171 would allow the Secretary of State to give CCAs the power to restrict short-term holiday lets, and my Amendment 442 probes the question whether local authorities may request that the Secretary of State limit the number of short-term lets in their area. My noble friend Lord Blunkett’s Amendment 172A would ensure that:
“No change in existing council tax levy can be introduced without an independent economic evaluation”.
Clearly, there are complexities relating to second and unused homes. We believe that local authorities need more flexibility over council tax premiums. Surely, it must be for local authorities to decide whether or not they will charge premiums and how much these should be, depending on their local circumstances. This has been a difficult issue for local government, particularly in coastal and rural areas such as Cumbria, where I live. Locals are often priced out of the market as houses are increasingly being turned over to Airbnb or continue to be marketed as second homes. This is putting even more pressure on the housing situation. Communities can be completely hollowed out when this happens. There are villages near where I live in which the majority of houses are second homes or holiday lets. This hollows out local services and infrastructure. We lose bus services, the local school, shops and pubs, all of which are threatened when the number of people living permanently in the community diminishes.
We believe that this Bill is an opportunity to create some innovative solutions, both through the financial regime and the planning system. At the same time, we need to be aware of any unintended consequences. Loopholes exist through which properties can be pushed into the business rates category, thereby avoiding council tax. This happens too often, and we need to ensure that these loopholes are closed.
My Amendment 445 would allow regulations to be introduced to license short-term rental properties. The Labour Party believes that one way to tackle the challenge of second homes in coastal and rural areas is to introduce a licensing system that identifies genuine holiday lets, as opposed to second homes whose owners leave properties empty while pretending to rent them out to holidaymakers.
The Labour Government in Wales are planning to introduce a similar scheme, which would also allow councils to set a limit on the number of second homes. I ask the Minister whether the Government will take account of what is happening in Wales and use it to inform decision-making in England.
Lord Young of Cookham (Con)
My Lords, Amendment 294, in my name and that of the noble Earl, Lord Devon, would oblige the Secretary of State to make short-term rental properties a distinct use class for planning purposes. The amendment is supported by the Local Government Association, of which I am, exceptionally, not a vice-president, and is based on changes made to secondary legislation in Wales in 2022.
A common theme running through all the amendments is the promotion of the country’s housing stock as a main home, either by raising the council tax on second homes or by using the planning system to control short-term lets. The planning system is not just about whether or not a piece of land is to be developed; it is about the use to which it is then put. For example, you need planning permission to convert a block of flats into a hotel. These use classes have been used to control changes that may be undesirable, and in a few cases they have been relaxed to promote changes between uses.
The Government have clearly recognised that we have now reached the stage where some form of control is needed if we are to maintain a proper balance between those who need permanent accommodation for rent and those who are making short-term visits. Clause 210, mentioned by the noble Baroness, introduced by the Government on Report and headed “Registration of short-term rental properties”, is a very useful step which I welcome. I also welcome the statements made about it in another place by Lucy Frazer, the previous Housing Minister. It proposes a new registration scheme for short-term lets, but this will not happen for some time, as consultation on the exact design of the scheme will not start until later this year, with decisions and actions later.
A registration scheme is a good first step but we need to build on this, as proposed in my amendment, and see much stronger controls. We need to do that if the planning system is to determine local priorities. We also need to make faster progress; only then will we see a better balance of housing options which will help families and young people who simply cannot find a place to live in some rural areas but also in London. Were she still able to attend, I am sure my noble friend Lady Gardner of Parkes would be speaking strongly in favour of this amendment.
A balance is important. Short-term lets can provide a useful boost to the local economy by promoting tourism where commercial accommodation is in short supply or very expensive, and they can be a useful source of income for those who do not need their homes all the time—for example, if they are away on holiday. However, we need a balance between second and first homes. My amendment provides a means of meeting that balance.
The Government’s legislation needs to go further by introducing a new use class for short-term rental properties, which, in turn, should be a precondition for the registration of such properties. We may not need to regulate short-term lets across the board, but making them a separate use class, as proposed in the amendment, allows full planning control in places such as seaside towns and the area just mentioned by the noble Baroness, Lady Hayman, where the growth in short-term letting has become a particular issue, or here in London, where there is pressure on the rental market.
There was a 1,000% increase in homes listed for short-term lets nationally between 2015 and 2021. That is 148,000 homes that could otherwise house local families that are available on Airbnb-style lets. In Cornwall, short-term listings grew 661% in the five years to September 2021. The county has roughly 15,000 families on social housing waiting lists and the same number of properties being marketed as housing lets. The noble Earl, Lord Devon, may mention his county, where short-term lets appear to be worsening an existing housing crisis, with nearly 4,000 homes taken out of the private rented sector and 11,000 added to short-term listings since 2016.
Currently, local authorities outside London have no legal means of preventing this loss of private rented housing to short-term lets. Several cases have come to light of people in rented housing in rural areas being evicted so that the property can be let on a short-term basis. In this context, it is worth mentioning the position in London as it shows a way forward. The Greater London Council (General Powers) Act 1973 —I declare an interest as I was on the GLC at the time—discouraged short-term lets by saying that the use of residential premises for temporary sleeping accommodation for fewer than 90 consecutive nights in London was a change of use, for which planning permission was required, so London residents face a possible fine of up to £20,000 for each offence of failing to secure planning permission. That position was basically confirmed in the Deregulation Act 2015. I see some advantage in simply extending this London provision to the rest of the country.
Finally, there are issues here that go beyond my noble friend’s department. Holiday lets get mortgage interest relief; residential tenancies do not. Holiday lets have no minimum energy and safety standards, and they qualify for business rates and small business rate relief. We need a cross-government approach to get a coherent and better-balanced policy on this important matter. Of course, I hope my noble friend will feel able to accept my amendment. If she cannot go that far—and I see from her body language that that may not be possible—will she commit to consulting soon on building on Clause 210, with a view to getting that better balance between the use of scarce housing stock in areas under pressure and to helping families for whom private renting is the only option?
Lord Foster of Bath (LD)
My Lords, I will address the four amendments in my name and that of my noble friend Lord Shipley and comment on some of the others. We have already heard numerous examples describing why we need to address the issues around empty homes, second homes and properties available for short-term rent. As noble Lords are aware, some parts of the United Kingdom have already introduced measures to tackle some of them; for example, certification of tourist accommodation in Northern Ireland and licensing schemes for short-term lets in Scotland and Wales. Sadly, at the moment, England is being left behind.
I am pleased that at long last the Government are tackling one issue—the way in which some second home owners have gamed the system so that they pay neither council tax nor business rates—but many other problems remain. I live in east Suffolk, close to the popular seaside town of Southwold. With the recent growth in second home ownership and the rapid rise in properties available for short-term rent, of the 1,400 properties, now only 500 have full-time residents, while 500 are second homes and 400 are short-term lets; in other words, nearly two-thirds are not permanently lived in, and this has had a significant impact.
Lord Blunkett (Lab)
My Lords, I am speaking to Amendment 172A in my name, but I want to commend the breadth of what has already been described in the three speeches that we have already heard. I strongly commend Amendment 170, in the name of my noble friend on the Front Bench, about bereavement; we have to be careful what we do here.
I want to make it clear that I am not speaking about empty property. I think there is absolute clarity about taking action to bring back into proper use, as either rented or owner-occupied premises, those homes that have been empty for a length of time. However, I shall touch on some of the complexities relating to second homes. I declare a very long-term interest from 1987 onwards, because I was involved in having to have a second home as a Member of Parliament, as MPs outside a radius of 25 miles of London will inevitably have to do if they are serving their constituency appropriately. Not all do so, but these days most see it as their duty to have a foothold, a footprint, in their constituency, even if they spend more time than would otherwise be necessary in London.
Perversely, because of the nature of our housing market, even with the new rules through the Independent Parliamentary Standards Authority—which will pick up, on behalf of the public purse, the cost of second homes—there can be the very perverse situation where someone chooses to designate their second home in one place when actually it is their main home, because they do not want to be caught on their death in relation to capital gains, or when they move. There are all kinds of complexities that many people speaking today know more about than I do when it comes to the housing market.
I want to address the importance of the devolution of decision-making to local authorities, but with the proviso that those authorities are encouraged, in whatever way is appropriate, to do a proper research review themselves of the impact of the actions that they take, because the intent—and I have to say it is a very socialistic intent—of the legislation before us, in the debate that we are having, can have completely perverse consequences. Today we have heard references to short-term lets and Airbnb, which the right reverend Prelate the Bishop of Exeter mentioned last Thursday, and to holiday lets. They are very different, but all have very similar impacts in the short-term nature of those coming into communities which otherwise would have long-term owner-occupier or renting residents. I separate the two because there are already consultations going out—or pseudo-consultations—from local authorities across the country, consequent on and in anticipation of the passing of this legislation, which fail completely to distinguish between ownership and rent.
Of course, there are people with second homes who rent them on a long-term basis, perhaps on a lease, and those who are the owners of the property. In certain parts of the country, we have very large landowners who are landlords and have built up over the years enormous portfolios of rented accommodation. They are the owners and people are renting—many of them local people who managed to obtain a rent agreement in the past that still holds. There is a residue of old agricultural workers legislation in some parts of the country.
