Growth and Infrastructure Bill
Baroness Hanham Excerpts(11 years, 8 months ago)
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The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, I thank the noble Lord for introducing these amendments. I will move the government amendments, as he asked. I very much welcome the scrutiny that noble Lords have given this clause. We have looked very carefully at the issues raised, and I am very glad to be able to bring forward the amendments in this group that respond to them.
In Committee, concern was expressed about the need for greater reassurance and stronger safeguards in relation to the way that this clause could be used. This was also reflected in the reports of the Delegated Powers and Regulatory Reform Committee and the Select Committee on the Constitution. The amendments we propose are designed to provide that reassurance by making very clear in the Bill the circumstances in which this clause may be used and by providing Parliament with an opportunity to consider the criteria by which planning authorities’ performance would be assessed.
Amendment 4 will ensure that applications for major development only can be submitted directly to the Secretary of State. The point was made quite forcefully in Committee that there should be a determination as to which applications were caught by these provisions. A number of noble Lords argued for this, and what we are doing now gives the Secretary of State the power to prescribe what “major development” means for this purpose. We intend to use the existing definition found in secondary legislation; for example, 10 houses or more or an equivalent amount of commercial space. This approach reflects the change that the noble Lord, Lord McKenzie, proposed in Amendment 3, and I am grateful to him for saying that he thinks what we have done is sufficient for him perhaps not to take his amendment any further.
Amendment 7 makes two important changes. First, it puts beyond any doubt that an authority could be designated under the clause only if it is not performing adequately in handling planning applications. Again, in doing this we are responding positively to the arguments put forward in Committee. Secondly, it requires that the criteria for designating authorities—and, indeed, for lifting any designation—must be laid before both Houses for a period of 40 sitting days before they come into effect only if there has been no vote in either House to the effect that the document should not be approved. We will come to what we expect those criteria to be when we debate the next group.
I believe these changes provide a powerful safeguard against any perceived future misuse of the powers that Clause 1 confers on the Secretary of State. I do not think there is any need to go further and require an affirmative procedure for the criteria, as Amendments 1 and 14 would require, as that would take us well beyond the sort of safeguards that underpin other performance regimes. It is also worth noting that where similar powers were taken by the previous Government in the Local Government Act 1999, the Education Act 1996 and the National Health Service Act 2006 there is no parliamentary scrutiny on the criteria that the relevant Secretaries of State use before exercising their powers. To go further than we propose would mean an unnecessarily protracted process for any changes that do not need to be made.
Amendments 8, 11 and 12 make some minor consequential changes to the clause. A further consequence is Amendment 53, relating to Clause 31, which provides for early commencement of proposed new Section 62B. This is for one reason only, which is to allow Parliament sufficient time to consider the criteria we propose to use while still allowing any initial designations to be made in October this year, as we set out in our consultation paper. This change has no impact on when the remainder of Clause 1 would come into effect.
The noble Baroness, Lady Whitaker, has not spoken to Amendment 10. I am not sure whether I shall move my amendments and give her an opportunity to do that. We have not heard from her. I think this is a bit unusual but since she seems to have missed the cut, I will move my amendments and leave the noble Baroness to speak to hers.
Baroness Whitaker
My Lords, I agree with my noble friend Lord McKenzie’s inference from the responses to the consultation and welcome the direction of travel of the Minister’s amendment, but I shall argue for more specificity in the Bill. I speak to Amendment 10 in my name and that of the noble Earl, Lord Lytton, who regrets that he cannot be here today. What I shall say has been drawn up with him, and I am grateful for his expert support and that of the Town and Country Planning Association. Perhaps I should also declare that I am an honorary fellow of the Royal Institute of British Architects.
Our amendment is tabled because of a gap in the concept of designation. Of all the evidence of poor performance by a planning authority, the one that has a particularly adverse effect on quality of life, as well as the local economy, is bad design, coupled with lack of sustainability, but that is not specified in the Bill. That power is open to wide discretion, whereas, at the other extreme, the consultation’s proposals for failing authorities are pretty mechanistic and relate to speed and appeal decisions—not tests of quality but, rather, tick-box exercises to check compliance. The impact of designation on local democracy is very powerful, and speed and compliance with the NPPF with regard to appeal decisions should not, I submit, be enough to prompt a designation decision. That should be taken in the round and take full account of the quality of outcomes. That is particularly important because the broad principles in the NPPF are themselves open to quite a degree of interpretation.
The two extremes of a vague, wide power in the Bill and narrow, mechanistic tests for failure omit the real point of good planning—to approve development that is durable and practical, acceptable to residents and capable of improving their total environment as well as, in the long term, saving public money. That cannot be done without an informed approach to design; but design capacity is still very patchy among planning authorities, and many succumb to the will or blandishments of developers who may well not have the long-term interest of the local community at heart.
Therefore, the amendment makes it necessary for the Secretary of State to consider what the authority has done by way of contributing to sustainable development and good design, which complements existing duties in planning legislation rather than enabling them to be overridden. He has also to consider, in addition, what the local views are so that, for instance, if a neighbourhood has developed design criteria but cannot get the planning authority either to accept them or to draw up its own, it is not short changed by the process. Finally, he must consider what any wider public interest might be. That latter obligation enables discretion to be used when necessary, so that it is not a matter of a fixed threshold being triggered. Finally, the Secretary of State must publish his or her reasons for designating according to the criteria in the amendment, which element of transparency I hope that the noble Baroness will also support.
In conclusion, the amendment would go a long way to protect residents from the kind of system failure in design and sustainability which poor planning authorities all too often let themselves in for. In that way, growth and infrastructure really could work properly. I commend the amendment.
Lord Tope
My Lords, as this is the first time I have spoken at this stage I, too, must again declare my interest as a member of a local planning authority in London. Briefly, I echo the sentiments of both my noble friends who have just spoken; even though they started by disagreeing with each other, in effect they are saying the same thing. I recall recognising at Second Reading that the Minister is well known for listening, and saying that on this occasion I hoped that she would not only listen, characteristically, but hear and be able to act accordingly. I am grateful that she has indeed listened and heard and that we have these welcome amendments. I rather gather that the government amendments are being welcomed on all sides of the House. While not making this clause perfection, they have certainly improved it considerably.
In saying that, I have had the chance only to have a very quick look at the consultation results, which we received fairly late yesterday. I am a little surprised that there is so much support for the proposals in Clause 1, including from local authorities. I cannot help wondering whether, if we were to consult now—I am not suggesting that we should—on Clause 1 as it is likely to read after today, we might see even better results. With the reassurances that have been, and I think still will be, given on it, Clause 1 has been made far less onerous than when we first looked at it. I welcome the movement from the Government and their amendments before us today. They do not go as far as some of us would wish but they go considerably further than we might have hoped at an earlier stage and we on these Benches certainly welcome them.
Baroness Hanham
My Lords, we are running slightly out of order so, with the leave of the House, I will speak now and the noble Lord can respond after me.
I am glad that most noble Lords have had an opportunity to see the consultation. I made it clear in Committee that I would try to ensure that the consultation responses, at least, were available to the House, and that is what we have done. It would be fair to say, as the noble Lord, Lord Jenkin, has done, that with any consultation parts are agreed and parts disagreed. If I did not misunderstand my noble friend Lord True, he suggested that we might dismiss anything that had come in from a local authority. I can assure him categorically that that is not the situation.
Baroness Hanham
I apologise for missing the fact that this was an aside. I will not take it any further, other than to underline the point that we listen very carefully to what local authorities say about legislation and we always will.
I am also grateful for the general support we have had. I understand that there are still concerns about this designation but we are trying to keep it as simple as we possibly can. In that regard, I will briefly address the noble Baroness, Lady Whitaker, and the noble Lord, Lord Best. We will be discussing the criteria in Amendment 10. They may want to intervene again in the next group but I think and hope I can deal with it. It is important to remember the whole purpose of this clause, which is to encourage good and timely decisions from local authorities and to give applicants for major development the choice of a much better service. There is no question here that, where the authority is designated, an applicant cannot still go to them. They are given the choice of being able to go to a local authority or being able to go immediately to the planning inspector. At the moment, they can do that after 13 weeks if an application has not been dealt with, but now they can go right from the outset.
In the context of design, sustainability is hugely important. However, it is not relevant to what we are trying to do here, which is to get the number of appeals against a particular local authority down and the applications dealt with quickly. Local authorities have to take sustainability, design and good development into account. The noble Lord, Lord Best, pointed out very clearly what my honourable friend at the other end, Nick Boles, has said. We believe very strongly in that. The national policy framework deals with that as well and makes it very clear. However, these are not tests that we ought to apply as part of assessing the designation. They are not matters that can easily be assessed on the basis of our considerations and the very limited criteria which we are employing.
Were the amendment to be accepted, there would be a very real risk of having a process that is far from transparent. We do not want that: we want it to be as open as it can be and, perhaps, open to judicial review. We wish to avoid that by employing the criteria that will ensure that the assessment process is as fair and transparent as possible. As I say, we will have a chance to consider those further in the next group.
My noble friend Lord True—I actually understood him this time and did not get it wrong—asked whether there would be clarity where the applications were sent to the Secretary of State. Again, we will deal with this later in the Bill where there are relevant amendments, but I assure him that the intention is that it should be open and transparent, with local people having the right to make representations to planning officials. With that, I hope that the noble Lord will feel free to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for her response to the amendments and for moving the Government’s amendments. We are happy to accept Amendment 4, with perhaps a more grudging acceptance of Amendments 7 and 19 because we think that a more robust process would be appropriate. At least now we have a parliamentary process, though, so the Government have moved on that and we should thank the Minister for it.
I agree with the noble Lord, Lord Tope, that Clause 1 is far from perfect; we would prefer it not be in the Bill and we will debate that later, but these amendments have edged it forward in a more acceptable direction.
I agree with the noble Lord, Lord True, that it is entirely appropriate that local authorities should be engaged in this consultation; in a sense, it is their powers that are potentially restricted by this. Something is still unclear to me regarding representations. Again, I take the point of the noble Lord, Lord True, that we do not want representations by the back door from people to the Secretary of State, but the opportunity for local authorities to make representations to the Secretary of State before designation takes place is still a grey area, at least to us. In Committee, the noble Baroness seemed to open the door for some iterative approach which is encompassed in performance agreements, formal or informal. I hope that we can get greater clarity on that during our deliberations today.
The noble Lord, Lord Jenkin, basically said in respect of the responses from local authorities, “Well, of course they would say that”, but the value of the consultation is not only the metrics—even though it was me who quoted them—but some of the issues that are raised, and they are very relevant to some of the debates that we are going to have.
We support the approach of my noble friend Lady Whitaker’s amendment, spoken to and supported by the noble Lord, Lord Best. It reminds us that one way to judge quality might be the level of unsuccessful appeals, but that does not really go to the heart of whether a planning authority’s decisions and engagement are focused on the quality of design and the achievement of sustainable development.
It is interesting to look at the consultation responses to Question 5,
“Do you agree that quality should be assessed on the proportion of major decisions that are overturned at appeal … ?”.
Is that the right metric for judging quality? Only 27% supported that while nearly half, 48%, were either opposed to it or had a qualified opposition to it. It is this lack of a qualitative assessment and reliance on the mechanistic approach to designation that is likely to drive down standards. Clearly, ignoring any view from parish or town councils, neighbourhood and business forums, or indeed any relevant representations, may make for clarity of criteria but, I suggest, does not assure us of the right sort of outcomes that we want from the planning process. Having said all that, though, and accepting the Government’s amendments, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, we heard from the noble Lord, Lord Tope, in Committee on a similar amendment proposing a period of 18 months. The intention is to give early warning to local authorities, so that they have an opportunity to improve with the help of other local authorities, the LGA, and possibly even the Government.
The thrust of the amendment is entirely reasonable. We suspect that the Government’s response will be that authorities will know in good time. Designation will be based on two years’ data and authorities will know the results of the first of these years. If they are failing the criteria for year 1, the danger signals will be there for the end of year 2. Councils will be able to seek to improve. This does not address the position at the start of the scheme where, before the ink is dry on the legislation, the die will effectively be cast.
At a recent meeting, which was kindly organised with the Planning Minister, it was hinted that there might be some easement in the early period. Perhaps the Minister will tell us whether there are any such developments. In any event, on an ongoing basis, knowing in year 2 that year 1 criteria have not been met may not give the local planning authority sufficient time to improve. Improvement may in part depend on the nature of any new applications. Tardy dealing with the major development submitted in year 1 may affect the data for year 2. For a small local planning authority, staff sickness and the timescales to recruit new staff are factors which anyway could mean that a local authority has insufficient time to turn things around by the end of year 2.
If the objective is to encourage sustainable improvement in local planning authorities, the rigid application of the criteria could be counterproductive. The noble Lord’s amendment seems to give an opportunity of improving that situation under these arrangements. I say to the noble Lord, Lord Tope, that if we do not get a satisfactory answer from the Minister today, he should consider testing the opinion of the House on this proposition.
That leads to our Amendment 15, which requires the serving of a notice of intention to designate but then, crucially, a chance for a local planning authority to make representations as to why designation would be inappropriate—not for an extensive period but for just four weeks in this case. We know that the Government will argue for the importance of transparency and certainty in the process but they should also recognise that a range of factors could affect the timeliness of dealing with applications—difficult development, statutory consultees, extended and iterative community consultation, to name but a few. It might be argued that anyone served with a prospective designation notice is bound to make representations but of course not all will be justified.
In any event, at a recent meeting, we heard from the Planning Minister that although the number of likely local planning authorities to be designated has crept up—I think that he suggested 20—that surely is not too large a group for there to be the opportunity to make representations. We should think of the damage to and the demotivation of a planning team which gets designated through no genuine reasons that it could influence.
Perhaps I may again take the noble Baroness back to our deliberations in Committee when she said:
“There are usually reasons why planning applications are delayed, and one may be that an application will take longer than the normal consultation period. Before an authority is designated, it will be allowed to put that view forward and say that it has not been able to deal with certain applications because it has agreed that the process will take longer, or there may be some other reason. A portcullis will not just come down; discussions and explanations will be possible”.—[Official Report, 22/1/13; col. 1032.]
That seems to be pretty clear and suggests that there should be scope for precisely what the amendment in the name of the noble Lord, Lord Tope, and our Amendment 15 seek. Unfortunately, from all that we have heard so far, it seems as though the portcullis will just come down and that there will be no stay of execution on this.
Baroness Hanham
I thank both noble Lords for these amendments, which, as I have said, open up the discussions on the criteria and the means of designation. The noble Lord, Lord Tope, has said that with designation we should be incentivising and not punishing. From the outset, I want to make it clear that that is precisely what we are trying to do. While we designate because of a performance, we are trying to ensure that that performance improves. If this is an incentive to do that, that is precisely what we are trying to do.
How the designation process will work is very important. As a matter of course, we are consulting on it. I think that it would be helpful if I begin by giving noble Lords an indication of what people have said and how we intend to respond. The consultation closed on 17 January and, as noble Lords have said, there were 227 responses, many of them from planning authorities. There were inevitably some differences of view and, having looked carefully at the responses, we are in a position to confirm how we plan to move forward on some of the key elements of the proposals. We will of course publish a full response to the consultation in due course, once the primary powers to be implemented have been finalised.
In the light of the consultation we have concluded that the speed and quality of decisions on planning applications are the most appropriate basis for assessing the performance of local planning authorities for the purpose of implementing this clause. The basis refers to the specific thresholds where, as the noble Lord, Lord McKenzie, rightly said, 20% were lost on appeal and 30% assessed on speed or lack of it—applying, in other words, to authorities that have had 20% or more of their major decisions overturned at appeal, or that have decided 30% or fewer of their major applications within the statutory period.
It bears repeating that these are very low thresholds. The intention behind them is to create a safeguard that encourages—or incentivises—good performance rather than to see a lot of designations. We remain of the view that designations should be a last resort and that these thresholds are in line with that objective. We will keep them under review—that is our starting point and firm intention. Through the amendments that we have made to Clause 1, Parliament will have the opportunity to consider the criteria before they are finalised.
There was considerable support for our proposal to allow extensions of time agreed between the local authority and the developer to be dealt with separately from the performance figures that we currently collect. This was one of the points addressed by the noble Lord, Lord McKenzie; where over time there are difficulties, as long as there is agreement with the developer for an extension of that time for whatever reason, that will not become part of the decision-making relating to the designation. These performance figures are part of promoting a simpler, more proportionate approach to planning performance agreements. We will reflect this as quickly as possible in the data that we collect. We also intend to proceed with our suggestion that any authorities that fall below the performance thresholds are considered for designation and dedesignation on an annual basis.
