Levelling-up and Regeneration Bill

(Limited Text - Ministerial Extracts only)

Committee stage
Monday 20th March 2023 Lords Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.