The perverseness I refer to is that, on many of these large estates, when accommodation for rent becomes available because the tenant leaves—for whatever reason—it is turned into holiday lets. They are turned into business rate, rather than council tax, providers, which changes the character and nature of the locality. Of course, many second-home renters or owners may turn up infrequently. However, many, not least because of the experience we had from Covid, are spending a quite lot of time in both their homes using the facility of being online and—if I might touch on a controversial issue—working from home for part of the week. This has also transformed the nature of how the impact might be felt at a local level.
I want to put on record that, although I have no problem at all with this, it is important going forward—and I hope the Government will bring forward their own amendment—we ensure that a proper economic and social impact assessment is undertaken by people who know what they are talking about. I am afraid to say this as someone who spent many happy years in local government, but many authorities, particularly small ones, do not have officers with the first idea how to conduct a proper research survey, never mind analysing it.
If we do not get this right, it will have consequent perverse outcomes none of us wants. The purpose must surely be to try to get as much accommodation as possible available for long-term local provision, either for let or owner-occupation, to keep the life of those communities going. If action is taken that has a very different effect and pushes accommodation that is currently available for rent into holiday lets, we will have achieved exactly the opposite outcome to the one we seek. As I have some experience of this and know what is going on, for example in the Peak District, I counsel very strongly that we build in guidance so that we get what we think we are getting, rather than the opposite. It does not matter if it is a 100% or 300% council tax hike if you get the wrong answer and it switches to national business rates. Neither local people nor the local authority will be the gainer.
Baroness Bennett of Manor Castle (GP)
My Lords, I offer Green support for the general direction of all of these amendments. I will attempt not to repeat the tale of woe we heard, but I will make a couple of additional points and also pass on some good news, because I think we need some at this point. In the debate on the last group, I should have declared and put on the record that I am a vice-president of the Local Government Association.
Lord Shipley (LD)
My Lords, I will speak very briefly about saturation areas and Article 4 directives that already exist under the planning system. I support the amendment in my name and that of my noble friend Lord Foster of Bath. It is important because it would enable neighbourhood plans to include policies relating to the proportion of dwellings that may be second homes and short-term holiday lets under a use classes order proposed by other new clauses in this set of amendments.
Saturation areas already exist and can be defined under the licensing system—for example, for outlets serving alcohol. They operate under the licensing system. Houses in multiple occupation are also subject to a licensing system, but, in my city of Newcastle upon Tyne, they now use the planning system as well, following a lot of work that the administration that I led undertook. Under the Article 4 directives, permitted development rights can be restricted where the conversion of a family home into a house in multiple occupation would continue a trend of making family homes very expensive to buy and not easy to obtain. Without those Article 4 directives, the nature of a neighbourhood can change significantly.
So I ask the Minister what the difficulty is, in principle, over second homes and short-term holiday lets. As we have heard, there is fairly widespread support now for giving local councils and local planning authorities greater powers to restrict long-term residential homes being converted into short-term lets or second homes. There is a range of principles that I think local authorities should be able to decide for themselves. They may decide that they want to encourage short-term lets and second homes because it might increase the number of people who are buying services from local retail outlets and local leisure outlets—restaurants, pubs and so on. There is some evidence in some places that I know that that may be the case, but surely it should be for the local planning authorities themselves to be making those decisions.
The simplest way is through the use classes orders that we have heard about, but the principle already exists within existing legislation, both within the licensing system and within the planning system. My noble friend Lord Foster said that more needs to be done, and that is absolutely the case. Whereas I would support a higher council tax payment for second homes—I think there is justification for that—I am not actually convinced that it will solve the problem. I think we have to use the planning system to resolve the difficulty we face, so I hope very much that the Minister will give further consideration to this issue, which is affecting so many small communities, particularly in rural and coastal areas. The time has come for the Government to act.
The Earl of Lytton (CB)
My Lords, I will get the guilt off my shoulders through your Lordships’ provision of the confessional: I declare an interest as co-owner of a second home in the West Country and of two short-term let properties in the same area. All, like the house I live in, which is in another part of the country, are legacies of estates that have been broken up and whittled down. Both areas have important family historical and indeed, in some cases, national historical associations.
Having declared that, I ought also to declare to the noble Lord, Lord Foster of Bath, who mentioned the Built Environment Committee, that I was, until the latter part of January, a member of that committee, and very privileged to have been so under the chairmanship of the noble Lord, Lord Moylan, who I am pleased to see in his place, and before him, the noble Baroness, Lady Neville-Rolfe. So I am familiar with the matters that were brought before us. However, I shall leave a lot of that to one side because there has been a bit of disaggregation in the groupings here. We have group 10 coming up, in which aspects of this will recur, and I find that quite difficult to deal with: I shall try to avoid getting up then and saying the same thing all over again and boring your Lordships.
While I have involvement with both normal assured shorthold tenancy properties and short-term buy to let, I certainly do not have anything to do with keeping property deliberately empty: that would be complete anathema to me, and I say so as somebody with professional training: I am a chartered surveyor and I know that all that happens with empty properties is that they deteriorate. They are much better occupied and lived in or used in some way.
I agree with the general premise that residential properties should not be deliberately kept empty for no good reason. I know that in some areas—the City of Westminster is one—there was a thought that foreign investors were buying up high-end residential accommodation and keeping it empty under the premise that perhaps it was less valuable if it had been previously occupied. It takes all sorts, but that is a particular situation. I support the noble Baroness, Lady Hayman of Ullock, in her Amendment 166 because there is a great deal of speculation about how many empty properties there are and where they are. They are not always in the places where people want or need housing and have to live and work. So, first and foremost, there is a distribution problem, along with a numbers problem. We need to sort that out, and there needs to be better data on that.
I would go further and suggest that the reasons why a property might be empty need to be understood before we set about making dramatic changes, either to the amount that is levied or to planning, although I take the point made by the noble Lord, Lord Foster, that something probably needs to be done in some of the areas that the noble Lord, Lord Shipley, referred to—the hotspots. They are not actually everywhere; they are not in every town and city; they are in defined places. Even those who particularly object to the idea of second homes and holiday homes altogether on principle recognise—and the data seems to show—that these are in quite specific areas. They are not necessarily in holiday locations at the seaside; they can be in the middle of cities and in parts of Greater London. We need to identify that.
We should not underestimate the inventiveness of those faced with a surcharge, any more than we should fail to consider the equity of a surcharge where there is a genuine reason the property is empty. The noble Baroness, Lady Hayman, referred to that and I use the example of the Ds: death, disrepair, dispute, debt, decarbonisation and, of course, redevelopment. Sorry, “redevelopment” is not a D, but noble Lords will get my drift.
Another aspect is that if there are to be additional charges, is that for the purpose of rectifying some particular, identifiable ill or mischief that is occurring, or is it just another tax? If it is just another tax and it is going into some jolly old pot, I am not particularly keen on that. There needs to be some degree of hypothecation. If there is a demonstrable case—for instance, that empty properties affect affordability in a locality or are adversely affecting incomers who might be economically active—the tax yield generated should perhaps be devoted to that or allied purposes and not put in some general pot. Presumably the case needs to be made.
I agree that ultimately, subject to some sort of national framework and means of analysis, the decision should be for the local community to put in place—and not necessarily be dictated from on high. The authorities, having made the case, must accept that the principle stood behind that is binding on them; otherwise, we risk a rather unedifying and opaque state of affairs, where the power is invoked for one reason but implemented for some entirely different objective altogether, and I would not be keen on that. We do not need a knee-jerk reaction to all that. There needs to be a consistent methodology for assessing the nature of empty second properties or short-term letting, and the detrimental effect these are having.
The noble Lord, Lord Foster, gave a graphic account of the issue, which I know from—
Lord Foster of Bath (LD)
Before the noble Earl moves on to another point I raised, could I ask, through him, for the Minister to perhaps confirm that even in the current legislation as proposed, it will be possible for councils to add a premium on the council tax for empty properties? It would be for the council to determine how that money is used; for example, my own local council has already a debate on this issue and proposed that the vast majority of additional money raised will go towards the building of more affordable homes in the area—to address the problem that is now being created because of the empty properties and short-term lets.
The Earl of Lytton (CB)
I thank the noble Lord for his intervention, because that is exactly the point I am making about having a degree of hypothecation. In other words, it should not just go into the general purposes fund. I hope the Minister will comment on that, because there is a question of trust and transparency in this. If these things are to be robust, they will need that.
From my observations, I know that what the noble Lord, Lord Foster of Bath, said about the instances and the impact in some of these hotspot areas is true. However, we need a bit more data to get the visible, empirical facts. The noble Lord, Lord Blunkett, referred to that, and I entirely agree with him. We also need to identify the likely economic outcomes of certain actions. Letting platforms were referred to; we need an analysis of how they operate for some bits of businesses but not others, because they are doing lettings direct or whatever it may be, to get some idea of how that is functioning.
There is a bit of incoherence here. For a while, conversions into residential accommodation in rural areas were often subject to the condition that they could not be occupied full-time. They had to be occupied, effectively, as holiday accommodation. Usually, they could be occupied only for something like 11 months of the year continuously, because local authorities did not want to give consent for new, independent dwellings in the countryside; there was an objective not to add to them, which I understand.