In line with this we have been giving particular thought to how we can put in place a cycle of support for authorities that are at risk of designation and have actually been designated. This is important for two reasons. First, by providing early support we very much hope that we can help any authorities that may be struggling to improve sufficiently and so avoid designation. Secondly, for authorities that have been designated we will want to make sure that they can get out of it as quickly as they can and that, if possible, designation can be lifted at the end of a first year.
In the light of the consultation responses, our position is that decisions about dedesignation should be guided primarily by an assessment of what the authority has done to address the reasons for underperformance, and its capacity and capability to deal effectively with major applications. This will mean reviewing at the time of designation what the authority needs to do to reach a satisfactory level of performance and to ensure that it can access whatever help may be required. To provide that support we have been having helpful discussions with the Local Government Association about the way that it can best be provided to those local authorities. We agree with the LGA that this is appropriately done by support from the sector, and that it has a vital role to play in driving improvement in planning services and addressing poor performances where they exist. Giving local government the responsibility to manage its performance is a principle we are committed to and have supported through our funding of the Planning Advisory Service.
Lord McKenzie of Luton
My Lords, will the noble Baroness clarify the position at the start of the process? The first round of designation will take place in October this year and as most of the data that will influence that is already in existence, there is little that a local authority can do now, given the time, even if it is extended to June, which might have been the suggested date, to have a sector-led approach to help them to improve. We are almost in March, and the legislation is not yet on the statute book. What the noble Baroness said was helpful going forward, but I do not see that it helps people and local authorities at the start of the process that much. Can she give us any further comfort on that?
Baroness Hanham
My Lords, I have two bits of comfort, if I can voice it like that. First, I think that local authorities that are in the designated zone will be very aware that they are and the Local Government Association is well prepared now to help them. Secondly, the figures that they can see at present may make them feel at risk once they have done that, but they can then approach the Local Government Association for help to see whether they can improve their figures going up to October.
Lord Tope
My Lords, I am very grateful to the noble Lord, Lord McKenzie, for his support so far and I am grateful to the Minister. The noble Lord, Lord McKenzie, said, in urging me to consider testing the opinion of the House, that we would have to listen very carefully to what the Minister had to say. I am grateful to the Minister for spelling out the whole process so fully and thoroughly. We will all want to look at it a little more carefully and read it in Hansard tomorrow, but it seems to me that she has gone a long way towards meeting the intentions of my amendment.
As I believed to be the case, she has confirmed that the intention is to seek improvement and not to punish. She has confirmed that it will be a sector-led approach, that discussions have taken place with the Local Government Association and that it will fully co-operate, help, support and lead that. She has rightly said that those authorities that are likely to be at risk under the criteria, which, as she rightly says, are set at a very low threshold, already know that they are at risk. I believe that, since the Bill was published last autumn, those authorities that feel themselves to be at risk are already showing some significant signs of improvement.
I feel that the Minister has accepted the intentions of my amendment; indeed, she has accepted almost everything but the words themselves. Having achieved that much, I feel that it is right and proper at this stage to beg leave to withdraw the amendment.
Baroness Hanham
(2) In this section—
“major development” means development of a description prescribed by the Secretary of State;”
Lord Tope
My Lords, my noble friend Lord Shipley and I have added our names to Amendment 13, to which the noble Lord, Lord True, has spoken. I strongly echo all that he has said; indeed, I think we find ourselves so much in agreement that our respective council groups will be getting very alarmed by our togetherness. I will not repeat what he has said or what the noble Lord, Lord Deben, has said, with which I also strongly agree.
I want to use this amendment and this opportunity to return to the position in Greater London, about which I spoke in Committee. At that time, I pointed out that the Mayor of London—the office, not the post-holder—is responsible for strategic planning in London; that the mayor is elected and democratically accountable both to the elected London Assembly and to the electorate of London; and that if any London planning authority was unfortunate enough to find itself designated, it would surely be far more appropriate and satisfactory for the Mayor of London to take the place of the Planning Inspectorate, with his far greater level of local London knowledge.
In reply, the Minister, the noble Lord, Lord Ahmad, said:
“We gave the reassurance that applications of potential strategic importance would be notified to the mayor very quickly once they had been received by the Planning Inspectorate, so that he will be able to act immediately should he wish to intervene”.—[Official Report, 22/1/13; col. 1101.]
He described that as a more practical approach than having the mayor, in effect, taking the place of the Planning Inspectorate in London. That sounded reasonable and reassuring in theory, but I want to use this amendment to understand better how it is intended that that would work in practice. Will it happen through regulation or through some form of gentlemen’s agreement —and who knows, one day the mayor might not be a gentleman? To what extent will the mayor be able to take responsibility for dealing with the appropriate applications in London when an authority has been designated and, if it is still PINS, what notice will PINS take of what the mayor, with that responsibility, has to say?
I think the Minister is aware that I was going to raise these points. I seek clarification for me, the mayor and the mayor’s office, who are similarly not sure whether or not to feel reassured.
Baroness Hanham
My Lords, I hope I can be reassuring on all the aspects that have been raised. We are fully aware of the necessity to ensure that residents and local communities are involved in any planning application. In any planning application process, effective community involvement is essential. It is a priority that we have been pursuing vigorously through the various planning reforms.
In Committee, I tried to be clear that we will ensure, through secondary legislation, that there is no reduction in the rights of communities to become involved where applications are made directly to the Secretary of State. Let me go into that a little further. There will be no dilution of the legislative safeguards to enable communities to become aware of applications made to the Secretary of State, to comment on them and to have their views taken into account; nor will any less weight be given to their views on the planning issues involved.
Indeed, the existing primary legislation will require a planning inspector, when making a decision on such an application, to take all material considerations into account, just as a local planning authority would. The decision would have to be made in accordance with the development plan unless there are any material considerations that indicate otherwise. Again, that is no different from the approach that a local planning authority would have to take. The local authority will, of course, be able to put its own representations to the Planning Inspectorate with regard to the application.
It was a major element of the Localism Bill that there should be pre-planning discussions, and we expect those to take place as well. This is not a fast process from that point of view. You would expect pre-planning discussions to take place before the application was lodged, because otherwise they are not worth having. That aspect will still continue. We are trying to ensure that the important protections in town and national planning policy are taken fully into account, whether the decision is made by a planning inspector on behalf of the Secretary of State or by the local planning authority.
Through secondary legislation, we will ensure that the relevant documents for applications made directly to the Secretary of State are made available at the offices of the local planning authority as well as on the planning inspector’s website. I can also confirm that our intention is that there should be short local hearings. The noble Lord, Lord Tope, asked whether hearings and discussions would be held to consider the views of key parties where a case has raised issues that should be considered in public. I hope noble Lords will understand that we are very anxious that local communities are not excluded from this process and that it is as transparent, as it would be were the local planning authority dealing with it.
My noble friend Lord Tope raised the question of the Mayor of London. Schedule 1 allows the Mayor of London to retain his ability to call in any applications of potential strategic importance for the capital where an application is made directly to the Secretary of State. To ensure that the mayor is made aware of any such application as swiftly as possible, the Planning Inspectorate will make an immediate assessment of whether any application it receives falls into this category. If it does, it will notify the mayor’s office without delay and he can then decide whether he needs or wants to call in the application for his own decision. I hope that addresses the point made by my noble friend.
The Town and Country Planning Act makes specific provision for parish councils to be notified of proposals in their area. It was a point made by the noble Earl, Lord Lytton, and the noble Lord, Lord Greaves, neither of whom are in their places today. I reassure them that parish councils will have to be notified of proposals in their area where they have notified the planning authority that they wish to be kept informed. It is voluntary as far as they are concerned.
I have two amendments in this group. Amendment 17 responds to the point made by the noble Earl, Lord Lytton, which I have just discussed, and will make it a statutory requirement for the Secretary of State to inform parish councils of any applications that affect them, provided that they have asked to be notified of the applications, which seems reasonably fair. Amendment 19 makes a minor consequential change to Schedule 1.
In the light of what I have said, while I understand and sympathise with the intention behind the amendments put forward by the noble Lords, Lord True, Lord Tope, Lord Shipley and Lord McKenzie, and spoken to very supportively by my noble friend Lord Deben, I do not think that these additional changes are necessary to ensure that effective community involvement is seriously taken into account where applications are made to the Secretary of State. As I have said, we will ensure that secondary legislation requires the same degree of consultation with communities as primary legislation, which sets out the requirements that apply when applications are made to the local planning authority. We will of course ensure that the House has an opportunity to consider the secondary legislation that deals with these matters when the time for that is ripe.
With those assurances, I ask the noble Lords not to press their amendments.
Lord McKenzie of Luton
My Lords, I thank the Minister for her response and for moving her own amendments. Clearly we support the government amendments and their provisions for the notification of parish councils. I have already indicated my support for the amendment tabled in the name of the noble Lords, Lord True and Lord Tope. I believe that the Minister has satisfied us about the legislative framework under which the Planning Inspectorate will be required to consult to make residents aware and to ensure that their views are taken into account, whether by primary legislation or by secondary legislation that is to come.
However, nervousness remains over whether the Planning Inspectorate’s approach will involve engaging with the intensity with which a local authority would, and whether its connection with the local community is as intense and engaged as that of a local planning authority. I suppose there is no way of getting greater assurance on this point until we see what happens in practice. The noble Lords, Lord Deben and Lord True, made a point about the era that we are in. Local people now have a much greater focus, and the entitlement to engage in these things is important. However, I do not think that we can second-guess what might happen; we will have to see in practice what the level of engagement is.
I hope the noble Lord, Lord Tope, has been satisfied on the mayor’s position. That said, I beg leave to withdraw the amendment.
Baroness Hanham
“62B Designation for the purposes of section 62A
(1) An authority may be designated for the purposes of section 62A only if—
(a) the criteria that are to be applied in deciding whether to designate the authority are set out in a document to which subsection (2) applies,(b) by reference to those criteria, the Secretary of State considers that there are respects in which the authority are not adequately performing their function of determining applications under this Part, and(c) the criteria that are to be applied in deciding whether to revoke a designation are set out in a document to which subsection (2) applies. (2) This subsection applies to a document if—
(a) the document has been laid before Parliament by the Secretary of State,(b) the 40-day period for the document has ended without either House of Parliament having during that period resolved not to approve the document, and(c) the document has been published (whether before, during or after the 40-day period for it) by the Secretary of State in such manner as the Secretary of State thinks fit.(3) In this section “the 40-day period” for a document is the period of 40 days beginning with the day on which the document is laid before Parliament (or, if it is not laid before each House of Parliament on the same day, the later of the two days on which it is laid).
(4) In calculating the 40-day period for a document, no account is to be taken of any period during which—
(a) Parliament is dissolved or prorogued, or(b) both Houses of Parliament are adjourned for more than four days.”
Lord McKenzie of Luton
My Lords, I speak in favour of Amendment 9 in support of my noble friend Lord Judd, who so effectively and passionately introduced it. He argues for the inclusion of the national parks authorities and the Broads Authority in those organisations that cannot be designated.
A major concern with this Bill is that it will drive down standards—that, because of the focus on timing in the criteria that are to be adopted, planning authorities will be pushed into making less considered decisions, eschewing quality for speed. That is something that runs through our concerns about this clause. As the CPRE states, exempting those particular planning authorities would be a clear recognition that landscape considerations are paramount and that they need not be distorted by the extra pressures that are coming through, as a result of this clause, on the speed of decision-making and, of course, to avoid contesting more difficult appeals.
My noble friend Lord Judd was fantastically supported by my noble friend Lord Liddle, with his direct experience of national parks. I say to the noble Lord, Lord Deben, that the fact that my noble friend’s proposal is romantic should not preclude it from being supported. It can be effective and practical, as my noble friend argued, as well as having romanticism. I would have thought that that is what we want from our national parks.
Baroness Hanham
My Lords, I thank noble Lords for their interesting interventions on this interesting amendment, which we discussed in Committee. I am not going to endear myself to the noble Lord, Lord Judd, by saying that my answer now is the same as it was then. My noble friend Lord Deben said that he can see no reason for excluding national parks from designation just because they are national parks; nor can we. That also applies to the Broads Authority. The reason for keeping them included is that they are planning authorities. If they perform wonderfully and at a standard that I think the noble Lord said they would, this registration will not matter to them at all. It would completely leave them out to carry on doing what they are doing so beautifully. There might be authorities which fall into this category only if, as my noble friend Lord Deben suggested, they do not perform to the designated standard. They would then become involved.
It is important that national parks are served by an effective planning service. That applies just as much to them as to any other area. They are asked from time to time to put in major developments—we call them major if they are of 10 houses or more—and it is absolutely essential that there is within those areas a planning authority that understands what it is doing and makes those decisions carefully. There are some national parks that deal with a relatively small number of major applications, but some do not. The noble Lord, Lord Judd, cited figures, some of which would, I think, fall below the major applications category. I understand that the Lake District made decisions on 31 major applications in the past two financial years, while the New Forest dealt with 23 and the Broads Authority with 18. For those authorities, those are not inconsiderable numbers.
The noble Lord, Lord Judd, asked why national parks and the Broads Authority should not be included among others which had not been designated, such as the Mayor of London and the development corporations. However, these are by and large not normal planning authorities. Certainly, the development corporations get involved to deal with only very big or complex proposals and do not deal on a day-to-day basis with some of the smaller ones.
It is true that other national parks deal with fewer major applications, but the two-year assessment period that we have proposed is designed to even out some of the fluctuations. It is also important to remember that these authorities will be able to enter into planning performance agreements or agree an extension of time where there are issues that will take additional time to resolve, which may be germane only to their particular type of application. There should be no worries that if a national park or the Broads Authority were to be designated, that would result in decisions that pay less regard to their special qualities. If, in these circumstances, an application for major development were to be made to the Secretary of State, the decision would have to be in accordance with the same statutory principles that apply to the designated authority. Indeed, I expect that they would also be able to access the help of the Local Government Association.
In other words, there would be the same legal obligation to make decisions in accordance with the development plan, unless there are material considerations that indicate otherwise. The Secretary of State will also be under a statutory duty to have regard to the purposes for which the national park has been designated in making such decisions. I listened carefully to the noble Lord, Lord Liddle. I am enchanted by the fact that the national parks have such good people, but that is not what this is about. If they have really good people they are making really good decisions, so they are not in any jeopardy of being designated.
I will resist the amendment and hope noble Lords will understand that, as recognised planning authorities, neither the national parks authorities nor the Broads Authority should be exempt. The communities and businesses in their areas deserve the same standards of service on planning as the rest of the country. I hope the noble Lord will withdraw his amendment.
Lord Judd
My Lords, I thank the Minister for the characteristically friendly candour with which she has replied. I am sorry that she has replied in the way that she has at this stage; it is rather disappointing. She referred to the complexity of the issues facing the bodies that appear in the Bill. However, I would argue that what faces a national park authority is every bit as complex, every bit as difficult and sensitive, as what faces these authorities. They are in a very special category in that context because of these wider issues of the inheritance, the special role of the parks and all the rest. Her argument about complexity strengthens the case for the park authorities being in the Bill.
I must say a word about the contribution by the noble Lord, Lord Deben. I take second place to no one in my admiration for the tremendous contribution he has made on a lot of green issues in this country. I really do regard him with some awe for the way he has stood up on a number of issues. This makes it doubly disappointing that he said what he said. Why? First, it is not the first time I have heard, almost word for word, that particular contribution by the noble Lord, Lord Deben, on national parks. I do not suppose it is the last time we will hear it, either. He clearly once had a very bad night with some of the national parks. I am not quite sure what this bad night was and I would value him putting the story straight with me in the bar one night.
I am sorry if he was left wounded for life, but if he is raising the issue that I am falling back on a generic argument when there are specific examples, why does his argument not apply to the Homes and Communities Agency? Why does it not apply to the Mayor of London or to a mayoral development corporation? Why does it not apply to an urban development corporation? Is he really saying there will not be variations there, or moments of good performance at some times and not such good performance at others? I do not understand the logic of his position. If you accept that there will always be variations but that, notwithstanding those, there are some that have such great responsibilities and complex—to use the Minister’s word again—issues to deal with that they have to be in the Bill, then these unique and special parts of our national parks’ life really should be there alongside the others. Not to include them is to demean them.
If it were not for people who refuse to take no for an answer—those right across the political divide in the 1930s and 1940s who kept going with their arguments, belief and purpose in establishing the parks—we would never have had them. I do not give up. I believe in the power of reason, the power of reflection, the power of decency and the civilised values that I know the Minister shares. If I am to withdraw the amendment at this stage, it is in the real hope—not just as a debating formality—that she will go away with her colleagues, look seriously at this issue again and see if there is some way she can bring meaningful reassurances to this House at Third Reading. In the mean time, on that basis, and in thanking those who have spoken to this amendment, not least my own Front Bench, I beg leave to withdraw.