When I attended a meeting on second homes at Exmoor National Park, it was asked why there was a reduced council tax assessment for people with second homes. It transpired that only by having the bait of self-declaration could they identify how many second homes they had in the area, so that is how they did it. I say incoherence, because one really feels that the world has gone mad in some of these situations.
There is a good deal of misinformation about what is perceived to be the vast profitability of short-term lettings. When I had the privilege of being on the Built Environment Committee, I ran a little exercise, which established what I knew: that I would be better off in headline income letting full-time on an assured shorthold tenancy. However, that would probably be not to a local person but to some writer, artist or someone who wanted a nice location. The real reason behind this is that, if you are dealing with an old stone cottage which requires constant maintenance and a lot of refitting—never mind that you may have energy issues and things breaking down; things go wrong in old cottages more than they do in new ones—you are constantly in and out. The only way you can keep control of that is short-term letting, because you can take a week out and get in there and fix the boiler and all the other things that have fallen apart. It is really not for the faint-hearted.
When you compare the weekly headline rents for short-term holiday lettings with those of an ordinary assured shorthold tenancy, you are not looking at like for like. You are not dealing with fully serviced accommodation, where all the linen and services are paid for, and where somebody just walks in and all they have to do is buy their own food and go, with all the cleaning and everything else being done in-between. All that costs money. One of the greatest litmus tests of health and well-being in these rural areas is whether you can get a cleaner or someone to fix your windows. That is the real test of what is happening in the economy. With that, I will sit down and wait for group 10.
Lord Moylan (Con)
My Lords, it is a pleasure to follow the noble Earl, Lord Lytton. I will speak briefly and narrowly to the point made earlier by the noble Lord, Lord Foster, in which he argued for a national registration scheme rather than one which, as the noble Earl said, the Built Environment Committee said should be available locally and at local option. The noble Lord’s reason was that having a national registration scheme would make it easier for the Government to gather large amounts of data. That is a very weak reason for what would be an astonishing intrusion into privacy and the rights of property.
I believe the noble Lord, Lord Blunkett, said that a national scheme was preferable because it could be implemented more quickly than one implemented by a local authority.
Lord Moylan (Con)
I beg the noble Lord’s pardon, but I heard those remarks made. I am simply saying that I do not believe that point; any scheme implemented by the Government at a national level will take a very long time to bring forward, whereas in my experience a local authority, duly empowered and with sufficient interest in the matter, could act more quickly.
One of the important findings of the Built Environment Committee was that this problem exists, as the noble Earl said, in very localised areas. We need to understand the problem if we are to find the solution, and so we need to understand the very important localism and find locally tailored solutions rather than rush into a national scheme which would be applied to the whole country and would involve a great deal of resource being spent to no particular purpose. As the noble Earl said, we will have the opportunity to return to this on group 10, whether this evening or on our next day.
As certain noble Lords have said, there is an anomaly in the taxation of properties, depending on how they are declared. If they are declared to be residential, they are liable to domestic council tax like anybody else, but if they are declared to be in business use, which is what an Airbnb-type property might be, they pay business rates. However, business rates are not paid by anything other than quite large businesses; very small businesses do not have to pay them. Therefore, by declaring oneself for business rates, one then qualifies for threshold exemptions that are not available for domestic council tax payers. Effectively, one escapes any form of tax on the property at all.
That is clearly an anomaly about which it would be worthwhile the Government thinking, but it seems to me that the right way to address it is to change the tax rules rather than introduce a large distortion in the property market. It is giving us a solution at the wrong end; if the problem is with the tax rules, it would be better and easier to remove the anomaly from them. However, we will have an opportunity to return to this later.
Lord Mann (Non-Afl)
My Lords, a widow in Thoresby, in Nottinghamshire, is currently being evicted by the office of the Thoresby estate, having lived for 62 consecutive years in a rented property on that large estate. The reason given by the estate managers is that the new higher environmental standards required of landlords by government mean that doing up the property to an appropriate standard would be too expensive.
Therefore, this widow—after 62 years of renting and living in the same property—is currently being evicted. If, as in this case, a multi-landlord—and a recipient of many state grants over the years, as well as lottery money—has not invested sufficiently during those 62 years to bring the property up to a decent standard, there needs to be leverage for the local authority—in this case, Newark and Sherwood District Council—to ensure that a failure by the landlord to upgrade a property over a 62-year family tenancy does not result in an eviction and the emptying of a property. If the amendments in this group are not acceptable to the Government, how will they ensure that some decency prevails and that there will be effective use of existing properties which will become empty under current plans? What precise leverage will they give a local authority to ensure that this absurdity and injustice can be remedied by the local authority?
Lord Blunkett (Lab)
Before the noble Lord sits down, perhaps he will indulge me for a second. I know he knows the area very well and that the Dukeries have very large landlords and estates that he has described. Has he any knowledge in this tragic case as to whether it is likely that such an estate would sell the property, having evicted the tenant and renovated it, or is it likely that it will put it on the market as a holiday let?
Lord Mann (Non-Afl)
As reported in the last few days, the estate is saying to the local media that it does not have the money to renovate so the property will become empty. Over the years, I have seen on other comparable estates similar properties: properties in an appalling situation in terms of utility and investment. It is the failure to invest by landlords that is the problem. I repeat to the Minister: what remedy is open to the local authority to ensure that this property remains available for someone to use—preferably so that this widow of 62 years’ tenancy is able to continue to live in what I think it is reasonable to describe as her family home?
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, this group of amendments concerns second homes, holiday lets and empty properties. I declare my interest as set out in the register as the owner of a second home in Wales.
In relation to Amendment 166, tabled by the noble Baroness, Lady Hayman of Ullock, I share her commitment to ensuring that we have the best-quality data to inform our policies. Indeed, I also share some of her concerns. I can assure her that we already have good systems in place; for example, local authorities report annually on the number of properties that have been classed as empty for more than six months. This data is published as part of the council tax base statistics. It is also used as the department’s measure of long-term empty dwellings that are published in the live tables on dwelling stock. This latter data includes the number of properties vacant on a particular day, as well as the number of properties that have been empty for more than six months.
As part of our council tax base statistics, we also detail the number of properties that are subject to the existing long-term empty property council tax premium. This shows the number of properties subject to the premium in each local authority area, broken down into the different levels of premium that apply, depending on the length of time that the property has been empty. We will continue to further refine the data we seek from local authorities to ensure that we have data on how many properties are subject to the extended premium, having been empty for more than 12 months. I hope that the noble Baroness is satisfied with that assurance on data that we already collect and propose to collect.
Baroness Hayman of Ullock (Lab)
My Lords, perhaps I ought to start by saying that I am also not a vice-president of the LGA, seeing as other noble Lords seem to have made that clear. This has been a very good debate with a lot of speakers, and I thank all noble Lords who have taken part. One of the things that has come across is the significant recent increase in short-term lets and the fact that something does need to be done around this.
I thank the noble Lord, Lord Young of Cookham, for his support, his amendments and his speech. He made the very important point that a registration scheme is a good first step, but we do need to make faster progress on this. As he said, a consultation to get a better balance between first homes and second homes would be a very good start. I also congratulate him on his small victory, which the Minister just announced. The noble Lord, Lord Foster of Bath, made the important point of the significant impact on prices and affordability of more homes going to short-term let, and the fact that the Bill does not go far enough as it stands, as far as we are concerned. Again, I thank him for his support for our amendments.
I would also like to thank my noble friend Lord Blunkett for his support for my Amendment 170 regarding bereavement. And, while I am on Amendment 170, I am really pleased that the Minister said that there is going to be further opportunity to look at this, and perhaps some consultation. I would be really pleased to be kept informed of any developments on this area, but it is very good that people are listening and taking account of this particular consideration.
Baroness Hayman of Ullock
“(10) In the case of a billing authority which is a district council in a county for which there is a county council, the increase in council tax arising from a determination under section 11B or this section must be paid into the collection fund.(11) Except to the extent that a billing authority decides that any proportion of the amount paid into the collection fund under subsection (10) should be paid from the collection fund to one or more major precepting authorities which issue a precept to that billing authority, the amount paid to the collection fund under subsection (10) must be paid to the billing authority.” Member's explanatory statement
This amendment seeks to ensure that, in the case of a district council for which there is a county council, all of the income from the supplements under section 11B or 11C of the Local Government Finance Act 1992 would be retained by the district council as it is the housing authority. The amendment allows the district council to decide to allocate some of the supplement to any of its major precepting authorities if it so chooses.
Baroness Hayman of Ullock (Lab)
My Lords, my Amendment 168B seeks to ensure that, in the case of a district council for which there is a county council, all the income from the supplements under Section 11B or new Section 11C of the Local Government Finance Act 1992 would be retained by the district council as it is the housing authority. The amendment allows the district council also to decide to allocate some of the supplement to any of its major precepting authorities if it decides to do so. I will not go into much detail about this amendment; I think what it is trying to achieve is pretty self-explanatory.