Baroness Hanham
Lord McKenzie of Luton
My Lords, I shall be brief. If Clause 1 stays in the Bill, and we hope that it does not, then there is a need for an independent review of its impact. I acknowledge at the start that the wording of this amendment could be improved, as it should focus not just on the impact on local authorities but on the effectiveness of the planning system as a whole, including from the perspective of developers. However, if necessary we can tidy this at Third Reading.
Clause 1 introduces a significant change into the planning system. Subject to later deliberations, we could be giving the Bill approval without the Government’s clear and definitive position on some key aspects—certainly, their response to the planning performance consultation, although the Minister gave us some glimpses of where the Government are on that. We accept that there are obviously more general opportunities for parliamentary scrutiny, such as the Select Committee, but we assert that this requires an independent review. Will the Minister give us any assurance about what follow-up is planned to the Bill generally, but specifically to Clause 1 and its impact, and whether the Government would support such a review? I beg to move.
Baroness Hanham
My Lords, I have no difficulty with the suggestion that we should keep the implementation and impact of this measure under review, but that is not something for which we need legislation. We set out in the impact assessment that, as usual, we will undertake a post-legislative review of the provisions in the Bill three to five years after Royal Assent. This reflects the Cabinet Office guidance on post-legislative scrutiny, which requires that three to five years after Royal Assent the department must submit a memorandum to the relevant Commons departmental Select Committee, published as a Command Paper. This will include a preliminary assessment of the effects of the Bill. Furthermore, the data on local planning authority performance will be published on a quarterly basis and an annual basis, in line with our commitment to transparency. This will allow anyone with an interest to see how planning authorities are performing and, together with the decisions about dedesignation, it will form a view of the impact that the measure is having. The noble Lord’s amendment is not necessary, as this is certainly something that will be kept under close scrutiny. Under the circumstances, I hope that he will feel able to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister. I anticipated that that was what she might say in response to this amendment. The only thing that I would say about post-legislative scrutiny, which I certainly support as a concept, is that it does not necessarily introduce this independent aspect of the scrutiny. Still, I wanted to get on the record what the Government planned as a follow-up to the Bill, and the Minister has helped us with that. I beg leave to withdraw the amendment.
Baroness Hanham
“62C Notifying parish councils of applications under section 62A(1)
(1) If an application is made to the Secretary of State under section 62A(1) and a parish council would be entitled under paragraph 8 of Schedule 1 to be notified of the application were it made to the local planning authority, the Secretary of State must notify the council of—
(a) the application, and(b) any alteration to the application accepted by the Secretary of State.(2) Paragraph 8(4) and (5) of Schedule 1 apply in relation to duties of the Secretary of State under subsection (1) as they apply to duties of a local planning authority under paragraph 8(1) of that Schedule.
(3) An authority designated for the purposes of section 62A must comply with requests from the Secretary of State for details of requests received by the authority under paragraph 8(1) of Schedule 1.””
Lord Tope
My Lords, I am inclined to agree with the noble Lord, Lord Deben, but then to speculate that if that perfect world existed what function would we be left with?
Three months ago I would have had little, probably no, hesitation in joining the noble Lord, Lord McKenzie. When first published, this clause was really the antithesis of localism, which we spend so much time debating. It was clearly centralist and unsatisfactory. Even after some welcome reassurances on Report in the other place, at Second Reading, I still felt that it was unacceptable.
In moving his amendment, the noble Lord, Lord McKenzie, acknowledged that the Minister had moved “a little”, I think his precise words were. That was uncharacteristically ungenerous of him. The Government have moved very substantially on this clause. I have not become an enthusiast for it but I acknowledge that pressure from all sides of this House, some excellent work by the Minister and her colleagues, and other Ministers who have been prepared to listen and hear—to echo my earlier words—have made this clause very much less harmful than it might have been. We have criteria, which will be subject to parliamentary approval, proposed at a very low threshold that, as set now, would catch, if that is the right word, few local planning authorities. We have a process whereby local planning authorities will have good warning of when they are at risk and ample opportunity to improve.
We have heard that that improvement will be sector-led and that the LGA has been in discussions and is prepared to work with local planning authorities at risk and to help them reach the necessary improvements so that they do not become designated. If after all that a local planning authority is performing so badly, it probably deserves to be designated. We are looking at an incentive to improve and not a deterrent to punish. I believe that after the criteria that we have put in place, and the provisos and reassurances that we have had, very few local planning authorities will actually get designated. I understand why the noble Lord, Lord McKenzie, fears that, at least in part, that may in part be because the quality of decision-making is reduced particularly to meet timescales, or, to be less particular, on important issues such as design.
We will have to see, but given how few local planning authorities currently would meet the criteria for designation, I am not too worried about that. If it looks to be the case, we will have to tackle that, but I am not too worried. As I said previously, if at the end of this process the local planning authority is still so bad that it meets the criteria for designation, that may very well be the last resort that has to be taken, but even when we get to designation we should remember that major planning applications will not be required to go PINS; that will be the choice of the developer. The local situation may be so bad that the developer makes that choice, but my guess is that in most cases the developer would still prefer to stay local and stay working with a local planning authority, where by that stage no doubt the relationship would be far from perfect, but there would still be a relationship.
I start to wonder whether this clause—not that it is undesirable—may not be necessary and whether the Planning Minister’s hope and aspiration that it will never be necessary to use it may well come about. Like my noble friends, I have been reassured during the process of the Bill and, perhaps unlike the noble Lord, Lord Deben, I am pleased that we have been able to go through the process, although I would rather not have been in that place in the first place. On that basis, I am prepared to accept the Government’s wish to have this clause as an incentive not a deterrent to encourage those local planning authorities whose performance is far from perfect—and we all acknowledge that they exist—to improve themselves.
Baroness Hanham
My Lords, I think my noble friends Lord True and Lord Tope for their encouraging words and for their recognition of the amount of work that has been done in this House—and we should acknowledge the fact that the House has played a very important part in the changes that we have been able to make in this Bill. I understand that there are still real concerns about it, and the noble Lord, Lord Judd, referred again to localism. This is not an issue of localism but of ensuring that local people get a proper planning service and that local developers get a proper result from the applications that they put forward.
This is not a measure that we take lightly. It is something that we are very serious about because we believe it to be both necessary and appropriate. We are very clear—and I want to emphasise this—that planning decisions should continue to be made locally wherever possible but, as I have emphasised throughout our discussions on this clause, we should be prepared to act where standards have fallen to a wholly unacceptable level. Noble Lords will agree that the criteria that they are working to at the moment would constitute being at a wholly unacceptable level. That is no different from the approach that previous Administrations have taken, and I have pointed out how the criteria were adopted by schools, hospitals and other services under previous Governments. We should be prepared to do the same for planning, not least because of the role that it plays in supporting growth as well as being an important community service in its own right.
We listened carefully to the arguments made in Committee, and the amendments that we have brought forward put beyond doubt that this measure can be used only where it is clear that performance is inadequate and that the ability to apply directly to the Secretary of State will be open only to those seeking approval for major development. We have defined that, too. As my noble friend Lord Deben said, the choice of where this application is heard will still be in the hands of the developers; it is their option to go to the Planning Inspectorate if they are not happy having the application heard by a designated council, but they do not have to. They can leave the application and have it heard in the normal way by the council, if that is their choice. I agree, too, that some developers work very closely in particular areas and therefore have a relationship that is wholly proper with their local authorities.
I also indicated that Parliament will have the opportunity to consider again the criteria for designating authorities before they are finalised and before any changes are made to them in future, if they are to be made. By using transparent criteria, with data published on a regular basis, planning authorities will be clear about whether their performance needs to improve to avoid designation, and through the support package that we have been discussing with the LGA we hope and expect that the number of designations in future will be very limited indeed.
Of course, we also anticipate that the mere existence of this measure will encourage timely and well considered decisions by planning authorities and so avoid the need for designations. I do not accept the argument that local authorities will now rush around trying to get planning decisions through in 13 weeks to escape or grind up slightly from the percentage that might hit the criteria. We have made it clear that they do not need to rush; they need to make a very focused effort on plans. If there are reasons why the planning applications cannot go forward in the normal timescale, then the planning agreement signed and agreed between the local authority and the developer will be recognised as the reason why it has taken longer than normal.
For those authorities that are designated, we are clear that we are not removing any powers from them in any way. The Secretary of State is intervening in only a very marginal area.
The noble Lord, Lord Beecham, referred to the planning and development grant. I point out to him, as I am sure he knows, that planning fees have increased by 15%, and there has been an extra contribution to local authorities from that point of view.
I believe that this clause remains a necessary measure, albeit one of last resort. We have put beyond doubt how it may be used, and thought carefully about an approach to assessing performance that is fair, transparent and minimises any risk of perverse outcomes. My noble friends Lord True, Lord Tope, Lord Deben and Lord Judd—well, the noble Lord, Lord Judd, is a friend, but not in this instance—have underlined what I have been saying. There is a need for this, however limited the need may be. I ask the noble Lord, Lord McKenzie, to withdraw his amendment; if he does not and he presses it to a Division, I ask the House to reject it.
Lord McKenzie of Luton
My Lords, I thank all noble Lords who have participated in the discussion and thank my noble friends Lord Judd and Lord Beecham for their strong support for the amendment.
What surprises me somewhat is the view that people have taken that the clause is now so dramatically different from what it was at Second Reading, when pretty much everyone who spoke in the debate would have preferred to see it out of the Bill. Along the way, I should say that at no stage would I have it said that I had not recognised the important work that the Minister has done on this Bill, and will continue to do.
Let us look at the position. The noble Lord, Lord Tope, said that he thought that the Planning Minister would believe or hope that this provision would not affect anyone at all. At a meeting just the other day that the Minister organised, he said that the number likely to be caught had gone up and that it could be as many as 20. The criteria that are promulgated—we do not yet know what the final criteria will be—have not changed since Second Reading. The 20% and 30% criteria have been consulted on.
The noble Lord, Lord Tope, said that if local authorities are so bad, they deserve what comes their way. It depends how you judge “so bad”. Part of the challenge that we have is that the criteria are not necessarily a fair determinant of poor performance because so many other factors influence the timing of approvals and the planning process. If you look at what has changed since Second Reading when people were so unhappy with this clause, you will see that we have the term “major development” in the clause but, at the start of our consideration of the Bill here, the position was always that major developments would be caught by this and that was very clear from debate in the other place. The criteria that were promulgated at that stage have not changed.
We have a parliamentary process but, frankly, the negative procedure is the weakest parliamentary process you can have. We know full well that it is not really possible to change those regulations once they come into force. We also know that the Government are seeking to tighten those criteria in the future. They have consulted on that, although we do not know the extent to which that tightening will take place. It seems to me that very little has moved on this clause that is positive. I accept that there have been assurances around sector support, but even that was promulgated around a concept at the time when we debated this at Second Reading. From my perspective, very little has changed in practice on this clause since the Bill arrived in your Lordships’ House. I hear what noble Lords on opposite Benches have said. I am sorry that I have not been able to persuade those who have spoken, but I wish to test the opinion of the House.
Baroness Hanham
My Lords, I should like to explain the purpose and operation of the sun-setting amendment, Amendment 32, in my name in this group. After careful consideration of the concerns expressed by noble Lords in Committee, the amendment we propose sunsets Clause 6 on 30 April 2016 unless an affirmative order is made for it to continue.
Until I heard them speak, I thought that this addressed the amendment proposed by the noble Lords, Lord Shipley, Lord McKenzie and Lord Tope, and the recommendations of the Delegated Powers and Regulatory Reform Committee. As I made clear in Committee, the clause is targeted at helping development to get under way on sites that are being stalled because of the current economic conditions. We believe it is essential to allow for a review of schemes where this could bring development back into viability. This would deliver more private and affordable homes than would otherwise come forward.
The clause already contains a power for the Secretary of State to switch it off by order, reflecting our underlying thinking that this is about addressing current uncertainties. However, we have listened carefully to the arguments that we should define this more precisely. Arguments have been made that the clause should reflect the current uncertainty in the property market and that we should insert a date when the operation of the clause will cease. We have therefore set the sunset date for 30 April 2016. That is based on the forecast from the Office for Budget Responsibility that shows that investment in housing is expected to stabilise in 2016. I accept what the noble Lord, Lord Best, said; there is evidence that some of that housing is beginning to move, which is very welcome. This is reinforced by evidence from the Centre for Economics and Business Research, which expects house prices to return to pre-recession levels in 2016.
The amendment will send a clear message to local authorities and house builders to review their schemes where affordable housing viability is an issue. None of us can be certain about the future of the property market—forecasts are not guarantees—and therefore we have taken a sensible and pragmatic power to extend this date by order should that prove necessary.
The amendments to Clause 28 will require the order to be made through the affirmative procedure and both Houses will have an opportunity to vote. So there is a commitment for it to come back to this House if necessary. Although the amendment does not limit the time period for any future extension, I fully anticipate that this would be for a limited time justified by prevailing market conditions. In taking this approach, we have again followed the suggestion of the Delegated Powers and Regulatory Reform Committee when it commented on the Bill ahead of Committee. The amendment also includes a separate power to make transitional or transitory provisions related to the sunset of the clause by order.
Turning to the amendment tabled by the noble Lords, Lord McKenzie and Lord Best, this would allow only affordable housing obligations in place at the time of Royal Assent to be challenged on the grounds of viability. As I said in Committee, we are still not in a position of stability in the market and, therefore, applying such a limited amendment would not be helpful.
I also provided evidence in Committee from the Office for Budget Responsibility which indicated varied performance across the country. House price growth remains subdued across much of the United Kingdom, and it is widely varied. The recently announced 2.5% house price increase in England was driven by a 5% rise in London and a 3% increase in the south-east. However, in other parts of the country there is a wide variation in house price growth. I said earlier that the forecast of the Office for Budget Responsibility shows house price growth stabilising at 4% by 2016-17.
Concerns have been expressed that a developer could agree a Section 106 next year knowing that he could apply to renegotiate it. If the local planning authority has taken account of local economic realities and negotiates a fair and viable agreement, it is likely that there will be no case for reopening the agreement within the short-to-medium term and a developer would not have viability evidence with which to be successful on appeal. The amendments do not make allowance for current market uncertainties. We believe that we need three years for the housing construction market to stabilise. We wish to allow opportunities for scheme viability to be reviewed, even for those which may come forward after the Bill is given Royal Assent.
Amendments 51 and 52 are minor government amendments which make changes to Schedule 2. They seek to change the numbering of an existing amendment to Schedule 6 of the Town and Country Planning Act 1990. With that explanation for those amendments, and given what I have said about the reasons for the Government’s time-limit on the sunset clause, I hope the noble Lord will withdraw his amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for her response. I also thank the noble Lord, Lord Best, for his support and for properly and effectively explaining Amendment 22, and the noble Lord, Lord Shipley, for his tacit support.
The Government’s response to this is that unless you have certainty in the housing market you must always have the provision currently contained in the Bill. One might accept that argument where there has been particular turmoil in the financial markets—as was occasioned in 2008 when obligations were entered into and the market changed dramatically—but why should there now be this ongoing facility for people who can make a judgment as to what is happening in the market? Yes, there will be some uncertainty—there are always uncertainties in markets—but there is no substantial reason to prolong this opportunity. A cut-off of those things which will have happened by the time this Bill comes into effect is entirely reasonable. In fact, it could be argued that the cut-off should be earlier than that. Indeed, the changes that the Government are making to the regulations generally about affordable obligations go back only to April 2010, so that might be even more restrictive than the amendment allows for.
As to the sunset clause, it cannot be much of a sunset clause if it can be renewed endlessly. There is no certainty as to when its provisions will be brought to an end. I am inclined to support the view of the noble Lord, Lord Shipley, that we will look to the Minister to come back with something more definitive on Third Reading. If the Minister is not able to do so, we will look to amend it because this is, quite rightly, open business. We are dealing with new business tonight which has a continuing uncertainty.
As to Amendment 22, we have not heard a convincing reason why we should not press the amendment, and I seek the view of the House.
Baroness Hanham
My Lords, I think that it is explanations that are asked for rather than anything else. I was asked what “off-site” provision was. It is exactly what it says. As noble Lords will know, when an obligation is entered into for affordable housing, in many cases that affordable housing is not on the main development site but is being provided elsewhere. All the guidance says is that any affordable housing that is not on the particular site can be taken into account. I hope that explains that. We discussed this quite a bit in Committee but it should be quite clear that this clause relates only to affordable housing. That is the only element that we are seeking to address within this Bill.
Local authorities can voluntarily renegotiate Section 106 agreements already. Under the regulations that have just been laid, they can be required to look at the whole aspect. Often the affordable housing is quite a large aspect of the development obligations and it therefore makes sense not to go through the whole galaxy of the Section 106 review, but to take account of the affordable housing and go through a quicker process.
This is, of course, taken into account against the background of the development plan and has to be reviewed under those provisions together with what was taken into account when planning consent was granted in the first place. The development plans include policies for the delivery of affordable housing to meet local needs. These policies are usually applied in the context of individual site viability. The effect of the clause is to help to deliver these policies by bringing forward viable development; it does not require a revisiting of the plan policies.
The noble Lord, Lord McKenzie, made, I think, a moderate complaint about the fact that the proposals for establishing viability appeared only last night. I recognise that and I apologise that they were rather late. However, they are not very detailed and I think anyone with a lunchtime would have had an opportunity to read them. However, lunchtime does not exist in my life and maybe not in other noble Lords’ lives either, so I understand the noble Lord’s point.
The obligations that we are discussing were probably agreed at the time of the property boom and before the statutory tests for Section 106 were introduced in April 2010. Before then there was no statutory requirement to ensure that obligations were,
“necessary to make the development acceptable in planning terms”.
Therefore, there may be capacity to revisit a range of obligations that were required before the tests were in place.
A full review of all aspects of an agreement could be costly and time-consuming for both parties. We wanted a streamlined review process as a backstop whereby viability is an issue. Affordable housing obligations are often the most expensive element of the Section 106 agreement and are agreed subject to viability. Research from 2007-08 found that about 50% of all planning obligations were for affordable housing so this is quite a significant area. That is why we have focused on only the affordable housing element of a Section 106 agreement in the Bill. For obligations agreed since April 2010, the statutory tests should ensure that the local authority can require only those items that are,
“necessary to make the development acceptable in planning terms”.
Our approach will safeguard essential mitigation measures, such as transport, open space and education provision, which are required for the scheme to go ahead, and would be part of the overall Section 106 agreement but would probably take a great deal longer to negotiate. To open up the clause to these other obligations would add complexity to the review and could make the development unacceptable in planning terms.
I turn now to community infrastructure levy payments, which I am not sure the noble Lord, Lord Shipley, mentioned but my noble friend Lord Jenkin did. It is not very helpful to bring them into consideration here. The community infrastructure levy is non-negotiable so it cannot be taken into account as it cannot be renegotiated. The levy is up front—developers know what they will have to pay and it is predictable. It is set at the local level in accordance with local viability. Local authorities do not have discretion to waive or reduce the community infrastructure levy once the payments are set. The regulations make provision for exceptional circumstance relief but only subject to very strict criteria.
With those explanations and going back to the indication that this clause relates only to affordable housing in this Bill, that Section 106 agreements can be renegotiated voluntarily and that the regulations for post-2010 are now in place, I hope noble Lords will realise that there is a package here and will not press their amendments.
Lord Shipley
My Lords, I thank the Minister for her reply and for her explanation. I am sure that we share the aim of wanting to build more affordable housing. In accepting the Minister’s assurances about the Government’s desire to get housebuilding on-site, I beg leave to withdraw the amendment.
Baroness Hanham
My Lords, I apologise. I always manage to do this once, sometimes more than once. Perhaps we can rest a moment before we hear from the noble Lord, Lord Best.
Amendment 25, in the name of the noble Lord, Lord McKenzie, which I have noted but which I shall say more about, requires local authorities to have regard to regulations setting out how viability will be assessed. Those regulations are to be subject to consultation and the affirmative procedure. I hear what the noble Lord says about returning to this at Third Reading, but in the mean time it might be helpful if I just go through where we are.
The draft viability guidance has been circulated to assist the House’s understanding of how developers, local authorities and the Planning Inspectorate will approach the new process. It is an early draft, and we intend to discuss it further with professional bodies and interested groups before a final version is issued on Royal Assent.
Noble Lords will see that the basic principle of the guidance is that it works with existing industry practice on assessment of viability. It strongly encourages developers to use the same methodology and basic assumptions as in their original assessment and to focus on what has changed. A number of technical questions have been raised on the draft viability guidance. If it would be helpful to noble Lords, I am happy to have a meeting between now and Third Reading to hear views and see whether we can resolve, or at least discuss, some of the issues.
There is a good deal of technical information in the draft guidance, which needs to be kept under review. Using secondary legislation would not allow the flexibility to adapt to changing circumstances and data that statutory guidance offers.
Noble Lords will recall that the legislation for the community infrastructure levy, introduced under the previous Government, makes provision for statutory guidance. That covers the assessment of viability for the purposes of setting the levy. It is a model that allows for the required flexibility and is one that we intend to follow.
I hope that, with that reassurance, the noble Lord will withdraw his amendment, even if only for the moment.
Baroness Hanham
(b) where the determination relates to an application to which section 106BAA applies, any representations made by the Mayor of London in accordance with that section.”
Baroness Hanham
“106BAA Duty to notify the Mayor of London of certain applications under section 106BA
(1) This section applies to an application under section 106BA(2) in relation to a planning obligation where—
(a) the application for the planning permission to which the planning obligation relates was an application to which section 2A applied (applications of potential strategic importance relating to land in Greater London),(b) the application for planning permission was not determined by the Mayor of London, and(c) pursuant to an order under section 2A or a development order, the local planning authority that determined the application for planning permission was required to consult the Mayor of London in relation to that determination.(2) A local planning authority that receives an application to which this section applies must send a copy of the application to the Mayor of London before the end of the next working day following the day on which the application was received.
In this subsection, “working day” means a day which is not a Saturday, Sunday, Bank Holiday or other public holiday.(3) The Mayor of London must notify the local planning authority before the end of the period of 7 days beginning with the day on which the application was received by the authority whether the Mayor intends to make representations about the application.
(4) Where pursuant to subsection (3) the Mayor of London notifies the local planning authority that the Mayor intends to make representations, those representations must be made before—
(a) the end of the period of 14 days beginning with the day on which the application was received by the authority, or(b) the end of such longer period as may be agreed in writing between the local planning authority and the Mayor.(5) Where this section applies, section 106BA(9)(b) applies as if it required an authority to give notice of their determination to an applicant within—
(a) the period of 35 days beginning with the day on which the application was received by the authority, or (b) such longer period as is agreed in writing between the applicant and the authority.”
Baroness Hanham
My Lords, I thank noble Lords for that debate. The noble Lord, Lord Best, explained clearly that his amendments are aimed at ensuring that development happens. We all want to ensure that happens, as there is otherwise no purpose in this clause. I understand the desire that, in return for an adjusted affordable housing obligation won at appeal, a developer should get on and build. Planning consent is permission to build; it is not a requirement to build. The purpose of this clause is to give developers an opportunity to build, allowing them to review schemes against prevailing market conditions and secure a viable affordable housing agreement. We should remember that without this clause many housing sites will not come forward at all, which is not what we want. Of course, having put in place a revised agreement, we want developers to build, and that is the purpose of the amendment tabled by the noble Lord, Lord Best.
Clause 6 places a three-year time limit on modified obligations made on appeal. If the development is not completed within three years, which is the other side of the coin that the noble Lord referred to—he was talking about commencement while I am talking about completion—the original affordable housing requirement will apply to those parts of the scheme which have not been commenced, so there is a difficulty for the developer in that. Developers are incentivised to build out as much of their scheme as possible within those three years. It will not be sufficient to commence one part of the development to secure the revised affordable housing obligation for the whole scheme.
For example, on a scheme of 100 homes, if 50 units are completed at the end of the three years and the remaining 50 are not commenced, the appeal decisions would require that the original obligation would apply to the remaining 50—so we would go back to 100. If developers are concerned about the viability of their scheme at the end of the three years, they can seek to modify the agreement again. This could be done through voluntary renegotiation or by making a new application under this process.
We believe that the clause ensures that we incentivise build-out and completion. Local authorities are not bound by a three-year decision, but we are clear in our draft guidance that they can follow similar time limits prescribed for appeal decisions. We believe that this decision is best made locally. Where the matter has gone to the planning inspectors, the local authority can of course put its own evidence to the Planning Inspectorate, which could include evidence on commencement of the development. That could become part of the modified planning obligation if the planning inspectors agree to it.
I hope that the noble Lord will take some comfort from our being aware that local authorities have a wide range of tools and powers to encourage development. Those may be through the way they use the Section 106 agreements flexibly or in the way that they support development through investment in infrastructure or the use of land assets. We are aware of local authorities which have introduced clawback agreements to incentivise developments and we understand that those may be appropriate in some circumstances.
More specifically on Amendment 31, which prescribes a six-month commencement for appeal decisions, I said in Committee that I thought setting a six-month period in primary legislation was too prescriptive. I am particularly concerned that placing a six-month limit to commence development will allow little time for developers to get on site—this is the other side of the coin that we have just been talking about. Not all schemes will be ready to go when they are renegotiated. Regeneration schemes where land is in multiple ownership or where planning conditions need to be met before development can commence could be excluded from this process by the six-month limit. Sites where significant work, such as decontamination, needs to be done to prepare the site for development could be excluded. We want to ensure that we deliver as many homes as possible through this measure, not through an overly prescriptive approach, which could be counterproductive and end up with these measures having no effect.
In Amendment 30, the noble Lord, Lord Best, proposes to require the Planning Inspectorate to introduce a clawback in appeal cases whereby the local authority receives increased funds for affordable housing if the market rises. I oppose this amendment because it requires the Planning Inspectorate to make provision for a clawback agreement, which would impose a requirement that will not be appropriate in all cases. I am also concerned that this amendment might have unintended consequences. In cases where a variable agreement would be onerous and unnecessary, the inclusion of the amendment could discourage developers from appealing. We need developers to engage in this process and ensure they can secure viable agreements and we can then secure the affordable housing.
I will now turn to the new clause on redefining commencement. The definition of commencement and material operation serves a wide range of purposes in planning law. It triggers the payment of community infrastructure levy and Section 106 revenues. Perhaps most importantly, it is used by local authorities to establish whether a development needs planning permission and can form the basis of enforcement action if a material operation has taken place without permission. In short, the amendment would have far-reaching and fundamental consequences that go far beyond its intention, which is to prevent developers from doing a minimal amount of work lawfully to implement a planning permission. The noble Lord spelled that out quite clearly.
Changing the commencement threshold in the way envisaged would not have a substantial effect on the behaviour of developers. Any new definition of commencement would simply create a new minimum threshold for such developers to build to. The additional costs for a developer in doing so would be unlikely to be significant in the context of an overall construction budget. Furthermore, the complexity of the threshold proposed would result in uncertainty and confusion that would affect all parties involved in the planning process, including local authorities. As the definition of development is a highly contested part of planning law, it would be likely to result in a significant rise in legal challenges as the courts interpreted the new definition. Any legal definition of commencement should be exactly that: the point at which a development is commenced. It would be counterfactual at best to say in legislation that a building project where the foundations or roads are 49% complete or where only 99% of the pipes have been connected has somehow not legally begun.
In short, while I recognise the problem, this is not the right solution. It would do very little to address the problem, while it would have wide-ranging consequences for other areas of planning practice and have a very significant adverse impact on local authorities, developers and third parties. There is already a power available for a local planning authority to serve a completion notice to deal with uncompleted development. However, a far more productive approach would be to address the underlying reasons for developers delaying their schemes. The Government recognise the importance of this through a number of initiatives, such as the £570 million Get Britain Building fund to unlock stalled sites.
I hope that with these comments the noble Lord will feel able to withdraw his amendment.
Lord Best
My Lords, I am very grateful for the debate that this has stimulated and for the interventions from the noble Lord, Lord Deben, and the noble and learned Lord, Lord Mackay. We have explored an issue and taken it a little bit further than anyone has before in these public fora. These ways of trying to persuade the developer to start building—which is what we are all about—are quite difficult, and it is quite messy to concentrate on defining where commencement really lies. Concentrating on completions of developments which are, obviously, at a later date than my six months for a start, sounds a much improved way of looking at this. I had not appreciated—and I am not sure if others had—that it will be possible for the Planning Inspectorate to place conditions relating to a timescale and a definition of starting on more than simply the reduction in the amount of affordable housing. The assumption has been that it is the reduction in affordable housing that the planning inspector can talk about, and these other, more sophisticated, aspects of getting things going have been beyond the remit of the Planning Inspectorate when these appeals come forward. We are hearing tonight that the planning inspector could, in a way, substitute for the negotiation that has failed at the local authority and developer end. These cases have gone forward only because earlier negotiations have failed. It could be that the planning inspector could substitute for that and come up with a set of requirements that go with the consent to drop the amount of affordable housing.
I am grateful to the Minister for explaining these issues in more depth. I will go away and think about them and hope that, within that explanation, there are the seeds of hope.
Lord Mackay of Clashfern
My Lords, before the noble Lord decides what he is going to do about this, I would like to air the question of whether the planning inspector has these powers. The noble Baroness assumes that he has these powers, but I am not immediately sure that he would have them because the statute prescribes what he can do. She may be right—I am not saying she is not—but it is a critical part of her answer. In so far as it is correct, the answer is, no doubt, a good one, but if it is not correct, the answer is, to that extent, defective.
Baroness Hanham
My Lords, I need to answer this. The inspector will have the power to say that these developments have got to be completed within three years.
Baroness Hanham
“(4) Sections 106BA, 106BAA and 106BB of the Town and Country Planning Act 1990, and subsection (5) of this section, are repealed at the end of 30 April 2016.
(5) The Secretary of State may by order amend subsection (4) by substituting a later date for the date for the time being specified in that subsection.
(6) The Secretary of State may by order make transitional or transitory provision or savings relating to any of the repeals made by subsection (4).”
Baroness Hanham
Growth and Infrastructure Bill
Baroness Hanham Excerpts(11 years, 9 months ago)
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Baroness Hanham
Baroness Hanham
Lord Berkeley
My Lords, I will speak to Amendment 78 in this group, which is in my name and that of the noble Lord, Lord Jenkin of Roding. It is yet another attempt to change the definition of what type of project could be included in the extent of the Planning Act. It relates to commercial and business developments that require consent under the national significant infrastructure regime.
The issue that I would like to raise is that of mixed-use schemes that have some housing or retail element. They should be able to take advantage of the regime for nationally significant infrastructure projects. Any retail element is excluded from the proposed list of development types set out in annexe A of the recent CLG consultation on extending the Planning Act regime. I imagine that this could always be reversed if the Government were minded to do so, but the Bill prevents any housing element being included in regulations.
I believe there is a large number of potentially significant business and commercial developments that will have some retail and certainly some housing element in them, even if it is only a caretaker. In theory, if there is just one property in a development, it cannot qualify for going down the nationally significant route. It is important for such developments to be able to include some housing element and to go for the nationally significant approach. An awful lot of time and cost could be saved if this were possible. The original prohibition of housing was well intentioned, and clearly big housing projects are not what the nationally significant definition is for, but it is a problem because if there were just one or two houses in a big development, it would be excluded.
That is what this probing amendment seeks to achieve. I hope that the Minister is willing to look at this again. Perhaps we can discuss whether there is some better wording that could be applied on Report.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, this group of amendments seeks to set out in the Bill the types of development and development sites which can and cannot be considered nationally significant under Clause 24. A number of specific amendments have been moved, and I will attempt to address the issues in each.
As noble Lords are aware, the purpose of Clause 24 is to extend the existing powers within the Planning Act to direct sub-threshold forms of energy, waste, transport, water and waste-water schemes into the Planning Act regime, to new forms of business and commercial development. Our intention is not to bring new development into the regime automatically but to provide an alternative planning route where proposed development is of national significance. We have recently consulted on the types of business and commercial developments, and we are now in the process of considering the responses to that consultation.
Amendments 77ZJ and 77AB would rule out proposed schemes using the regime if they were on sites of special environmental or historic importance or if they involved minerals extraction, or quarrying. These amendments would apply equally to the existing types of infrastructure, such as energy, transport and water, as well as to new forms of business and commercial schemes.
An example of the effect of Amendment 77ZJ is that a sub-threshold energy scheme of national significance that might otherwise be considered via the Planning Act route could not be the subject of a direction if part of the site had an environmental designation. We do not consider this to be a sensible approach. If a scheme is of national significance and is directed into the regime, the Secretary of State will have to consider all the issues that are important and relevant, including any impacts on the historic or natural environment, before reaching his decision. To exclude large tracts of land without consideration of the planning merits or otherwise of the proposed development could discourage developers bringing forward much needed infrastructure or economic developments.
I will explain our thinking on minerals a little bit more. As we recognised in the National Planning Policy Framework, minerals are essential to support sustainable economic growth and quality of life. Without minerals, our building industry would grind to a halt. It is essential that there is a sufficient supply of material to provide the infrastructure, buildings, energy and goods that the country needs. We therefore consider that some minerals schemes could be capable of being of national significance, but again we wish to consider the consultation responses before we reach final conclusions about the forms of development.