Previous days in Committee have included a lot of discussion about the important role that district councils play in delivering services to our communities. Noble Lords have talked about the fact that, in many parts of the Bill, they feel that district councils are being shut out. They will not have access to the same opportunities within the proposed combined county authorities, and they are not then going to get the support they need to continue to deliver services, including housing and planning. We believe that if the district council is the housing authority, it should be able to keep all the income from these sections of the Local Government Finance Act. It should also be in the district council’s gift to decide how that income should be used. In the previous debate, the noble Earl, Lord Lytton, and the noble Lord, Lord Foster of Bath, talked about local authorities being able to decide how funds are spent in other areas. Again, we absolutely agree that this is important.
My Amendment 169 would give the owner of a dilapidated property up to a year after acquiring the property to refurbish it before additional council tax rates are incurred. We touched in the previous group on dilapidated properties but, I suggest, from a different perspective. This is an issue that came to me when I was a Member of Parliament in the other place. Constituents would come to me because they were having financial difficulties in being able to update a dilapidated property, which sometimes they had inherited, because of the amount of council tax they were being clobbered with—to be blunt—which made it much more difficult for them to have the funds they needed to do up the property in good time. It was taking them a long time to do it up.
We know that bringing old, dilapidated buildings back into use will benefit the whole community. However, as I said, it can take a long time, depending on what is needed—for example, if there are problems with damp or you need a new roof. It can take a long time for properties to be restored to a good condition. My Amendment 169 recognises that there can be circumstances in which houses will not be occupied while work needs to be carried out. It is also designed to encourage people to bring homes back to a decent standard without being hampered by having to pay higher council tax rates, which, as I said, can impact on people being able to pay the costs of refurbishment.
The other amendments in this group, Amendment 428 in the name of the noble Baroness, Lady Pinnock—I look forward to her introduction of the proposed new clause—and Amendment 474 in the name of the noble and learned Lord, Lord Etherton, look at the business rates system. Amendment 428 proposes to review it, and Amendment 474 proposes to review it and include consultation to look at how we can bring economic support to businesses, especially in high streets and town centres.
This issue is incredibly important. We know that business rates have had a very negative impact on many of our high streets and town centres, and I am sure we will debate that when we come to the group on high streets later in Committee. Noble Lords know that I feel very strongly that good public consultation and participation for communities is important when we are looking at these kinds of issues. We know that business rates are one of the most important taxes for local government, but they have also been blamed for the struggles of retailers, for the death of the high street and for exacerbating the country’s economic divides.
I suggest that there are three fundamental problems with business rates, which I ask the Minister to take away for further thought and discussion. First, they do not always reflect local economic realities. That became extremely clear during the pandemic, when many businesses struggled to keep going. Secondly, business rates can be far too complex; we do not need them to be that complicated. Thirdly, at the moment they actually disincentivise investment, which is crazy—they should be doing exactly the opposite.
We support these amendments, as we believe that we need a reformed system which will support towns and cities in improving their business environments, raise productivity and boost prosperity.
Lord Etherton (CB)
My Lords, I will speak to Amendment 474. I am grateful to the noble Baroness, Lady Pinnock, for allowing me to speak first. We both have the same objective in mind: that there should be a review of non-domestic business rates. The main differences between us are twofold: first, the noble Baroness’s amendment is slightly more prescriptive than mine; secondly, and more importantly, my amendment would provide for a public consultation. Those are the only two differences, really; there is nothing much more than that.
I should declare my interest as the owner of high street investment retail properties, and I am grateful for the support of noble Lords across the House who have signed my amendment. The objective of my amendment is stated in its proposed new clause: to make business rates
“fairer to businesses and to sustain economic activity and growth, especially in high streets and town centres.”
The Bill is an entirely appropriate vehicle for such a provision, since one if its major concerns is that there are empty high street retail properties and failed retail businesses both on the high street and in town centres.
I acknowledge the steps taken in the Autumn Statement to ease some of the economic burden of business rates but, if we want flourishing high streets, we need to look at the system as a whole and not rely on ad hoc changes. Those who invest in retail properties, whether they run small businesses there or otherwise, will want to know what their liabilities are—not what might happen in future—either to raise or reduce business rates or to introduce new ones. This is the one outgoing that is not negotiable. You can negotiate your employees’ wages; you can negotiate the rent; you can go to one of a number of power and energy suppliers; however, you cannot negotiate the rates.
The Government said by way of a manifesto commitment that they would reduce the overall burden of business rates. In fact, the Office for Budget Responsibility reported last year that the Government are
“forecasting that income from business rates will rise to nearly £36bn by 2027/28 (from £28.5bn in 2022/23)”—
a very significant increase that is quite contrary to that manifesto commitment.
There are numerous reasons why it is appropriate to have a review of—and, I would say, a public consultation on—non-domestic rates. Let me mention a few. The uniform business rate multiplier, which is used to calculate rate bills, is running much higher than its historical level, which was 34p; currently, it is 51p or 49.9p for small businesses. Consideration also needs to be given to the empty property rates relief; there is a question as to whether the six-month empty property rates holiday should be extended from the warehouse and industrial sectors to include retail and offices.
Then, there is the question of how often revaluations should take place for the purpose of fixing the level of rates, the suggestion being that it should be yearly. Another question is what is or is not rateable in relation to plant machinery. Finally—these are only a few of the considerations that need to be addressed—there is the question of the appeals system, which is too lengthy, not transparent and not accessible. Those are reasons why it seems essential to me that, if we are to have full and flourishing businesses and retail properties on the high street, we need to look at this one non-negotiable expense, which is running at an historical high, notwithstanding, as I said, the ad hoc reliefs granted in the Autumn Statement.
Baroness Pinnock (LD)
My Lords, I totally agree with what the noble and learned Lord, Lord Etherton, said about his Amendment 474 and the complexity of the system. It is difficult for businesses to negotiate the terms which determine their viability; business rates cannot be negotiated; and the multiplier has risen substantially in the past few years, making the costs to businesses unaffordable in many cases.
Amendment 428 in my name and that of my noble friend Lord Shipley addresses a principle of business rates rather than the nuts and bolts. The key to levelling up and realising one of the ambitions of the White Paper—vibrant and successful town centres and high streets—lies in business rates. Too many town centres across the country are blighted by empty, boarded-up shops, which then become less attractive to local people wanting to shop there, causing a downward spiral.
I accept that the purpose of town centres is changing, as in fact it always has done. The balance of provision in town centres is increasingly shifting from the sale of goods towards services such as hair salons, nail bars and the like. However, the growth of e-commerce has put enormous pressure on traditional retail. This is where Amendment 428 comes in, because it would require a fundamental review in principle of business rates.
These are the reasons. The Government call it “bricks versus clicks” and “the tax imbalance” on the government website, which then refers to business rate revaluation, which actually does very little to redress the imbalance. I will give an example of one of the great e-commerce providers, Amazon. Its provision is in out-of-town warehouses and their rateable values are very low. An Amazon warehouse near me in Doncaster is paying rates at £45 per square metre—on average, because things change according to what is provided in a warehouse—whereas a small town centre shop near me has rates of £250 per square metre. We should think about that differential. The massive warehouse is providing retail goods, as is the small shop, but there is this huge disparity between the rates they are being charged, putting the town centre retail shop at a huge disadvantage.
The noble Baroness, Lady Scott, mentioned in an earlier group that the Government are tackling this by reducing town centre business rates by 20% following the revaluation. I always get cross about the use of percentages, because they are ratios, so whether they are percentages of a large number or a small number makes a very big difference. A 20% reduction on this £250 per square metre still leaves them paying £200 per square metre. However, although the Government have raised the rates for e-commerce by 27%, they are still paying only £56 per square metre. The disparity is still enormous, leading to an unfair competitive advantage for the e-commerce sector.
The Government have rejected the idea of an online sales tax, and I can understand why. It will be complex. However, I urge the Minister to respond positively to my suggestion that the Government use the existing business rates system to provide for much fairer competition between e-commerce and retail in physical shops. E-commerce businesses have a huge advantage. Not only are their business rates low but some of them also manage not to contribute much taxation to the country. They lead to significant increases in the volume of traffic, moving the goods between warehouses or from warehouses to pick-up sites or people’s homes. Yet, if they use electric vehicles, which is a good thing, they are not contributing much to the upkeep of the roads. Whichever way you look at it, e-commerce retail is at a considerable advantage. That is not in line with the Government’s ambition, which I totally support, of having vibrant town centres. The noble Baroness, Lady Hayman of Ullock, referred to incentives to help out-of-town warehouses. I think I have given the answer to that. The business rates for these e-commerce sectors must be in line so that there is fair competition between the two ways of providing retail goods.
Amendments 168B and 169, tabled by the noble Baroness, Lady Hayman of Ullock, make a good case for the retention of rates income by district councils. I will listen carefully to the Minister’s response to that argument. On Amendment 169, it will be interesting to hear what the Minister has to say, but I understood that there is already a grace period for uninhabitable buildings to be made habitable during which they are exempt from council tax. Maybe that is not the case, but I remember taking it through this House and I understood that to be the definition then.
It would also be helpful for us all to understand the definition of empty homes, empty properties, empty dwellings, because it is not always as it seems. Maybe the Minister will put me right, but my understanding is that empty properties are not empty if they are partially furnished. There is a whole debate around definitions of empty properties and uninhabitable dwellings that we probably need to understand more closely with regard to these amendments and the previous group in relation to council tax on holiday lets, short-term lets and second homes.