Amendments 78ZA, 77AA, 77AC and 77BA seek to place the types of commercial and business development in the Bill. I am pleased that the noble Lord, Lord Adonis, broadly agrees with the types of development on which the Government consulted recently in connection with the proposals to extend the infrastructure planning regime to business and commercial projects. Nevertheless, we consider that this amendment is premature. We believe that a broad range of types of development of national significance could benefit from using the infrastructure planning regime and that further public and parliamentary scrutiny on how this new power should be used is appropriate. That is why we are now considering the responses to this consultation and why the accompanying regulations will be subject to the affirmative procedure.
Amendment 78, in the names of the noble Lord, Lord Berkeley, and my noble friend Lord Jenkin, also seeks to remove the exclusion in the Bill on dwellings from being prescribed in regulations. I listened carefully to the remarks made on this point by the noble Lord, Lord Berkeley. The Government have a clear position that planning for housing should remain a core responsibility of local councils. As the Government set out in the National Planning Policy Framework, local councils should be planning to deliver a wide choice of high-quality homes and wider opportunities for home ownership and creating sustainable, inclusive and mixed communities.
Many of the responses to the consultation exercise that we carried out recently supported the exclusion of housing from the infrastructure planning regime. Again, we are considering these responses, but we believe that housing should be and remain a core responsibility of local authorities.
Lord Jenkin of Roding
I did not intervene in the debate, because the noble Lord, Lord Berkeley, made the point. When will the Government publish the full response to the consultation? It has been represented to me that there were quite a lot of objections to the exclusion of housing. Of course one agrees that housing cannot be a main purpose of an application that goes directly to the Planning Inspectorate, but there are a lot of mixed developments now that usefully and importantly will include a housing aspect. It ought to be possible for an applicant to use the new procedure to have his application referred directly to the inspectorate.
Baroness Hanham
My Lords, I think that I made clear in my remarks that we are considering the results of the consultation that has just taken place. At present, the intention is to continue to have housing dealt with by local authorities. We are analysing the responses at the moment. While we already have a summary of the issues, we will publish a full response in due course. The summary of the issues may be helpful to us for the next stage.
I hope that noble Lords will agree the Government have set out a sensible approach that will enable new forms of nationally significant development to benefit from the Planning Act regime, that the noble Lord feels able to withdraw his amendment, and that other noble Lords do not press the amendments in their names, mainly probing as I understand them to be.
Lord Greaves
My Lords, I did not quite catch what the Minister said. Will a published summary of the issues encompass a summary of the Government’s views and their response to the consultation, and did she say we would perhaps have that before Report? Some of us did not put down detailed amendments on Clause 24 because we were waiting for some clearer indication of exactly what it means in detail. If we do not get at least a summary or broad overview of the Government’s views on this before Report, we might be tempted to take up more time on Report by putting new amendments down than the Minister would perhaps prefer.
The other questions I wanted to ask were about minerals. Will Clause 24 make a difference, for example, to the way in which planning permission or development consent is given for things such as quarries in national parks—the quarrying of limestone in the Peak District, for example—which are highly controversial and at the moment are done by the local planning authority, the national park? Are decisions like that going to be moved to the Secretary of State and the infrastructure planning regime?
The other question was specifically about the development of fracking for unconventional gas, which is going ahead slowly in Lancashire. Lots of different consents have to be obtained for that, notably from the Department of Energy and Climate Change, which takes place at a national level. However, the development that has taken place so far and the scale of it means that the planning permission, as I understand it, is the responsibility of the county council; in the case of the fracking that is taking place, or is about to resume, at the moment on an experimental basis in Lancashire, that will be Lancashire County Council.
It seems to me that with something like fracking, there are two crucial sets of decisions to be made. One is the question of whether the drilling, the fracking and the extraction of the gas should be allowed to take place. Then there are all the environmental issues related to that on the surface, such as the screening of developments and whether pipes from the different wellheads, which are quite close to each other, should be underground, overground or whatever, which is a matter of the local landscape and local planning. I would be quite appalled if the decisions over that kind of local planning were taken away from the local planning authority—in this case Lancashire County Council, as it is a minerals development—and put in the hands of a national authority, which I really do not think would have the local understanding or the ability to do the job properly. There are two separate issues there. Would it be possible for them to be separated, because they are dealing with quite different aspects, and for the decisions about whether the drilling and fracking goes ahead—and I should say that it seems to me that this is development which ought, at least on a pilot basis, to proceed as far as a viable commercial scheme—to be taken nationally through the infrastructure planning process but for the local details of the environmental protection and amelioration connected with it, and how that works on the surface, to be left with the local planning authority?
Baroness Hanham
My Lords, I thank noble Lords for those questions. The noble Lord, Lord Jenkin, asked about the summary of responses. We have that summary of responses, and I think it has already gone to the noble Lord, Lord Adonis; if not, it is on its way. We can make sure that Members of the Committee receive a copy and will put it in the Library, so that it will be available for consideration at the next stage.
We are thinking about the responses to the consultation and whether fracking should be included in the infrastructure planning regime or, as the noble Lord said, stay with the local planning authority. At the moment, a request will have to be made to the Secretary of State to use the major planning infrastructure regime, and the Secretary of State will be interested in it only if the whole proposal was going to raise issues of national rather than local significance. Fracking is a developing area and things may change but, as I understand it, that is the situation at the moment. I hope with those explanations that the noble Lord may be willing to withdraw his amendment and that noble Lords will not press the others when the time comes.
Lord Greaves
I will perhaps take up the question of fracking with the Minister outside the Chamber. However, the important thing before Report is not to get the summary of responses—although that would obviously be useful—but to get the Government’s view of the responses and their view of the way forward.
Baroness Hanham
I understood that that was what the noble Lord, Lord Greaves, was getting at. I have committed to giving him the summary of the responses and have been told that the Government’s response will come in due course. That does not sound to me as if it will come before Report, but if it does, I will let noble Lords know that it is coming.
Lord Adonis
My Lords, the noble Lord, Lord Greaves, raises a point of some substance. I have read the summary of responses which the noble Baroness very kindly sent to me a short while ago. It is supremely uninformative. Question 3 asks:
“Do you agree with our assessment of the factors that the Secretary of State would need to take into account when considering whether a project is nationally significant?”.
The summary of responses says:
“A number of respondents thought the assessment factors were broadly right whilst others commented that they were not detailed enough or were not supported at all”.
I could go through them, but it is a profound exercise in waffle and does not really help us very much. To be fair to the Government, in annexe A of their consultation paper, they set out both specific types of development and very specific criteria in terms of the square metreage for the thresholds that would need to be met before these projects are deemed to be of national significance. That is crucial in informing our view as to whether we think this clause should proceed without requiring further limitation, although I think there is quite a strong preference for seeking to put provisions in the Bill. It would be extremely helpful if the noble Baroness were able, before Report, to indicate whether the Government stick by their proposals in annexe A or are minded to amend them in any form. If that does not come before Report, we will of course have no chance to assess the Government’s intended course of action before this Bill becomes law.
Baroness Hanham
My instinct would say that if it is there, then the Government are going to introduce it and are probably not going to amend it. If there is any change to that, I will let the noble Lord and the Committee know.
Baroness Parminter
My Lords, I support my noble friend’s contention that this clause do not stand part of the Bill. I will not repeat the questions raised by noble Lords, which I feel deserve an answer from my noble friend the Minister. I am sure that we will get answers, because she has shown herself throughout this process to be very open and willing to engage with us.
The one issue I would like to expand on a little further is that of fracking, and bringing that into the fast track process. The Minister rightly said that this is a developing area, and it is therefore important that this House has time to consider all the possible implications. Like the noble Lord, Lord Jenkin, and others, I think it is appropriate for the Government to introduce a national planning policy statement for this. As my noble friend Lord Greaves said, this is an important new area with major implications, particularly in the north-west. Given the scale of fracking and the Government’s commitment to press ahead with it, it would seem illogical not to give the Planning Inspectorate further clarity as it takes this issue forward.
The Minister said that there will be between 10 and 20 cases a year, a point raised by the noble Baroness, Lady Young. She cited evidence given by Friends of the Earth; I choose instead to cite evidence given to the House of Lords inquiry into EU energy policy last month, when Professor Jonathan Stern of the Oxford Institute gave his assessment of the implications of fracking in the United Kingdom. In the committee’s evidence session, Professor Stern stated:
“The US drills 45,000 wells every year of which 80% are fracked... people in Europe just do not understand the scale on which the drilling has taken place. In the future, it may be possible to reduce the scale of that drilling but I think what you can say is, if in any specific country you have drilled 100 wells, you may know something about the resource base. If you are going to produce shale gas on any scale, you probably need to be drilling somewhere between 300 and 500 wells a year, every year”.
I quote those figures because I think it is beholden upon my noble friend to answer—and I am sure she will do her best to do so—why the Government seem to think there will only be 10 to 20 cases emerging through this fast-tracking process if fracking is brought forward. There is a disparity which needs urgent clarification. Yes, it is a developing area, but if the Government are going to proceed with fracking, and take it forward as part of the energy mix in the short to medium term, then not only is there a case for a national policy statement, but there needs to be far greater clarity about the implications—particularly the resource implications—that would accrue for the Planning Inspectorate.
Baroness Hanham
I thank those noble Lords who have taken part in this rather interesting and short debate. I will try to pick up some of the matters raised, either as we go through or subsequently. Perhaps it would be helpful if I explain the Government’s rationale for Clause 24 and the reforms within it. As we have said on many occasions, one of the Government’s top priorities is to get the economy growing by creating the right conditions for growth. This includes ensuring that the planning system is operating in the most efficient and effective way. Clause 24 will support this aim by allowing developers of nationally significant business and commercial development to request to use the streamlined planning regime set out in the Planning Act 2008.
The noble Baroness’s Amendments 77A, 77B and 78A would remove the ability of the Secretary of State to issue a direction for prescribed forms of business and commercial development in response to a request from a developer. I have listened to views expressed that business and commercial planning applications should be determined by the local planning authority, and we have no difficulty with that. The Government agree that that is the right approach in the vast majority of cases. However, there will also be a small number of projects that will be of national economic importance and, in certain circumstances, it will be right that a decision on such proposals is taken at the national level by democratically elected Ministers.
We are not proposing that that should be a mandatory route for developers; it is optional. Developers of major projects will choose to request to use the infrastructure planning regime only if it offers other benefits which the local authority cannot provide, such as statutory timetabling—the noble Baroness asked me what it would be—and the one-stop shop, which will be useful where multiple consents are required.
Any request made to use the infrastructure planning regime will also be subject to the agreement of the Secretary of State, who will have to be satisfied that the proposed project is of national significance. Under Section 35(10) of the Planning Act, the Secretary of State is required to give reasons for his decision when making a direction, and that requirement is carried forward in new Section 35ZA(10) in Clause 24. That is why we cannot accept Amendment 77ZK, which is unnecessary.
My noble friend Lord Jenkin spoke to Amendment 78B, which would limit who can make a request that an application or proposed application for energy, transport, waste, water or waste water projects below the Planning Act thresholds should be directed into the nationally significant infrastructure planning regime. I understand why the amendment has been tabled and am sympathetic to its aims, but perhaps I may explain why we have set out a different approach in the Bill for business and commercial schemes.
The Planning Act sets specific thresholds for energy, transport, water, waste and waste water projects. Any proposal for a development which meets those thresholds must seek planning consent through the nationally significant infrastructure planning regime. Section 35 of the Planning Act allows a request to be made to use the regime for projects which are below the thresholds. We have not sought to limit who can make a Section 35 request for infrastructure projects as we recognise that other parties may hold information which could indicate that the project was one of national significance and should be directed into the regime. However, for business and commercial schemes, the Government have been very clear that for developers of major schemes this is an optional route. Therefore, the limitation on who can make a request is not there. We believe that it should be for a developer or applicant to determine whether the advantages of using the infrastructure planning regime outweigh the usual route of making a planning application to the local planning authority. The Secretary of State will direct a project into the regime only if he considers that it is of national significance.
Concerns have been expressed that if we do not accept the amendment the Secretary of State will be inundated with requests from third parties, or that there will be delay to the application being submitted or to the local authority decision-making process. We think that this is unlikely. We are aware of only a very small number of such requests having been made to date. The impact assessment states that the figure is likely to be between 10 and 20 a year. We will have to see how that works out.
If an application or proposed application is directed into the nationally significant infrastructure regime, this does not mean that local opinions will be ignored. Developers will have to consult local communities, and local authorities will continue to play an important role. The consultation requirements of the Planning Act, as noble Lords will know, are rigorous. Local authorities will also be invited to prepare a local impact report. The Secretary of State must have regard to the report as well as to other matters that are both important and relevant in making his decision on the development consent order application. The local plan, for example, is likely to be both important and relevant, as indeed is the National Planning Policy Framework.
It is essential that sustainable development should go ahead with the minimum of delay. That is why we have brought forward this new power. We also think that it is appropriate to have further public and parliamentary scrutiny on how this new power should be used. That is why we have consulted recently on the types of development and why the regulations that follow and prescribe the types of development will be subject to the affirmative procedure.
Other matters were raised. The noble Baroness, Lady Young, who tabled some of the amendments in this group, has had a letter from my honourable friend Nick Boles which I think addresses most of the questions that she raised, but I understand why she would want those responses on the record.
Lord Greaves
If there are letters floating around which are being debated here, I wonder whether we might all have sight of them.
Baroness Hanham
My Lords, the letter in question was to the noble Baroness. If she is happy for it to be made available to the Committee, then, of course, I would be happy, too. I presume that my honourable friend at the other end was expecting at least most of it to be made public because it is a very public response to the questions asked. I do not think that there would be any disagreement with my saying that the local plan and the National Planning Policy Framework are both likely to be important and relevant in these matters. We have issued a consultation paper on extending the regime to business and commercial schemes, seeking views on whether one or more national policy statements should be prepared. These matters are relevant to today’s debate and the answers are the Government’s answers.
I do not think that moving business and commercial applications to the infrastructure regime will be a blow to local authorities. As I have said, we expect only a small number of applications to come forward and for most of them to be dealt with by local authorities.
I was also asked by the noble Baroness, Lady Young, and the noble Lord, Lord Greaves, whether we had any evidence that change is necessary. Over the past four financial years, the proportion of large-scale major applications for commercial and industrial projects taking more than 52 weeks to be decided by local authorities has increased from 8% to 13%, which is quite a significant rise.
We are not proposing to make mandatory this route for developers—it is optional—and there will be a timetabled approach. Developers will have to decide for themselves whether to use the infrastructure regime.
As we set out in our recent consultation document on the new business and commercial category of development, the Government do not consider the case to be strong for one or more national policy statements for this category of development. The consultation closed in January and we are considering the responses to that, including on whether national policy statements should be prepared. I think that we will discuss those later during our consideration of the Bill.
I was asked whether there will be sufficient resources. We are discussing the resource implications with the Planning Inspectorate at the moment.
We also had a question on fracking, which has come up quite a bit through the course of the Bill. It is clearly a developing situation. The information that the noble Baroness, Lady Parminter, gave us was interesting and begins to put a scale on what the ultimate development could be. At present, fracking applications will not be taken out of the hands of local authorities. Any developer will have to consult the local community and local people and the local authority will have the right of determination. A request would have to be made to the Secretary of State to use the infrastructure regime and he would agree to such a request only where the proposal raised issues of national significance. It may be that national significance and fracking will be one and the same but that gives an indication that at present we would expect this to be dealt with locally and local people would have a big say in what was to happen.
I think that covers the questions I was asked. The noble Baroness, Lady Parminter, also asked about fracking and, as I said, gave us very helpful figures from the report. I ask the noble Baroness, Lady Young, whether she would be happy for the letter from my honourable friend Nick Boles to be circulated. If so, I will make it available but if she does not wish that we will no doubt discuss the issues again at a later stage.
Baroness Young of Old Scone
Can the Minister respond to an issue raised by a number of noble Lords on the question of when we might hear the Government’s response to the consultation? It is very important for a variety of reasons that that happens before the Report stage. “In due course” does not seem a terribly firm timescale.
Baroness Hanham
We have a number of consultations coming through to fruition, so I am not able to stand here now and say that the Government’s response will be available by Report. I hope that we will have an indication of what more we can discuss on this. If the response can be made available then I will certainly see that it is but I am not in a position to say that it will be. I note what the noble Baroness said.
Lord Jenkin of Roding
I listened with great care to what my noble friend said on the question of who can make an application to the Secretary of State for an NSIP treatment. I will read very carefully what she said but, having listened, I am still puzzled as to why there is a difference between the existing applications and the new ones for business and commercial. Perhaps I might leave that there. I will read very carefully what she said and decide how we should proceed after that.
Baroness Hanham
I hope I did not speed over the amendment or that the noble Lord, Lord Adonis, had not gone to sleep with excitement over it. I said that the Secretary of State is required to give reasons for his decision when making a direction. That requirement is carried forward in Clause 24. That is why I said I was not able to accept his amendment: it is not necessary.
Lord Greaves
Will my noble friend comment on my request for some more detailed statistical information on these matters?
Baroness Hanham
If I can get what my noble friend requires, I will make sure he and the Committee get that before Report.
Growth and Infrastructure Bill
Baroness Hanham Excerpts(11 years, 9 months ago)
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Lord King of Bridgwater
My Lords, I had the privilege of representing for many years Exmoor National Park and the Quantocks AONB. Perhaps I may say to the noble Lord, Lord Adonis, that I am grateful to him for quoting my good friend, Dr Nigel Stone, who is the chief executive of Exmoor National Park.
It has been common ground throughout this debate that everyone here is in favour of two things. Everyone is in favour of helping the rural economy and considers that the rapid expansion of broadband is a vital ingredient in that. The noble Lord, Lord Adonis, set the tone at the start of the debate by making that absolutely clear. It is important to get broadband into the rural economy. We know that the problems in the economies of national parks are not easy. They depend on diversity, and tourism is enormously important. People must be able to ring up, book their bed and breakfast or hotel, communicate and run businesses of all varieties. I have some interesting statistics about the increasing number of SMEs within the national parks made possible by the huge improvement in modern communications.
Everyone is agreed on that and everyone is agreed about the other aspect—we are all here to make sure that we do not damage the national parks. One or two of the speeches were slightly exaggerated—if I may say so, with respect—and suggested that the clause was an undercover attempt to somehow undermine the protection and beauty of the national parks. It is a judgment as to the way in which we proceed, but nobody will discourage anyone’s motives in this—it is very important indeed to protect the beauty, quality and character of our national parks and AONBs.
The point was made by the noble Lord, Lord Cameron, and repeated by my noble friend Lord Marlesford, and I agree that the onus is on the Minister to say why we are here. It is suggested that there are no planning problems or delays—that it is possible to introduce high-quality broadband rapidly within a short timeframe, which is what the whole House wishes to achieve, and that it does not require an upheaval of the planning process. This clause is not the end of civilisation as we know it or the end of the national parks as we know them. That is a judgment that one or two noble Lords have thought to make. The theme that came through in many speeches, including that of the noble Baroness, Lady Parminter, is that there is not necessarily a fear of what the clause does but of whether it is a precedent for other things that might then happen and be the thin end of a wedge that could lead to all sorts of permissions and lack of protection in other areas.
Perhaps I may ask my noble friend about a matter that came up in Committee in the Commons. Am I right in thinking that we are talking entirely about cabinets and overhead wires and that we are not talking at all about masts? That is important. When people first hear about this provision, they think that there will be huge masts rising up on top of the Quantocks, without anyone having a chance to say anything about it. I note that the Minister in the other place made it clear that the Government are insisting on maintaining the statutory duty on people wishing to embark on schemes,
“to consult local authorities on the siting”.—[Official Report, Commons, Growth and Infrastructure Bill Committee, 29/11/12; col. 360.]
That dealt with one aspect of the statutory powers that some people thought might have been lacking. His second point related to the discussions on the code of best siting practice.
I do not think that we will vote on this matter today, but I hope that my noble friend will say something about it because it is important for the Government to give clear reassurance that the objectives that everyone in this House shares—rapid broadband expansion and proper protection of the national parks—can be combined. That is what the Government want to achieve and we want to make sure that they have the best way of achieving it.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, I was looking around the Chamber to check that everyone had finished. Many points have been raised and it is important that I try to deal with them.
We have been discussing the consultation paper. Although there was criticism that it was late, I am sure that noble Lords will give me some credit for the fact that I made sure that they were aware of it last night and had copies of it. I apologise that that was rather late for today’s purposes but it was completely missing for the discussions in the other place. At least we have had the opportunity to see it.
Within this group we have several amendments and a clause stand part debate which have not been moved. In the light of the general discussion, it may be helpful if I lay out some of the rationale behind the provision. I think that, as I do so, some of the questions that have been raised will be answered.
As noble Lords know, the Government’s ambition is to have the best superfast broadband network in Europe by 2015. It is a challenging target. It has not been helped by the discussions on state aid, but improving the UK’s communications infrastructure is integral to our ability to grow our economy.
No one wants to destroy, upset or prejudice areas of national beauty—the national parks—and that forms no aspect of what we are trying to do. I understand noble Lords wanting to preserve what we have. I can only say that, as part of the process of ensuring that broadband has a wide distribution, cabinets and wires will be inescapable, but it is how we deal with them that matters.
In order to ensure that the economy can grow all over the country, we need to make sure—
Baroness Miller of Chilthorne Domer
I am sorry to interrupt my noble friend but, before she goes into the detail of her speech, I just want to point out that my noble friend Lady Parminter, in her very broad-ranging and able speech, spoke on the question of the clause standing part, although I understand that in this House we do not say, “I beg to move” at the end of a clause stand part debate.
Baroness Hanham
My Lords, I am grateful for that and I apologise to the noble Baroness for not realising that. However, that gives me greater justification for doing what I am doing, which is to answer immediately what would have been the clause stand part debate. I think that we will all benefit in the end.
The more rural and remote areas, including protected areas, are some of the places where an infrastructure upgrade for broadband is needed the most. Without action, it is likely that these rural and quite remote areas will be left even further behind. I think that noble Lords have acknowledged that people who live in these areas want broadband and that there is a strong rationale for it. There are 700,000 households and businesses in national parks and areas of outstanding natural beauty, and most of these will not be served by the market alone. In England, 25% of premises in these areas currently get less than 2 megabytes per second. We estimate that, in total, potentially 4 million more people and nearly 2 million households could have access to superfast broadband as a result of Clause 8.
Without the rollout of broadband, businesses in these areas would suffer, including those in the tourism service sector, which increasingly find that visitors demand greater connectivity when they come and stay at guest houses, bed and breakfast establishments and hotels, and these businesses are frustrated by the lack of broadband to offer their customers. National parks authorities, along with many other rural areas in England, have cited insufficient broadband provision as a particular barrier to growth.
We are trying to tackle this disparity in the provision of superfast broadband and it is a key priority for the Government. We are spending nearly £700 million to stimulate the market to improve broadband connectivity and we are taking action to ensure that the barriers to deployment are removed. These actions are designed specifically to close the rural-urban broadband divide and promote economic growth. The broadband support package, which the Government announced on 7 September, is key to delivering that.
The consultation paper, Proposed Changes to Siting Requirements for Broadband Cabinets and Overhead Lines to Facilitate the Deployment of Superfast Broadband Networks—succinct as that is—published yesterday by the Secretary of State for Culture, Media and Sport, to whom we have been talking, brings forward proposals for two changes to the Electronic Communications Code (Conditions and Restrictions) Regulations 2003.
Perhaps I can take a few moments to set out what the consultation covers. The consultation’s first proposal is that we remove of the requirement to underground telecommunications apparatus. This is the only restriction that stops communication providers deploying overhead infrastructure. It does not say that they cannot provide underground structures. They can. If they want to share a gully or a trench with some other provider, they can do it in a way that is satisfactory to them. There is nothing to stop that. All this does is to say that it is not a requirement. If you cannot do it for some reason—
Lord Greaves
This is a crucial point. It is clear that they can still put them underground if they wish to, although there will be the removal of the statutory power of the local planning authority, which is usually the national park authority, to require it, and there will be less time for consultation. If I have understood it correctly, the consultation period will be 28 days and not 58 days in future. It would be helpful to have that confirmed. Do the Government have an estimate of the proportion of the lines in, for example, national parks in England and Wales which, in future, would be put underground compared with the present situation?
Baroness Hanham
I cannot answer the noble Lord’s question. He probably does not really expect me to answer it here. The consultation process will begin to throw up some of that information if we do not have it. If we do have the information, I shall see that noble Lords receive it.
The second proposal removes the prior approval requirements for broadband cabinets in protected areas. Of course, the cabinets have to be there, otherwise you cannot have broadband. They have to be at certain spaces and there are all sorts of things about broadband cabinets that require them to be placed in a specific location. We are bringing forward Clause 8 to enable us to make these amendments to the communications code through secondary legislation.
Let me be clear that the removal of prior approval will be temporary, as noble Lords have seen in the consultation which sets out a period of five years. By limiting the window to five years, this will also ensure that the operators have an incentive to get on with the rollout of that business and community need.
Lord Adonis
The noble Baroness said that the requirement for prior approval will be removed. However, she still has not told the Committee how that will accelerate the deployment of superfast broadband, given that there appear to be virtually no cases where the prior approval process has held up the deployment of superfast broadband in the national parks and in areas of outstanding natural beauty.
Baroness Hanham
My Lords, I have about another 15 pages in my brief.
Again, referring to the consultation paper, in the national parks, there are more than 22,000 businesses, of which more than 70% are small and medium-sized enterprises, as noble Lords have said. There are more than 153,000 homes and we know that there is a lot of demand for it. The proposed changes are about creating certainty and reducing the time and cost of deployments. Evidence to date from commercial deployment shows that deployment can be held up by planning decisions. In conservation areas where planning permission is currently required for broadband, there is evidence that it has been held up for 27 months by the need for consultation. This has resulted in the new broadband service not being provided in these areas.
Lord Adonis
The noble Baroness referred to conservation areas but did not cite any evidence in respect of national parks.
Baroness Hanham
My Lords, I was citing the reason for the process in conservation areas taking up to two- and-a-half years. Under the measures on which we are consulting, local authorities will still be involved.
Lord Greaves
As I understand it, there are no proposed changes in this legislation to conservation areas. I declare an interest as living in not one conservation area but two—they overlap. Are there proposals for changes to the rules in conservation areas?
Baroness Hanham
I am citing conservation areas that in many cases are in urban areas and have held up some of these decisions. I accept that we are talking about rural areas. I was asked why some of this was necessary. Part of the reason for the decision is the delays caused by conservation areas.
Lord Greaves
I wonder whether the Minister would write to me on that, as she does not have the answer. I asked a specific question about whether the rules in conservation areas were to be changed.
Baroness Hanham
My Lords, as I understand it, the rules in conservation areas are not to be changed.
Under the measures on which we are consulting, local authorities will still be involved and will have more of an opportunity to put forward their views on the siting of poles and boxes, and on their appearance. The existing regulations require, and will continue to require, consultation with local authorities. In addition, providers will work to a new code of best practice on the siting of infrastructure. This will contain an agreed set of overall principles on sensitive siting, together with specific requirements for consultation with local communities about new overhead line deployment. My noble friend Lord King asked whether these measures were related to fixed broadband. As I said in my Second Reading speech, these measures cover fixed broadband—poles and boxes.
We will outline the main principles of the code of practice by Report, and the code will be agreed before changes are brought into effect by regulations. We expect broadband operators to adhere to the code that they will be involved in drawing up. We believe that the sector should have responsibility for its own code. I can confirm that the English National Park Authorities Association will be invited to join the group that is drafting the code of practice.
Importantly, local authorities will also be able to influence how new broadband services are deployed when procuring projects under the Broadband Delivery UK programme—including, for example, determining whether lines should be run overground or underground. As I said, the underground aspect is not being removed. This will be balanced against how much coverage can be provided.
I turn now to the specific amendments. I do not agree that there is a need to place conditions on the Clause 8 enabling power.
Lord Judd
Before the noble Baroness turns to the amendments, perhaps I may ask her a question. I have great respect for her as a person and a Minister; I know that she very much cares about the qualitative dimensions of British life. On reflection, would it not have been better for the Government to say, “Our objective is to have the most efficient possible economic performance in Britain. We will include the rural areas in this objective. We are determined to have the best possible facilities to service that economic activity. However, we not only want our broadband system to be the best in Europe, we want our areas of outstanding natural beauty, including the national parks, to be the best in the world”? The Government’s purpose is to find a policy that enables both objectives to be reconciled.
Baroness Hanham
My Lords, I am beginning to feel like a jack-in-the-box. I hope that I do not look like one, but I am beginning to feel like one. The noble Lord, Lord Judd, asked a philosophical if not a practical question. We are where we are. My job is the legislation before us. It is not to proffer a view on that. This is how the Government feel it is necessary to proceed in order to do precisely what the noble Lord said, which is to get broadband across the country as quickly as possible and in the best way possible. As I tried to say as I was going along, the only way that you can get broadband is through masts, lines and boxes, and somehow that has to be dealt with in the best way possible.
Turning to Amendments 59A and 59C, tabled by the noble Lord, Lord Adonis, I do not think that there is a need to place conditions on the Clause 8 enabling power in the way that the noble Lord proposes, and I have referred to the existing consultation requirements in the regulations. That consultation must be considered before further action is taken. The relevant secondary legislation—the Electronic Communications Code (Conditions and Restrictions) Regulations 2003—already includes both general and specific statutory requirements for consultation with planning authorities. This will continue to be the case.
Communications providers will be required to notify local planning authorities about the equipment that they propose to install and where they propose to install it. The regulations will make it clear, as they do currently, that planning authorities will have an opportunity to influence the siting and appearance of that equipment and can put forward objections, as is currently the case. Communications providers will be required to make changes, if they are reasonable.
Communications providers are under a strong incentive to ensure that they follow the statutory requirements for consultation with local planning authorities. If they do not, this would be considered a breach of the permitted development rights under which they install their equipment and could lead to planning enforcement action.
The noble Baroness, Lady Whitaker, called for the regulations to be subject to the affirmative procedure rather than the negative procedure as is currently the case. The requirements for consultation with local planning authorities that we propose to introduce for protected areas are not new. They are already well established and work well for non-designated areas. I am confident that they can work well in protected areas with the co-operation of communications providers and local planning authorities alike. At present, I do not see the need for the affirmative procedure. This is not new. It is not novel: it is how things have happened in the past.
The noble Lord, Lord Adonis, also proposed Amendment 59B. As I said at Second Reading, we are unable to draft legislation in such a way that is specific to broadband infrastructure. I explained then that this is because of Article 8(1) of the Framework Directive 2002/21/EC, which requires technology neutrality so far as the primary implementing legislation is concerned.
We can, though, be specific in secondary legislation. As I made clear at Second Reading and make clear again today, and as our consultation also makes clear, our proposed changes relate to broadband cabinets and overhead lines—in other words fixed broadband technology. As I said, that cannot be done in primary legislation. It will be done in secondary legislation.
The amendment also suggests that specifying consultation with local authorities on changes to secondary legislation is necessary. Consultation with local authority interests already happens under the existing provisions of the Communications Act 2003. Section 109(4) provides that before making regulations, the Secretary of State must consult Ofcom and any other persons as she considers appropriate. As I mentioned earlier, a large proportion of the existing regulations consists of the requirements for consultation with and notification to highway and planning authorities; this will not change, and of course we are now consulting on our proposed approach. The Local Government Association and others such as the national park authorities will want to make their views clear on the proposed planning changes.
My noble friend Lord Greaves has proposed Amendments 59D to 59H. These would remove what we believe are necessary subsections to ensure that other legislation relating to protected areas is amended so as to be consistent with the Secretary of State’s powers in Section 109 of the Communications Act. If we remove them, Clause 8 would not deliver the result the Government are seeking to achieve. It would also risk creating great uncertainty and inconsistency in the law. My noble friend Lady Parminter raised this with us at a meeting we held yesterday. We explained to her then that this was the way we had to deal with the matter legally, and although it may seem rather cumbersome, it is essential. I have heard nothing to change my mind since our discussion, but I did undertake that we would consider the reasons why. I also understand the intention of my noble friend Lord Greaves and I want to reassure him that the amended legislation will continue to make it explicit that the Secretary of State shall have regard to the need to conserve the natural beauty of the countryside when making regulations in relation to the Electronic Communications Code.
As with the relaxation of prior approval in protected areas for cabinets and poles, these subsections also only apply for a period of five years, which I hope gives some comfort to noble Lords. The provision of broadband to business and communities across the country is vital to ensure that we have growth. We want to see the economy grow right across the country.
I have spoken at some length regarding the existing and proposed consultation requirements that will be necessary through the secondary legislation that Clause 8 will enable. Perhaps I may go over those requirements again. Communications providers will still be required to consult with local authorities on the siting of infrastructure and to take on board any reasonable objections, which is the current situation. The proposed code of best practice for the siting of infrastructure will contain an agreed set of overall principles for siting, as well as specific arrangements for consultation with communities on new overhead wires. Local authorities will be able to influence how services are deployed in their area in consultation with their supplier when procuring under the Broadband Delivery UK programme. There is a great deal of scope for local authorities to influence what is going on, and it seems to me that broadband providers are going to find it much easier to get their work done if they co-operate and co-ordinate their activities with local authorities to ensure that between them there is a sensitive recognition of the environment.