So that is my proposition to the Minister. We need a fundamental review of business rates because retail is changing fast. If substantial change to level the playing field is not made, the ambition for vibrant town centres will fail. I beg to move.
Lord Ravensdale (CB)
My Lords, I was pleased to sign Amendment 474 tabled by the noble and learned Lord, Lord Etherton. I also support the other related amendment in this group, Amendment 428, tabled by the noble Baroness, Lady Pinnock.
Regeneration of high streets and town centres is particularly important in the context of levelling up. I cannot stress enough how important a thriving town centre and high street are for the morale of a city, for its togetherness and for its onward development. Many high streets and town centres in the regions, including in some areas in Derby, where I live, are struggling with low occupancy and empty premises. This must be resolved urgently if we are truly to level up the regions and bring back the economic dynamism that is required for further developments.
I know that the Government get this, and their plans for enhanced compulsory purchase powers and high street rental options could form part of the solution here. However, in my role as co-chair of the Midlands Engine All-Party Parliamentary Group, I have canvassed many local stakeholders on what would really make a difference to high street regeneration, and the theme that comes at the top of the list time and time again is business rates.
The current structure of business rates makes it simply unviable for businesses to set up in certain locations. To expand on what the noble Baroness, Lady Pinnock, said, a property was being marketed on East Street, Derby last year at a lease of £35,000 per annum. It had a rateable value of £112,000 and rates payable of £56,000, so the rates were significantly higher than the rent. Another example, from the British Property Federation, is a property in a Hull for which the business rates bill was around three times higher than the rent a property in that location could reasonably demand. There are further cases of businesses not being willing to renew leases on their properties, even at zero rent.
Lord Shipley (LD)
My Lords, my name appears on Amendment 428, together with that of my noble friend Lady Pinnock. I just want to say two things. First, I hope the Minister understands the seriousness of this issue. Proposals for the reform of business rates have been regularly promised in the past, and there is clear evidence that reform is needed.
Secondly, I draw the House’s attention to the announcement this morning, which will be furthered at a conference in Liverpool tomorrow, of the launch of the fiscal devolution report of the Northern Powerhouse Partnership. It makes five key recommendations: first, devolution of reform of the business rates system to all mayoral authorities; secondly, the creation of three new council tax super-bands; thirdly, devolution of stamp duty to local councils; fourthly, devolution of 1p of existing employers’ national insurance contributions for local transport services and infrastructure, as is done in France; fifthly, a tourism tax on hotel stays to support culture, protect the environment and improve visitor experiences.
There will be a debate about that and, as we have heard, consultation will be needed on how to reform business rates. The time has come for this to be taken very seriously and for proposals to be initiated. I hope the Minister can tell the Committee that that is what the Government intend to do.
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)
My Lords, I thank the noble Baroness, Lady Hayman of Ullock, for setting out in Amendment 168B her suggested redistribution of the income raised by the council tax premium from upper-tier councils to district councils. The proposed premium will provide all councils, including district councils, with the opportunity, where they set a premium at the maximum level of 100%, to raise double the revenue from each second home in their area.
Revenue from council tax is essential for a wide range of councils, providing them with funding to make available a range of public services which best fits the needs of the local area. Under this amendment, in an area with two tiers of councils the district council would be able to retain all the income raised by the council tax premiums. This would disturb one of the key components of the council tax system—that local authorities should calculate their council tax charge for local services on the same basis as each other, with equal access to the revenues generated. The long-term empty homes premium has been in place since 2013 and has followed this long-established principle. We trust councils to make their own decisions on where their funding should be spent, and we do not consider it appropriate to engineer the system to direct part of the proceeds of council tax to one particular type of authority in some parts of the country.
Different communities will have their own set of challenges and solutions to second home ownership and empty properties. For instance, this may be through additional funding for transport or education, which falls within the remit of county councils. The current approach provides flexibility for a range of councils and other authorities to generate additional income, which can be used as they see fit. If a council feels that funding should be put towards a particular goal such as housing, this should be discussed with the other authorities in the usual way.
A change in the distribution method for the council tax premiums would also create an imbalance between two-tier areas and areas covered by unitary authorities. For example, in a single-tier area with a high number of second homes, such as Cornwall, the council would be required to share the proceeds of the premiums with the other precepting authorities, such as the PCC or the fire and rescue service. However, in a two-tier area with a high number of second homes, such as Norfolk, the amendment would mean that all additional income was retained by the district council. Notwithstanding the second part of the noble Baroness’s amendment, there would be no obligation to enable precepting authorities to benefit from the increased income. This may be advantageous to the district but would prevent the income being spent on services provided by other authorities in the area that can benefit the local community, such as road maintenance and better care for the elderly.
I turn to Amendment 169, in the name of the noble Baroness, Lady Hayman. We discussed earlier in Committee that the purpose of Clause 76 is to provide councils with an opportunity to apply a council tax premium on second homes. As with all properties, second homes may be in a variety of different conditions. For the purposes of Clause 76, however, a second home would be caught by the provision only if the property was substantially furnished. Indeed, this is an important factor in differentiating such properties from those that might be impacted by the long-term empty homes premium, as set out in Clause 75. Where such properties are substantially furnished, I would not envisage that they are likely to be in a condition to require significant work as a result of dilapidation. Therefore, the premium council tax on a second home applies only where it is furnished. However, in specific circumstances the local authority has tax relief powers as well.
Notwithstanding that potential distinction, I can reassure the noble Baroness that the clause already makes provision for the Secretary of State to make regulations that exempt certain classes of property from the effects of the second homes premium. Similar powers are already in place for the long-term empty homes premium. Obviously, before making any regulations the Government would wish to consult on any exemptions and to provide everyone with the opportunity to say what should—and, perhaps, what should not—be exempt from the effect of the premium.
The noble Baroness’s amendment also proposes a right of appeal against the imposition of a second homes premium. I can reassure her that, under Section 16(1) of the Local Government Finance Act 1992, council tax payers already have the right of appeal against any calculation of amounts they are liable to pay, including any premiums.
Finally, Amendments 428 and 474 were tabled by the noble Baroness, Lady Pinnock, and the noble and learned Lord, Lord Etherton. The Government are of course aware of the pressures facing businesses, including those on the high street, and have acted to support businesses up and down the country. As noble Lords are no doubt aware, the Government have only recently concluded a comprehensive review of the business rates system. A final report on the review was published at the Autumn Budget 2021, alongside a package of reforms worth £7 billion over five years. The review recognised the importance of the system in raising funds for critical local services in England, worth around £22.5 billion in 2022-23, and concluded that there was no consensus on an alternative model that would be of sufficient scale to replace business rates.
At the Autumn Statement 2022, the Government went even further and announced a range of business rates measures worth an estimated additional £13.6 billion over the next five years. As part of that package the Government announced that the tax rate will be frozen for a further year. This is a real-terms cut to the tax rate, worth around £9.3 billion over five years.
In addition, the retail, hospitality and leisure relief will be extended for a further year and made more generous. In 2023-24, it will provide eligible businesses with 75% off their bills, up to a maximum of £110,000 per business. This is worth an estimated £2.1 billion to ratepayers, many of which are on our high streets.
Furthermore, in response to the concerns of businesses in England, the Government will, for the first time and subject to legislation, introduce a transitional relief scheme for the 2023 revaluation. This will be funded by the Government and is expected to save businesses £1.6 billion. This will mean that the 300,000 ratepayers—
Baroness Pinnock (LD)
I apologise to the Minister for interrupting her reply, but she seems to be listing all the ways in which the Government are providing help to businesses via different reliefs for their business rates payments. If the business rates system is so bad that it needs substantial relief from the Government for those businesses to survive—and the amounts that the noble Baroness referenced were substantial—I can only conclude that the business rates system, as it applies to businesses in town centres, is broken. That is the reason for the argument that I have made, and why I hope that the Government will accept that business rates need a fundamental change; otherwise, the Government will be continually asked to provide relief to enable businesses just to survive.
Baroness Scott of Bybrook (Con)
I think I explained to the noble Baroness that we went out for extensive review—the issue is that we and local services need business rates—and there was no consensus on how they might be changed and made different, such that a similar amount of money would be coming in so that local areas could provide services. We tried but came to no consensus.
Lord Etherton (CB)
The Minister referred to, and I think the Government are relying upon, a 2021 review. What was the public’s involvement in that review?
Baroness Scott of Bybrook (Con)
I am sorry; I cannot tell the noble and learned Lord that, but I will make sure that I look into who, including the public, was consulted as part of that review. I will make sure that I get an answer to him and will put it in the Library.
As I said, in response to the concerns of businesses in England, the Government will introduce the transitional relief scheme for 2023. This will mean that 300,000 ratepayers seeing reductions in their rateable value at the revaluation also see an immediate fall in their bills from 1 April this year, rather than seeing those changes phased in over the life of the list. This will make the rates system much fairer and more responsive, and ensure that ratepayers benefit from the revaluation as soon as possible.