As a side issue, I was asked about advertising on boxes, an issue that has been the cause of a lot of concern. Advertisements are not permitted unless specifically approved by the local authority. Permission has to be sought to do that. My noble friend Lady Parminter asked about the siting of equipment. A number of statutory requirements are set out in the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 which are aimed at ensuring that the amount of electronic communications apparatus and its impact on visual amenity is kept to a minimum, and these provisions will remain unchanged. The relevant provisions are in the general conditions, under Regulations 3(1)(b), 3(3)(a) and 3(4). Regulation 3(1)(b) requires communications providers to,
“consult … planning authorities in relation to the installation of electronic communications apparatus, including installation in a local nature reserve”.
Under Regulation 3(3)(a), communications providers,
“when installing any electronic communications apparatus, shall, so far as reasonably practicable, minimise … the impact on the visual amenity of properties, in particular buildings on the statutory list of buildings”.
Under Regulation 3(4) they,
“where practicable, shall share the use of electronic communications apparatus”.
There is nothing in this legislation to change any of that.
I hope that I have dealt with more or less everything that has been said. If not, I am sure that somebody will remind me and ask me again. I hope, with those explanations, that the noble Lord will withdraw his amendment.
Baroness Hanham
My Lords, first, we need some speed to get this done. As the noble Lord will know, so far there has been very little deployment of broadband in areas of natural beauty and it is estimated that 85% of premises will not be reached by the market unless we can speed things up. This is at least a contribution to speeding up the provision of broadband in the rural areas where, at the moment, it is not very significant.
Lord Adonis
My Lords, that does not meet the point at all. The evidence which the national parks have given to noble Lords shows that 97% of several hundred applications—I think 292 have been made under the pre-notification procedure—have been agreed by the national parks authorities. I am sorry to keep putting this to the noble Baroness but it is a fairly fundamental issue. There has been a large number of applications, and we obviously want a great deal more so that we have a great deal more rollout of superfast broadband in the national parks and areas of outstanding natural beauty. However, almost all those that have been brought forward have been agreed. Does the noble Baroness have any evidence at all that there are cases which the Committee should take into consideration where the planning authorities themselves have been slowing down a rollout of broadband that would otherwise have taken place?
The Earl of Lytton
I apologise to the Committee for intervening now; I thought that I would intervene earlier but felt that it had been discussed. I want to try to disassemble something here. The Royal Institution of Chartered Surveyors, of which I am a member, recently looked into this question of the operation of the telecommunications code. One of the things that became apparent was that the code has been an exceedingly clunky means of dealing with difficulties and disputes because it has to be dealt with through the county court. One of the things that the institution was particularly keen to air—and perhaps I should have done so earlier—was that this process really needs to be dealt with. I would have invited the Minister then, and maybe I still can, to say whether it is correct that the Law Commission is looking into this whole business to try to find a better and more streamlined way of dealing with that particular process. I do not know whether British Telecom, or whoever it may happen to be, is concerned about the whole process, or specifically concerned about planning, or whether within that it is concerned about national parks, or whether it is actually the telecommunication code that is a common denominator for all planning authorities. If the Minister cannot respond to that now, perhaps it could be explored at some juncture.
Baroness Hanham
My Lords, I am grateful to the noble Earl. I will make sure that that is considered and give him an answer before next time—as I will with the other matters raised before Report.
Lord Adonis
My Lords, it is always good to try to be constructive. Given the scale of the concern that has been expressed in the Committee and the noble Baroness’s good intentions—as always—to seek to meet legitimate concerns which have been raised, I wonder whether she and the Planning Minister, Nick Boles, would agree to meet the chief executives of the national parks authorities before Report? They could discuss this matter directly and go into the specific issue of how superfast broadband can be rolled out more swiftly and effectively while seeking to preserve the landscape and not subvert the existing planning system.
Baroness Hanham
My Lords, the noble Lord knows that I am always happy to have meetings that are relevant to the legislation. Let me look into what would be sensible and the best way of setting up such meetings before Report. I give him an undertaking that I will do that.
Lord Adonis
I very much welcome that commitment from the noble Baroness. I hope that Mr Boles will also be present at the meeting and that we can make some good progress so that when this matter comes back on Report we do not have to have the same debate yet again.
Baroness Parminter
Perhaps I may ask the Minister to address an issue that was not fully responded to in her reply—an issue which was raised by a number of Peers, including the noble Lords, Lord Adonis and Lord Cameron, and myself, namely the issue of statutory guidance. The Minister said that the Government expect the operators to abide by the code. For those of us who are concerned about this issue, we feel that it should be a statutory code. Bearing in mind the fact that the final siting will be at the discretion of the operators and that the operators have the ability to deploy new infrastructure if they believe that there is still merit in doing so, can the Minister confirm whether the Government intend for the code of practice to be statutory or voluntary?
Baroness Hanham
My Lords, I apologise for overlooking that. The proposal is that the code should not be statutory. It should be a code of guidance but not backed up by statute.
Lord Greaves
My Lords, perhaps I could ask again: if everything goes well with a particular proposal and notification, is the difference in timing between the present system and what is proposed just 28 days as it seems to be? In other words, does the 56-day prior approval system disappear but the 28-day period still exist for the local planning authority to comment? Can the Minister say, either now or perhaps in writing, what will happen and what is available to people, particularly the local planning authority, under the proposed new system if there is a difference of view that cannot be resolved? If a proposal is put forward and the planning authority has comments—not necessarily on whether the proposal should be there at all but on the two key issues of siting and appearance—and if that dispute between the local planning authority and the broadband provider cannot be resolved, does the provider simply go ahead and do it or is there some other procedure? I am a bit mystified about where the county court comes in but perhaps everybody else understands that.
We have been told that the number of such cases that have been refused is very few indeed—it is a handful. But the fact that there was a handful means that there will be some cases where the local planning authority believes that what is being proposed is unacceptable. So under those circumstances will it be possible now for the proposal to go through?
Finally, with regard to the issue I was talking about before, Section 11A of the National Parks and Access to the Countryside Act is a general section that refers to everything. We are told that subsection (2) has to be put aside for this specific purpose because when the decisions are being made or the Secretary of State is issuing guidance and regulations under the Electronic Communications Act, if the national parks Act provision remains, there will not be a level playing field and the different considerations that the Secretary of State has to take into account will not be given equal weighting. Since Section 11A of the national parks Act is a general provision on everything that happens in national parks that authorities have to take account of, surely that is the case with all sorts of other things as well, yet all this other legislation that it must apply to—all these other powers of the Secretary of State and other authorities—does not appear to be invalidated by this section of the national parks Act. This is a fairly esoteric legal point but it would be very helpful to have clear legal guidance from the Government as to why they think this particular provision is necessary.
Baroness Hanham
My Lords, with regard to the latter point made by the noble Lord, Lord Greaves, this was a discussion that we had last night with the noble Baroness, Lady Parminter, and I said earlier that the strong legal advice is that it has to be done in the way that has been proposed at the moment. I said that I was happy to go back and have that checked but I expected that I would come back with exactly the same outcome because that is the legal process, but I am happy to give that undertaking to come back on it.
If all else failed and the providers could not get anywhere with the local authority and the planning committee, ultimately, yes, they could go ahead and provide the facilities where they need to. We do not expect that to happen. The whole purpose of this legislation is to ensure that there is good consultation and a clear understanding of where broadband is going to be placed, and that it should be done as quickly as possible so that we can move on.
Operators will have to adhere to the code. They are going to be involved in drawing it up, and we believe that they should have responsibility for their own code. I am sure that if we did not think that was going to happen properly we might consider taking a backstop power to ensure that the code is placed on a statutory footing, but I would like to come back to that on Report.
Lord Judd
The Minister said that she was willing to consult, which is encouraging. Can she say a little bit about the thinking that has gone on in government about any requirements for such installations to be removed as soon as advances in the technology make them superfluous?
Baroness Hanham
My Lords, I am sure that that is worthy of an amendment on Report. I am sure that they will be expected to be removed, but I take the noble Lord’s point that sometimes these things are put up and are not then pulled down. However, it is not part of this legislation; I will find out whether consideration has been given to that; and I will find out what the precedents are, because we have got boxes all over the place for cables and all the rest of it, some of which are not used again.
Lord Adonis
My Lords, on the basis that the Minister is content to meet the chief executives of the national park authorities before Report—
Baroness Hanham
I am content to meet their representatives. If we confine ourselves to chief executives, they may not be able to come in time, but I will certainly meet the organisations.
Lord Adonis
On that basis, my Lords, after an hour and 48 minutes, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, as the noble Lord, Lord Shipley, pointed out, Amendment 71A in this group, which stands in my name, is to all intents and purposes identical to the amendment that he moved and which stands in his name and that of the noble Lord, Lord Tope. It is also identical to the amendment moved in another place by my honourable friend Roberta Blackman-Woods.
The thrust of the amendment is to reverse the current arrangements whereby permitted development is determined at the centre but with local authorities having the right to restrict or extend permitted development rights by an Article 4 direction or a local development order. It would anchor the process of permitted development rights at the local level with full obligations to prepare a draft order for consultation. The Minister will doubtless argue, as was argued in the Commons, that the powers available under Article 4 or a local development order are sufficient to secure that the decision of the centre can be modified in the local context. However, the LGA briefing—the noble Lord, Lord Shipley, endorsed this—makes clear that these approaches are heavily bureaucratic, time-consuming and resource-intensive. If the Minister does not accept that case, I would be grateful if she would provide the evidence to the contrary. Accordingly, the briefing suggests that these approaches are rarely used. As I say, if this is challenged by the Government, will they supply evidence demonstrating that these approaches are used?
I have also added my name to Amendment 71 in the names of the noble Lords, Lord True and Lord Tope. This is a narrower amendment and requires that a new or amended development order that grants planning permission for development within the curtilage of a dwelling house should have approval from the local planning authority before being applicable.
My noble friend Lord Beecham has clearly argued the case for supporting the amendment and said why the Government’s position is inappropriate. The noble Lord, Lord True, has spoken previously about concerns in his local borough regarding developments in gardens and the challenges that this poses to the local community. Alarm bells were certainly set ringing by the November 2012 technical consultation on extended permitted development rights for home owners and businesses. Its proposals included doubling the size limits for single-storey domestic extensions, although for a limited period. Will the Minister let us know what is happening with that consultation, when we might expect the Government’s response, and whether, in advance of that response, we might at least have an understanding of the direction in which it is travelling?
Amendment 60B in the names of the noble Lords, Lord Tope and Lord Shipley, seeks to remove the requirement for the Secretary of State to approve all local development orders. We agree with this, but could this not also be addressed by secondary legislation? Is primary legislation required to do that?
On Amendment 60C, will the Minister please remind us what happens to the reports that are made under Section 35 of the Planning and Compulsory Purchase Act 2004? The amendment seeks to remove the requirement for those reports. What happens to the reports that are made and how do the Government deal with them? Is there any process by which the results of that are reported to Parliament?
Baroness Hanham
My Lords, that was rather a quick ending. I am grateful for this short debate, which I thought might take a bit longer.
The amendment tabled by my noble friends Lord Tope and Lord Shipley, and Amendment 71A in the name of the noble Lord, Lord McKenzie, have the admirable aim of giving local authorities the power to decide how to adapt nationally set permitted development rights to their own local circumstances. I am pleased to say that that power is already there. Where local authorities have concerns about the impact of permitted development rights locally, they are able to consult their local communities on removing those rights via Article 4 directions. I know that my noble friend Lord Shipley said that that process is complicated, but it is really up to local authorities how complicated it is and how long it takes. It is in a local authority’s hands; it has to consult for 28 days, but after that it can decide whether to confirm an Article 4 direction. Because there are concerns regarding potential compensation issues, local authorities can, if they give 12 months’ notice that they are going to consult on an Article 4 direction, always manage to avoid compensation requirements.
Where the aim is to extend permitted development rights locally, local development orders provide a quick and simple way to do this. After a slow start, the number of local development orders being put in place across the country is increasing. Local authorities are recognising the benefits of this flexible provision, which can be put in place through a simple and streamlined procedure. More than 30 local development orders have now been put in place in enterprise zones, and local development orders are contributing to growth by helping to speed up everything from small domestic alterations to major industrial development. Rather than being a cumbersome process, as suggested, local development orders work quite well.
Amendments 60B and 60C, tabled by the noble Lords, Lord Tope and Lord Shipley, are intended to make the local development order process even more straightforward. The amendments seek to remove the Secretary of State’s role in the local development order process and remove the requirement for local authorities to report on local development orders, with the aim of reducing burdens further. The Secretary of State only exceptionally exercises his powers to intervene in local development orders. In many cases, local authorities can proceed to adoption within a few days of submitting local development orders to the Secretary of State. However, that does not mean that we should not constantly be seeking to improve and simplify the processes under which development takes place.
Officials have already begun discussions with the Local Government Association with the aim of learning from the experience of local authorities about the best way of using local development orders. That experience is growing rapidly, and it is important to capture it in deciding whether and how local development orders can be improved, including in the ways that my noble friends have suggested. Given my assurance that local development orders are a perfectly reasonable way forward, I hope that my noble friends are willing to withdraw or not move these amendments. I have also given an explanation of how the Article 4 direction plays, or could play, a particularly big role in the control by local authorities.
I turn now to Amendment 71, tabled by my noble friends Lord True and Lord Tope—I am sorry they are unable to be here—and the noble Lord, Lord McKenzie, who has spoken to it. I appreciate the noble Lords’ wish to make sure that local authorities are able to take their particular circumstances into account when considering the operation of national permitted development rights. This is indeed a vital safeguard, because nationally determined rights will of course have different effects in different local areas. As I have already outlined, local authorities have this power now through the use of Article 4 directions, which they can implement themselves. However, I remind noble Lords that every time permitted development rights are removed, local people are deprived of the benefits that they offer and become subject again to the additional work and costs of putting in a planning application.
Extending development rights will reduce the bureaucracy and delays that home owners face when they want to carry out what remain, even with these revised proposals, small extensions. That applies to businesses also. This amendment would deny people those benefits on a much wider scale. It would fundamentally undermine the well established and popular system of permitted development rights, which allows home owners the freedom and flexibility to make the best use of their homes without getting bogged down in red tape. However, I hear noble Lords’ concerns and I am sure that we will return to this issue at a later stage, when perhaps other noble Lords who tabled amendments in the group are here.
The noble Lord, Lord McKenzie, asked about the consultation. It ended on 24 December and is being considered at the moment. I hope that we will have some indication of the response in due course. There is no fixed date for the announcement of the response, but I hope, given my explanations, that noble Lords will withdraw or not move their amendments.
Lord Greaves
My Lords, the Minister used the word “small” in reference to extensions. Does she understand and agree that what is or is not small depends to some extent on the size of the existing house and, particularly if it is an extension into a back yard, the existing size of that back yard?
Baroness Hanham
My Lords, I appreciate that proposals and applications for extensions will always be different because it will depend on the nature of the property—for example, whether it is terraced or detached. Permitted development rights are being removed for small-scale and reasonably small-scale developments.
Lord Shipley
My Lords, I thank the Minister for her detailed reply. She may be right to say that there will be a desire to return to some of these concerns on Report. For the moment, I beg leave to withdraw the amendment.
Baroness Hanham
My Lords, in responding to the noble Lords, Lord Greaves and Lord McKenzie, it may be helpful if I briefly set out why we are reforming the system for registering town and village greens. This explanation will take us through to the next group of amendments. In short, the reforms are needed to prevent the greens registration scheme being used to stop or delay planned development decided through the democratically accountable planning system. The changes will also protect the ability of local communities to promote or support development in their areas through consultation and decision-taking on planning applications and local and neighbourhood plans. Another aim is to reduce the financial burden on local authorities in considering green applications, and the costs to landowners whose land is affected by these applications.
Clause 13 inserts new Section 15A into the Commons Act 2006 which allows a landowner in England to deposit a statement and map with the commons registration authority, the effect of which is to bring to an end any period of use “as of right” for lawful sports and pastimes on that land. The noble Lord, Lord Greaves, very expertly went through what lies behind this clause. I will briefly say that under the current system, if landowners want to protect their land from town or village green registration, they may erect fences and/or notices to physically prevent access to the land. However, the courts have ruled that even taking such steps does not necessarily bring to an end any use “as of right”, in particular where fences or notices are not maintained in the event of damage or removal. Clause 13 will allow landowners to achieve the aim of ending use “as of right” through the submission of a statement. We hope that this reform will encourage landowners to allow recreational use of their land, safe in the knowledge that they can prevent the registration of their land as a green. That will then be of benefit to those who use the land, as well as to landowners.