The Government also announced a supporting small businesses relief scheme, which will ensure that ratepayers losing some or all of their small business or rural rate relief as a result of the revaluation see their increases capped at a maximum of £600 in 2023-24. This is worth more than £0.5 billion over the next three years and will protect an estimated 80,000 small businesses. This is again on top of generous existing packages of statutory support provided to small businesses through the small business rates relief, which ensures that over 700,000 of our smallest businesses pay no rates at all.
The Levelling-Up and Regeneration Bill provides additional measures to address empty properties on the high street, such as the high street rental auctions. These measures will empower places to tackle decline by bringing vacant units back into use and will seek to increase co-operation between landlords and local authorities. Auctions will make town centre tenancies more accessible and affordable for tenants, including SMEs, local businesses and community groups. A review has only recently concluded and the Government remain committed to delivering on its conclusions. The £7 billion reform package announced at the end of that review and the £13.6 billion package of support announced at the Autumn Statement 2022 will, alongside the 2023 business rates revaluation, deliver vital help to those most in need, such as our high streets, and rebalance the burden of our business rates. In the light of these explanations, I ask noble Lords not to press their amendments.
Baroness Hayman of Ullock (Lab)
My Lords, I thank everyone who took part in the debate. I have two specific amendments in this group, but the debate has focused mainly on business rates. The noble and learned Lord, Lord Etherton, was right when he said that we need to look at the system as a whole and that business rates are not negotiable. That is part of the problem. If the Government are looking to reduce business rates, and they say that quite often, they need to look at how local authorities are funded, because so many are reliant on business rates. The debate has also demonstrated that the appeals system does not work at all. The noble Lord, Lord Ravensdale, talked about the need for economic dynamism for high street regeneration and said that business rates are a problem to achieving it. I completely agree with this.
When introducing her amendment, the noble Baroness, Lady Pinnock, was right to refer to the mission to which this relates, which is about increasing pride of place. On that note, I point out that there is not currently any incentive for local authorities to improve their town centres and increase the business base, as they are subject to tariffs. This perverse system actually discourages proper investment.
Again, the noble Baroness, Lady Pinnock, talked about e-commerce’s advantage over town centre premises and said that we need a fair competition. I am sure that the Government accept that. The challenge for all of us is what to do about it—how do you make that level playing field? I do not think there are necessarily easy answers to that.
I also thank the noble Baroness, Lady Pinnock, for her supportive comments regarding my amendments. She asked a question on Amendment 169 around dilapidation and the grace period that councils can bring in. The Minister mentioned something along these lines. What I found, when I had constituents coming to see me who were in this position, was that you only got that reduction or grace period if the council agreed that there was an issue of dilapidation; they do not always do that. You can get people being unstuck if the council will not agree it—then that reduction does not happen, and people get stuck. That was one of the points that I was trying to make.
The noble Lord, Lord Shipley, rightly drew attention to the fiscal devolution document that is being published for the north. I think this is really important because we do not believe that levelling up is going to be successful without fiscal devolution.
I thank the Minister for, as always, her detailed and thorough response to my amendments; it is appreciated. I will make one final comment on business rates following the noble Baroness’s response. Rather than tinkering with reliefs and temporary measures, we believe the whole system urgently needs a complete overhaul. It needs replacing with a fairer system that actually works for business. The current system, unfortunately, does not. In the meantime, I beg leave to withdraw my amendment.
Member's explanatory statement
This amendment requires cultural, historical and archaeological factors to be considered before making a name change.
Baroness Taylor of Stevenage
My Lords, I come to this amendment with a deal of frustration about the clause being in the Bill at all. I have a great deal of support for the approach of the noble Lord, Lord Stunell, to Clause 77 in that I really have no idea what such an issue is doing in a Bill aimed at tackling big, strategic issues of levelling up and regeneration—never mind devolution. We have been told many times in debates on this Bill that the Government’s business is not to intervene with matters when they should be devolved to local authorities. So I can only assume this is there to pacify a noisy bee in someone's bonnet, perhaps on the Back Benches in the other place. The inclusion of this clause is even more peculiar when you consider the major issues that we think have either been left out of the Bill or skipped over, like local government finance, the business rate discussion we just had, proper consideration of environmental issues, delivery of social and affordable housing and even the Government's own levelling up missions, which are considered too transitory to be included in the Bill.
In my opinion, councils are perfectly able to deal with issues relating to street names without government legislation or intervention. If there are legal issues relating to that, perhaps they need to be covered. However, being realistic, I am aware even in my short time in Parliament that bees in Back-Benchers’ bonnets can be exceedingly loud and powerful. So if we are not going to persuade the Government that this clause has no place in a strategic Bill, my thought was that we had better make it add some value to the existing process for street naming.
Because I live in a town that was subject to a fantastic and visionary master plan back in the 1940s and 1950s, it was designed so that street names are zoned. For example, in one part of the town, you have streets named after women pioneers, which I really approve of: Ferrier Road, Nightingale Walk and—my favourite—Pankhurst Crescent. Another area is great architects: Telford Avenue, Wren Close, Nash Close and so on. So with a modicum of knowledge of my town, you can navigate your way around. Our street naming committee maintains a list of further names for that area to allocate as developments occur, upon which extensive community consultation takes place, as you would expect from a co-operative council.
I presume that this clause is aimed at tackling issues which arise when it becomes apparent that an individual after whom a street is named does not have quite the gilded reputation that they may have done previously, or when our view of part of our history as a country alters because of cultural changes. That will happen from time to time; there is nothing wrong with that so far. But surely it is in a council’s gift already to consult with local people, set out the reasons for the change and get on with it.
My first amendment is to ensure that appropriate thought is given to the context, history, potential connotation and local perceptions of the proposed change. In relation to the point about archaeology, I think this does need consideration, as a brief search will determine whether any future development is likely to reveal earlier uses of the land which can help in determining new names. For example, the huge hoard of Roman coins which was found on one of our estate developments resulted in the proposed road names being scrapped in favour of Augustus Gate, Valerian Way and Jupiter Gate, to remind us of their Roman history. That is the kind of thing that can occur with a very brief search before naming occurs.
On Amendment 175 in my name, if we must prescribe the process for changing street names—my preference is obviously that we do not—then it is vital that effective consultation is carried out with all of those who live in the area and those who may have businesses there. For those who are resident, I hope it is obvious that they should be consulted. For business owners, there may be a cost involved—sometimes considerable—in changing their business address and ensuring they are given adequate time to assess and comment on any change is clearly vital. I beg to move.
Lord Stunell (LD)
My Lords, I have given notice that I think Clause 77 should not stand part of the Bill. I thank the noble Baroness, Lady Taylor of Stevenage, for her helpful introduction and explanation of the situation. This is a clause which is out of place in the Bill in the first place, but, more to the point, assuming that we will have to consider it, this is a clause in search of a problem and I cannot find out what the problem is.
If you turn to the impact assessment, the very first questions posed by every impact assessment are: what is the problem under consideration, and why is government action or intervention necessary? The impact assessment for this Bill is 101 pages long; I may not have been a very diligent reader, but I could not find any reference in it to this clause. It would appear that the Government have not answered the question in an impact assessment of what the problem under consideration is and why action is necessary. That has not stopped us getting a clause which is 67 lines long and covers two pages. It has not stopped us getting Schedule 5; I do not suppose too many noble Lords have ploughed through Schedule 5, but what it does is repeal the existing powers that there are for councils to change street names.
So I am none the wiser. Is this clause here to enable residents to change an unpopular street name in the face of a recalcitrant council that will not shift—perhaps they live in Savile Row and the word Savile has dropped out of favour and needs to be changed, but the council will not hear of it? Or is it here to prevent councils introducing an unpopular change that residents oppose? Putting it another way, is the target councils that insist on changing street names or councils that refuse to change street names?
One way or another, I was an elected representative for 37 years on various councils and at the other end of this building and never, in all my time, did I come across a case where either of these things obtained. I did come across cases where people wanted to change names or the council might think it was a good idea to change names. There was a straightforward discussion and consensus reached as to whether it should or should not happen.
Lord Stunell (LD)
My noble friend suggests that Raspberry Close might be what we have as a future name. This provision illustrates everything that is wrong about the Government’s approach to levelling up and this Bill. First, it removes an existing power of councils to do exactly what the Government say they want to control. It adds bureaucracy and cost, and it puts in a new procedure which is not needed at all but, just to be clear, is a centralised new procedure. The word “regulation” appears eight times in 42 lines.
It is a make-work clause for people in Whitehall. It serves no practical purpose, but it goes down to the smallest detail in the text. For instance, Clause 77(3) states that, the name having been changed, a local authority may put up a sign. That is a pretty good point; I am glad they did not overlook that. What kind of sign? Well, it can be “painted or otherwise marked”. Yes, that is another good point. I am glad they did not overlook that. Where can it be put? It can be put on
“a conspicuous part of any building or other erection”.
Is this not getting down to the absolutely absurd? Of course, at first I was worried that trees were not included in the places where you could fix a sign—but then I realised that the Minister would tell me that trees will be covered in regulations. In fact, the whole clause is covered in regulations. The whole Bill is covered in regulations. The only consolation I get out of this is that we have not yet been given the department’s list of approved street names—but possibly the Minister will tell us that that is going to come on Report.
This is an unnecessary clause: it is poorly drafted and dripping with red tape and the Minister should take it out of this Bill and let us focus on the real task of levelling up, to which it contributes in no way at all.
Baroness Bennett of Manor Castle (GP)
Well, my Lords, follow that. After that devastating forensic analysis explaining exactly why Clause 77 should not stand part of the Bill, I rise briefly to add a couple of additional points to the arguments just presented. I very much agree with the noble Lord, Lord Stunell, that this clause should go altogether, but I also understand that the noble Baroness, Lady Taylor of Stevenage, is trying to ameliorate the mess to some degree. But I think it is clear that getting rid of the clause altogether is by far the best option, and I note that the Local Government Association has expressed its concerns about it.
I want to add one case study, one piece of analysis and one warning for the Minister and the Government in general. The case study concerns what has happened not with a street name but with a similar story in Stroud. There is what has been described as “an offensive racist relic” clock that glamorises the slave trade. When this became an issue, the council started an eight-week consultation. Some 1,600 people in a town with a population of 13,500 responded to that consultation; 77% said that the clock should be taken down. This is an interesting case study. One issue is that the clock is on a building owned by a trust. It is possible that the Secretary of State may have to be referred to on whether the trust is allowed to have this clock, which the people of Stroud have expressed their desire to see removed. This is my cautionary warning to the Government and the Minister. Do Ministers really want to get tangled up in these stories and issues?
Maybe they do, which brings us to the question asked by the noble Lord, Lord Stunell, about the purpose of this clause. It would appear that the purpose of the clause is that Ministers can be seen to take a position; that is surely a very bad reason to write law. The other case study warning, which has not been mentioned here but should be, concerns Bristol and the Edward Colston statue. That was a demonstration of what happens when public opinion is not listened to and when there is a strong clinging to tradition. As other noble Lords have said, times have moved on and things put up in the past are now offensive. People will take things into their own hands. It is clear that these are local issues that should be decided at a local level, and the Government really should not be sticking their oar in.
Lord Scriven (LD)
My Lords, I rise briefly to continue the absurdity that my noble friend Lord Stunell spoke about. Clause 77(6) says:
“An alteration has the necessary support for the purposes of this section only if … it has sufficient local support”—
so one needs to determine what is “sufficient local support”—
Lord Scriven (LD)
Indeed. It continues
“where it is an alteration of a specified kind, it has any other support specified as a pre-condition for alterations of that kind.”
We then move on to Clause 77(7) and, as my noble friend Lord Stunell just said from a sedentary position, it seems to be in the regulations. It says:
“Regulations may provide that sufficient local support, or support of a kind specified under subsection (6)(b), can only be established in the way, or in one of the alternative ways, specified in the regulations.”
These regulations should make provision for a referendum and, according to Clause 77(8)(a), should specify
“the conduct and timing of a referendum and who is entitled to vote”.
So it may not be the whole street; it may be part of the street, the street next door or a few streets next door. Clause 77(8)(b) goes on to say, interestingly, that the regulation may say that it may not be a 50:50 percentage split, or 51%. It says that the regulation will set
“a specified percentage or number of those entitled to vote in the referendum”
and
“a specified majority of those who vote indicate their support for the alteration”.
Clause 77(8)(c) goes on to say that, following the first voting event, at another specific time, through regulation, a second vote could be held, or it could be determined that it could be part of the street or the whole street that then gets voted on in a second referendum.
I totally agree with my noble friend Lord Stunell: this is a most ridiculous clause. It should not stand part of this Bill. It has nothing at all to do with localism. The 1907 Act allows exactly for a street vote to take place if it is required. It seems that the right honourable Oliver Dowden MP in the other place let the cat out of the bag on what the issue is. I do not think it goes back to Nelson Mandela, but to a four-letter word: “woke”. Oliver Dowden said recently that this should stop people getting rid of historical names and putting in “woke” names.
This is a culture war in a Bill; it should not stand part of the Bill. It is not a problem that has been defined. The 1907 Act already determines that this can take place. Doing this through centralised regulations in such a prescriptive way is not what levelling up or devolution are about.
Baroness Fox of Buckley (Non-Afl)
My Lords, in the interests of some balance, while I have no idea what Clause 77 is doing in the Bill—I agree with the objections that have been raised; it is far too prescriptive—I thought it might be worth noting that, in Haringey where I live, over £100,000 was spent on renaming Black Boy Lane as La Rose Lane. That was due to concerns that the old name had racist connotations. However, it is disingenuous to talk about the idea that this was based on local consultations. The council did launch a consultation after the death of George Floyd but, since then, it has admitted that a significant number of residents of the street objected to the idea. Its inbox was full of messages from people objecting to the name change but it decided to carry on regardless.
The culture war is not so much in the Bill as in society. I do not think it is fair to say that this is all to do with Oliver Dowden playing the woke card, because there are real issues happening on the streets of the UK.
Lord Scriven (LD)
Will the noble Baroness accept that I said that this clause was based on what Oliver Dowden said? It was a direct quote. Would she also agree that the example she gives could be dealt with if the 1907 Act were deemed to be appropriate for all street name changes and the 1925 Act repealed? Then there would not be a need for this clause at all—the 1907 Act allows for street name changes with votes.
Baroness Fox of Buckley (Non-Afl)
It is true that I am not familiar with the 1907 Act in detail, if at all. It is also true that I did not introduce the subject of Oliver Dowden or the term “woke”; I was responding to the comment that was made. I would just like to carry on, as this bit of what I am saying is important to the Bill.
Sometimes people speak on behalf of local democracy and actually the problem is that what passes for local democracy at the level of consultations is often faux and sham consultations, and local people feel aggrieved. In Haringey, there has been a big row about whether the name even has racist connotations. Local people have put forward all sorts of ideas that it was to do with chimney sweeps or was based on King Charles II —all sorts of things. Local supermarket owner Ali Demirci has been going round asking people what they thought the original name was. Whereas the council seem convinced it is racist, local people do not necessarily.
The bit where levelling up comes in is as follows. Carol Lee, who has lived on the road for 35 years and has mixed-race children, was quoted in the Guardian as saying:
“I’ll have to change my driver’s licence, and that’s £40 alone. You have to look after your money these days”,
as well as saying that she objects and that this has been imposed, and so on. Graffiti has been put up on the changed sign and signs put up in windows with the original name on them.
I was simply making the point that, although I do not think this Bill is the right place to deal with it, I do not think there is nothing to be dealt with. As to the Colston statue question, it would be wrong if, as the noble Baroness, Lady Bennett, suggested, we took to pulling down statues that we disagreed with because things did not go our way. I think that would be a destructive conclusion to reach.
Lord Lansley (Con)
My Lords, before my noble friend responds to the debate, I want to ask a couple of questions. I do not want to get into the detail of the public health Act, although I might say to the noble Lord, Lord Stunell, who quoted marking and painting, the text here is simply the same as the public health Act, so I do not think the draftsman can be criticised too much for incorporating some of the original drafting in the process of rewriting this bit of legislation.
I have two questions. First, subsection (10) of this clause says:
“No local Act operates to enable a local authority within subsection (1)(a) or (b) to alter the name of a street, or part of a street, in its area.”
That relates to a district council or to a county council for which there is no district council. Are there any such local Acts? I was not clear what the import of this is, and whether there are local Acts that have given this power and they are being disapplied by this provision. I wondered whether my noble friend knew whether there were any such local Acts.
Secondly, I did not give him notice of this question, but I am asking my noble friend if he will be kind enough to see what the department’s view is on it. If one knows Cambridge at all, one knows that to the west of Cambridge there is a new town called Cambourne. I was the Member of Parliament there when it was first proposed and, in the original naming process for what were then three linked villages, it was intended to use the name Monkfield, since they were actually built on land that was called Monkfield farm.
However, the local authority discovered that it had no power to determine what the name of a new village or town would be. Presumably, the legislation, except in the context of development corporations, never believed that local authorities would be naming new villages or towns that were put on to greenfield sites by private developers. As it turned out, the private developer had the right in law to determine the name Cambourne, which it chose using Cambridge and Bourn, a local village. Everyone is perfectly happy about that now, but at the time it was questioned whether it was appropriate that a local authority could name streets but could not name a town. That is a curious situation for us to have arrived at.
As it happened, the local authority subsequently came up with the excellent name of Northstowe, which I think slightly reflects the point made in the other amendment by the noble Baroness, Lady Taylor of Stevenage, since it used the name of the hundred within which the town subsists—namely, Northstowe—which historically had never been applied to a specific village or town, so a historic name was able to be given a modern usage. Fortunately, that worked okay without anyone having any problems with it. The question is: should the local authority have such a power and, if not, is this worth thinking about at some point?
Earl Howe (Con)
My Lords, I shall focus straightaway on the provisions of Clause 77 in the round, in response to the concerns and questions that have been raised by the noble Lords, Lord Stunell and Lord Scriven, and the noble Baronesses, Lady Taylor and Lady Bennett.
Clause 77 creates a requirement for the necessary support to be obtained for any changes to street names. The noble Baroness, Lady Taylor, and the noble Lord, Lord Stunell, asked why the Government have included this clause in the Bill. I was grateful to the noble Baroness, Lady Fox. I must repudiate the suggestion made by the noble Lord, Lord Scriven, that this has something to do with the culture wars. The answer is that it addresses the issue that, in some places around the country, there has been considerable concern and disquiet where councils have taken it upon themselves to change the name of a street without any meaningful consultation with local residents.
Under the available legislation, which noble Lords have rightly said dates from the early 20th century, any council has the power to change the name of a given street without consulting the residents in the street. The provisions of the Bill will ensure that, instead, local residents will be properly involved in changes to street names that affect them—changes that, as we have discussed, can alter the character of their area. Street names are often an intrinsic part of an area’s heritage, cherished by the community for their history and representation of the place. Changing names involves both practical costs for residents and businesses and social cost to the community. We are clear that these costs should be borne only with the consent of those affected.
How that should be attained will vary according to the nature of the street and its importance in the community. A one-size-fits-all approach would be insufficient to properly allow the views of the community to be determinative. The clause will unify the approach to how changes to street names are made where currently the rights of the community depend upon where they live and, outside of London, the decision of the local authority as to how involved or not the community should be.
Lord Scriven (LD)
I totally follow the logic of what the Minister has just said, but would it not be the case that a solution would be, rather than a new provision, to revoke the part of the 1925 Act that a council can adopt, which says there should be no vote, in favour of saying that all councils must adopt the 1907 Act, which says there must be a vote?
Earl Howe (Con)
The problem is that there are, I am advised, three Acts of Parliament that date from the early part of the last century, and that has led to a confusing mix of provisions across the country. Many provisions are over a century old, as I say, and there is no transparency over which Acts apply where. We thought it simpler to take the opportunity to be clear in this Bill that there should be more local determination of these issues. The current legislation is antiquated in its drafting, apart from anything else, so this updating is intended to make the process clearer for local authorities. All that should make the process for renaming a street more democratic and ensure that the voices of the local community are genuinely heard.
Amendment 173, tabled by the noble Baroness, Lady Taylor of Stevenage, would add additional criteria for local authorities when considering the renaming of a street. We entirely agree with the noble Baroness about the importance of history, archaeology and culture in this process. The last thing we want is anodyne street names divorced from the character and history of the area. However, as I have made clear, the Government are strongly of the belief that the final say on changes affecting street names should lie with local people. We fully expect those local views to reflect the historical or cultural associations of the names concerned and the importance that communities place upon them.
The amendment would create a duty on a local authority to consider the historical, cultural or archaeological significance of a name change. It is not clear that a free-standing additional requirement of that kind is necessary, nor is it clear how that duty would work alongside the provisions of the Bill. It could, for example, make it harder to secure name changes that had local support but where new considerations, such as the need to honour a local person or event, took precedence over an archaeological interest. We saw some Olympians having streets named after them following the 2012 Olympics.
It is for this reason that, with the aim of being helpful to local authorities, the Government would be minded to set out in statutory guidance how factors such as the history and culture of the area should be considered in bringing forward proposals for street name changes under this clause. We have consulted on the prospective secondary legislation and guidance to deliver these changes, and respondents were over-whelmingly positive about our proposals: 91% of respondents agreed that regulations and statutory guidance should set out how local authorities should seek consent when changing a street name. In view of that support, and of the fact that heritage and cultural significance are matters that local communities are best placed to weigh up for themselves, I hope I will have persuaded the noble Baroness that the amendment is not necessary.
Lord Scriven (LD)
The 1907 Act is very clear. It is not antiquated or in any way there to be debated. The 1907 Act power may be exercised only with the consent of two-thirds of the non-domestic rates payers and council tax payers in a street. That is what the Act says. What is it about the 1907 Act and that provision which seems to be non-democratic and does not give the power to the people on the street to make the change?
Earl Howe (Con)
Because it is a one-size-fits-all approach and our judgment is that that is not an appropriate prescription for every situation.
Lord Scriven (LD)
The noble Earl is therefore saying that in one street it could be 51% and, in another street, maybe a couple of streets away, it has to be 75%. Is that what the noble Earl is saying? The provision in the 1907 Act is very clear. It gives a provision of what needs to happen and a percentage of the vote required to change the name. Is he saying that different streets need different percentages of the votes to change the street name?
Earl Howe (Con)
We cannot, at this stage, prescribe particular percentages to particular situations. This is to be worked through in regulations and guidance, which was, as I emphasised, the approach that respondents to the consultation felt was right: we should not be unduly prescriptive in primary legislation, but rather allow for some flexibility at local level depending on the situation under consideration.
I turn to Amendment 175 in the name of the noble Baroness. As I outlined, our view is that local people should have the final say on these matters, particularly, as the noble Baroness’s Amendment 173 demonstrates, when it comes to their local heritage. In this context, I agree with the underlying intent behind this amendment. There should be clear processes for making sure that views from all relevant groups that might be affected by a street name change are taken into account. It is, however, important that we do this in the right way so that the processes are robust but can be adjusted if needed.
The approach in these amendments would be prescriptive and would limit our ability to go further than simply consultation by making local views determinative, as the clauses do at present. But I want to reassure the noble Baroness that we will be setting out clear, transparent and robust arrangements in secondary legislation, as we set out in the consultation I already mentioned. In addition, by setting out the detail for how consultation on street naming will work in regulations and guidance, we can maintain flexibility to update processes in line with different local circumstances and changes such as new technology. I hope these remarks are helpful in explaining the Government’s approach to what is a sensitive issue.
My noble friend Lord Lansley asked whether there were any local Acts of Parliament that might affect this issue. I am advised that the Oxfordshire Act 1985 might be relevant here. I think I had better do further research for my noble friend to find out whether there are others—but that was the advice that I have been able to receive.
On his other question of the power to name new villages, I have no direct experience of this. My understanding is that what normally happens is a conversation between a private developer and the local authority and an accommodation is reached. The noble Baroness, Lady Taylor, who clearly has direct experience of this, is shaking her head, so I do bow to her experience. It would seem appropriate that I look into this further and write to my noble friend once again.
Baroness Taylor of Stevenage (Lab)
I am grateful to all noble Lords who have taken part. I thought this would be quite a short debate, but you never know here, do you? I am also grateful to the noble Earl for, as usual, a very thoughtful and considered response to the debate.
Our contention in tabling the amendments in this group was that the Government’s introduction of this clause to the Bill was kind of bizarre in a way. We have looked at some very key strategic issues in the debates already—we are likely to come to more in the days in Committee to come—around local finance, business rates, environmental issues, affordable housing and so on, and found that there is not as much in the Bill as we would like to see on those. However, what seems to be an issue covered by previous legislation and seems for the most part to be managed perfectly well in local areas—there may be some notable exceptions—gets a whole clause in the Bill.
I was grateful to the noble Lord, Lord Stunell, for his careful evisceration of the clause—that is what it was. He used the term “a clause in search of a problem” and asked the clear question: what is the problem here? He also referred to the impact statement having no reference to this clause. I think the idea is that there may be—let us face it, there probably are—some councils around the country which either insist on name changes that have not got public support or resist name changes that have. But the existing powers, as has been consistently referred to through the debate, require a consultation of ratepayers to vote in favour of a name change, so it is difficult to see where the push comes from.
I know that this issue causes a great deal of concern in local areas if there are things that have gone wrong, but surely the pressure on a democratically elected council would be to make sure they had their residents alongside them if they were going to present a change of name, not to push against that.
The noble Baroness, Lady Bennett, talked about the LGA supporting getting rid of this clause. I noted that from the LGA’s briefing. The idea that people really want to get tangled up in these issues in Parliament is odd, to say the least, as far as I am concerned.
The noble Lord, Lord Scriven, talked about measuring sufficient local support. Leaving this to regulation seems, again, to be a huge sledgehammer to crack a nut. If we are going to have regulations around the conduct and timing of a referendum and what percentage is going to get us over the line in terms of what we call our road, that kind of centralised direction has no place in a Bill that is supposed to be concentrating on devolution. I do not want to get caught up in the issue around roads in Haringey particularly. It may be in that case that the consultation did not take place; I do not know.
Earl Howe (Con)
I do not think the noble Baroness has understood the issue. This has everything to do with devolution; that is the whole point of the clause.
Baroness Taylor of Stevenage (Lab)
Well, I think that regulating to the extent of telling where signs can be put and whether they should be painted or printed really is against the spirit of devolution.
The noble Lord, Lord Lansley, made good points on what powers local authorities have to name which things. We should not avoid the fact that private developers will of course choose to name things in a way that they think will help them to sell properties in an area. They will choose either road names or settlement names because they think it is in their interest and will help to sell properties. If we are to have this clause—I assume we will, because I doubt the Government will withdraw it—we need to think about this as well. Areas should be named according to some kind of local connection, whether it is history or individuals connected with the area—my second amendment refers to this—and I do not think that this should be entirely in the hands of developers.
I have not changed my view on this clause. I agree with the noble Lord, Lord Stunell, that it does not have much of a place in the Bill, but if it is going to be in there, when name changes are made we need to think about what the connections are. I am grateful for the comments of the noble Earl, Lord Howe, on this. We also need to think about proper public consultation on matters such as this. If it has to be in the Bill, so be it, but local authorities have managed this perfectly well so far and there is no need for a clause such as this in a broad-ranging, strategic Bill. That said, I beg leave to withdraw my amendment.