The noble Lord, Lord Greaves, tabled Amendments 61, 62 and 63. As he explained, their intention is to ensure that, where a landowner makes a statement, notice is given to local people and other interested parties so that they are aware that the clock is ticking on the time that is available for making a town or village green application. Amendments 63A and 63B, tabled by the noble Lord, Lord McKenzie, would require that publicising the deposit of a statement should be mandatory.
In line with the statements made by the honourable Member for Sevenoaks in the other place, I offer the Committee the reassurance that we intend that, where a landowner statement is deposited with a commons registration authority, the authority will be required to publicise it. This will ensure that local people and other interested parties are made aware of the fact that a statement has been deposited. We intend to use the power to make regulations, set out in subsection (6) of new Section 15A, to make publication of the statement one of the steps that an authority must take when the statement has been deposited.
It is our view that the specific publicity requirements are best set out in regulations; it is not necessary to include such detail in the Bill. However, my officials will draw up those regulations in close consultation with key interested parties, including the Open Spaces Society and the Association of Commons Registration Authorities. The regulations will require that commons registration authorities take appropriate steps to ensure that local people and other interested parties are made aware of the fact that a landowner statement has been deposited.
Amendment 63 would ensure that a landowner statement under this clause cannot be made until regulations prescribing the detail of the process under subsection (6) have come into effect. However, there is already provision for Clause 13 and those regulations to come into effect at the same time. The commencement provisions in Clause 31 provide that the Government can commence Clause 13 at an appointed time, and I reassure the Committee that the reason that the clause will be commenced in this way rather than on a set date is to ensure that these provisions are not commenced until regulations are finalised. I hope that, with those reassurances, noble Lords will not press their amendments.
Lord Greaves
My Lords, I am grateful for that detailed response and for the Minister’s comments. I am also grateful to her for referring to Amendment 63, which I forgot to speak to. I thought that I had spoken long enough—and I am sure that the Committee did, too. That is my excuse, anyway. What the Minister said is exactly what my amendment would do, so I am very happy not to press it.
On the publishing of information when a statement is deposited with a commons registration authority, I think that the Minister’s response fitted the bill and that her assurance was okay. We will look at the regulations when they come out and, if they do not say what the Minister has just said, she will have to explain why—but I am sure that they will.
The only point I will make is that it is very important that the publishing of the fact that a statement has been made should be sufficiently local. Some commons registration authorities are big unitary authorities such as Northumberland or Cornwall, or big counties such as North Yorkshire or Lancashire. Simply publishing statements centrally or on a website will not get to the people who are using a piece of land in a village or town. It is very important that publication is sufficiently local so that somebody will pick it up and pass it on. With that comment, I am pleased to beg leave to withdraw the amendment.
Local Government Finance Bill
Baroness Hanham Excerpts(12 years, 3 months ago)
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Lord McKenzie of Luton
The noble Lord raises a point perhaps in jest, but there is a heck of a lot of detail in these regulations that is highly germane to some of the debates that we are going to have. To not have had the chance to review those regulations and plough through them in some depth before we were due to debate them is unfair. Just before I move on, I encourage the Minister to have a discussion with the noble Lord, Lord Freud, who, in relation to the Welfare Reform Bill, was very good at holding seminars and giving us good notice about the seminar meetings before the regulations saw the light of day. That is the more effective way in which to do it—and this is not just nitpicking. We are engaged in this process to challenge and press amendments, but we want to see what comes out of this system work as well as the Government do. On a number of occasions when we were looking at the Welfare Reform Bill, the input of my noble friends in particular made a difference and was recognised as having done so.
As my noble friend explained, the amendment refers to universal credit being included as income in devising council tax support schemes. It is really to highlight the potential interactions between universal credit and council tax support schemes and why they need to be addressed. The Minister will doubtless tell us that local authorities have to decide themselves, but my noble friend Lady Sherlock stated clearly why that should not be the case and why in this regard at least there should be a mandation on local authorities.
Since the amendment was crafted, we have had the benefit of some draft regulations, to which I refer, including the default scheme. My noble friend referred to the comments of the noble Earl, Lord Attlee, about simple systems. We now know that the default scheme has 155 pages of simplicity. As we on this side maintained in earlier debates, the creation of a fair benefit system is complex; the multiplicity of circumstances that have to be catered for are amply reflected in the draft default scheme. It is a measure of the challenge that local authorities will face. Whether local authorities that cannot carry the full cost of a local scheme start with the default scheme, as the noble Earl suggested that they might, or start from the bottom up, is obviously a matter for them. But the default scheme demonstrates the range of issues that local authorities will have to weigh and the potential scope of the evidence base on which they will need to consult to justify their schemes. Clearly, local authorities could import chunks of default schemes, particularly round the national boundaries of the scheme, into their local scheme. But this hardly makes it a local scheme. The default scheme sets out some information and how it will deal with recipients of universal credit; administratively, as my noble friend said, it will tap into the assessment of applicable amounts, income and capital, compiled for universal credit, and will modify them. The principle is that universal credit is taken into account as income but netted for any childcare and housing cost elements.
Some issues have already come from the draft regulations in the time that my noble friend has been able to spend on them. She has identified the confusion between child costs and childcare costs.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
I can confirm that; it might save the noble Lord another six lines of his speech. Childcare costs is correct.
Lord McKenzie of Luton
Yes, indeed—but the documentation that we had was confused on that matter, which is why the diligence that my noble friend brought to bear was important. Also there was the issue around the actual rates. Again, I agree with my noble friend that this is not to be overly critical of the team. These are complex matters usually dealt with by DWP officials whose whole life is around benefits. That is what drives them.
So far as housing costs are concerned, this potentially deals with the point that, absent such a change, anyone claiming the housing component of universal credit would see their council tax support significantly reduced or even eliminated.
So far as childcare costs are concerned, the IFS points out that in certain circumstances those previously on housing benefit will see their effective support for childcare costs reduced. I have not had a chance to look at that in depth in the regulations but perhaps the Minister can say whether that is the situation on the basis of the draft scheme that we have.
My noble friend rightly focused on the issue of work incentives and the marginal tax rates. Including universal credit in the default scheme as income would appear to avoid the very high overall withdrawal rates of 90%, higher for unearned income, which could be in excess of 100%. But a withdrawal rate of 81% rather than 90% for effective marginal tax rates is still high.
One way of avoiding that would be to avoid overlapping withdrawal of benefits, in particular for council tax support to be withdrawn by the time that universal credit is withdrawn. Can the Minister say what modelling around this issue, clearly on the basis of current understanding of allowances, income disregards and tapers, has been undertaken for the default scheme? What is the range of effective marginal tax rates that flow from the proposed scheme? Who is affected?
We also clearly support Amendment 83, which is to do with consultation. There is a timing issue around this. It is clear that more detail, possibly the final detail, of universal credit will not be known until October this year. Even then, that may not be the final detail. That is important for local authorities devising their schemes. We know that if local authorities are to hit the timeframe of having a council tax support scheme in place by January next year, they would have to be well under way with their consultation by then. Therefore, if further information comes through around universal credit, particularly given its significance over a number of areas, it must be right that local authorities have to consult again on that.
The Committee will see the difficulty with the timeframe. If local authorities are consulting now and in August, September and maybe October on their current understanding and if things change in October when more detail is known, the practical opportunities for them to consult again will be restricted, but it is important that they do. It brings us to an amendment in the name of the noble Lord, Lord Jenkin, that we will come to later and that seeks to remove the restriction on revised schemes having to be promulgated by January of the preceding year. Effectively, as I understand it, the current arrangement does not give any scope for in-year adjustment of a scheme when new information comes forward—whether that is in relation to universal credit or anything else.
However, we know for certain that more precise information about universal credit will come through later this year, but at a point in time when most councils will have already started—if not completed—their consultations on the scheme without that extra information. It is important that it is made clear to local authorities that they should consult around the consequences of universal credit when that detail is known. Somehow, in the timetable for these processes, we need to build in for them the scope to do that.
Baroness Hanham
My Lords, I thank noble Lords for both those contributions. From the outset, I must say that I am surprised at the criticism that the noble Lord has levied across the Room on the timing of the draft regulations. The statement of intent has been out since May and it is quite indicative of what would happen. The draft regulations are in fact almost identical to those that currently support council tax benefit—there are probably 196 of those. I appreciate that the noble Lord finds the timing of this difficult but while I am sure it is necessary for us to discuss some aspects of those regulations here and to get the principles right, local authorities will already be well under way with what they are producing for their schemes.
Lord McKenzie of Luton
Can the noble Baroness then specify the extent to which the default regulations before us actually differ from the current detailed arrangements? Reference was made to the statement of intent—yes, but that is a very broad document and does not in itself set out any detail. It falls far short of the information you would need to devise an effective and important scheme.
Baroness Hanham
But even so, local authorities have been waiting for and expecting these regulations, and they have started off. Also, on consultation, they are now entitled to do less than the 12 weeks—that is in the Bill—so they can curtail or tailor their consultation to different timescales. Moreover, local authorities are far better equipped and far further on than noble Lords opposite are giving them credit for. I have spoken to quite a lot of local authorities, and if they do not already have their scheme in embryo they are all just about there and about to undertake the consultation. While I do not mean any discourtesy to this Committee about the regulations, the most important aspect of this now is that local authorities are getting on with what they are doing and while some may find some difficulties, most are making a good fist of it.
The noble Lord referred to my noble friend Lord Freud. He will appreciate that up until now it has not been entirely in our gift to have discussions since the regulations were published. I do not know the timing for this Bill when we come back but perhaps I can give the noble Lord an undertaking that if it is not considered in the first week, we will make arrangements to have the discussions he has asked for before we get to Report. We may find that helpful and even if there is a day, we will make sure that we do it on that day. I hope that is all right.
I have clarified to the noble Baroness that we were referring to childcare costs; she was quite right to say that. While I am picking up on her questions, before I read my reply, I should say that the universal credit rates are indeed last year’s and will be updated in November, which is in line with the normal uprating procedure in the Department for Work and Pensions for this year.
Baroness Sherlock
I want to be really sure that I understood that. Separate from the uprating, is it the intention that the rates will be the same as those that apply at the time? For example, if it were starting this year it would be the 2012-13 rates and if it were for next year it would be the 2013-14 rates, which is slightly separate from the uprating point.
Baroness Hanham
My understanding is that the rate will be this year’s, uprated. I hope that covers that point. I think the other question that the noble Baroness asked me was whether the very poor will still get the most. The answer is yes, because their income will still be very low, so this should work.
Baroness Sherlock
I am terribly grateful to the Minister for indulging me in this. These are the kinds of questions that I am wrestling with and that I therefore suspect others who read the record will be. It is not just about whether the very poorest will get the most but whether somebody on the equivalent of income support, for example, will get maximum council tax support under the default scheme. Will they get 100%?
Baroness Hanham
The answer to that is yes. Local authorities have been asked simply to take those who have council tax benefit already and those whose applications have been made already and to transfer them on to the new system.
The noble Lord, Lord McKenzie, asked about housing benefit costs. This relates to applicable amount and income so that it does not skew the award. We will be happy to write on this matter, which, judging by the noble Lord’s face, would be a very good thing. We are continuing to work with the Department for Work and Pensions to develop the treatment of universal credit as these regulations are finalised. There is still work to be done, but we will write to the noble Lord and give other Members of the Committee a copy of that letter, as we have done previously, so that, if we have to have discussions before the next stage, we will have the answers.
Let me read the replies that I have, as we need to put them on the record. Some of this will answer the questions that have been asked and some of it will not, but it will show what we thought the whole question was really about. Amendment 79B seeks to clarify that income from universal credit can be taken into account in determining eligibility for council tax reduction. We touched on this issue in the previous Committee session, when my noble friend Lord Attlee explained that, while local authorities would be free to take universal credit income into account as they saw fit in their local scheme, the Government would be prescribing how this income would be treated in the default scheme. I am pleased to confirm that the regulations are there—noble Lords have seen them.
I think that it would be helpful to explain paragraph 2(2) of new Schedule 1A of the Local Government Finance Act 1992. This is an illustrative provision, intended to show that local authorities can define the classes of person entitled to reductions by reference to such matters as a person’s income and capital and the income and capital of any other person who is resident in the dwelling. The many precise types of income that may be taken into account in relation to council tax benefit are, as the noble Baroness will know, currently listed in regulations. The draft default scheme regulations confirm that this will still be the case in future and, in relation to the default scheme, make it clear that universal credit will be among the types of income to be taken into account. Of course it is right that references to specific benefit incomes should be in regulations given the extent of the detail involved.
The noble Baroness may be seeking assurance on the way in which universal credit income will be able to be taken into account in calculating future awards under the default scheme—that is exactly what she was doing. Perhaps I could try to reassure her further than I have been able to do so far. Universal credit is a working-age benefit and it will normally fall to local authorities to design how income from this award will be taken into account in local schemes for working-age claimants. However, paragraph 4 of new Schedule 1A of the Local Government Finance Act 1992 requires the Secretary of State to make regulations providing for a default scheme. This will come into effect for any authority that has not made a scheme by 31 January 2013 and is to be in place for the financial year 2013-14.
As the noble Baroness will know, there are pathfinders for universal credit, which will commence in April 2013, and the migration to universal credit will commence in October 2013, so it is right that the default scheme should make provision for the treatment of universal credit income, although it will not be relevant to start with. The regulations for the default scheme set out how we intend to treat universal credit income under that scheme. As I said, we will continue to work with the Department for Work and Pensions on the detailed approach. However, we believe that this provides a clear general indication of how we intend to take universal credit income into account in the default scheme. The draft regulations explain that a person in receipt of universal credit will have a means test applied.
Previously, applicants of three benefits being replaced by universal credit—income-based jobseeker’s allowance, income-related employment and support allowance, and income support—would automatically have received 100% council tax benefit. However, universal credit will not distinguish, in the way that those benefits did, between those who are in work, and those who are out of work. This is an important part of the Government’s welfare reform agenda, ensuring that the return to work does not result in benefits dramatically dropping away, so that work pays and is seen to pay.
Claimants will be means-tested, using and appropriately modifying the assessment of income made for the purposes of universal credit. Broadly speaking, after the application of this means test, those who currently get 100% support will continue to do so. Those with a higher income will have their support tapered, as at present. So effectively, there will not be much difference. I can confirm that, in this case, universal credit income itself will also be taken into account, as I have said.
An individual in receipt of universal credit will already have undergone a complex Department for Work and Pensions assessment of income. It is proposed that, to reduce bureaucracy and red tape, this universal credit income assessment should be reused in the means test for council tax reduction, with certain appropriate adjustments for the calculation of council tax reductions; for example, the council tax reduction income disregards will be applied.
It is also envisaged that the DWP universal credit assessment of what the person needs to live on will be used in the means test in the form of the universal credit maximum award, again with some proposed adjustments to take off the housing element, which is disregarded under the existing council tax benefit system. That matter was raised by the noble Lord opposite. Final figures will not be required to finalise the default scheme regulations, as these refer to elements of universal credit award and calculation, rather than specific amounts.
I have answers to some questions that the noble Baroness asked me, but I should never have too many pieces of paper; they are a disaster. Our stated aim is that the default scheme should be as close as possible to the existing council tax benefit scheme. I can confirm that we are also pursuing this policy by looking to achieve, through our regulations, equivalence between the applicable amount in council tax benefit and maximum award in universal credit. It is already well known that the elements that make up the universal credit maximum amount and the elements that make up the council tax benefit applicable amount will have some broad equivalence. We continue to work closely with the DWP on this as well.
Clearly, the exact rates for each element of the universal credit maximum amount have not yet been finalised. The Department for Work and Pensions explanatory memorandum for the Social Security Advisory Committee, published in June, states that at paragraph 42. Should it, ultimately, be the case that the rates awarded to an element were different in universal credit, it would be a simple matter for us to adjust that by topping up the relevant element of the maximum amount so that it was equivalent to the council tax reduction applicable amount. That would still relieve local authorities of a considerable additional administrative burden in which they would otherwise be involved.
The draft default scheme regulations make clear the Government’s intention that local authorities in their schemes should be able to count universal credit income as a type of income to determine who is in a class. It is not necessary to amend paragraph 2(2) of new Schedule 1A to refer to universal credit, as authorities may already take this into account when determining the class of person entitled to a reduction under a scheme. Furthermore, it is not practical. If we were to refer specifically to universal credit in this provision, we might also need to refer to other individual benefits and types of income that may be taken into account. That would entail introducing references to myriad other types of income on the face of the Bill.
Amendment 83 would extend the requirement for local authorities to consult on their schemes so that they were required to do so under the current benefit structure or under universal credit. At present, council tax benefit is centrally prescribed. It is not clear to me what purpose a requirement for authorities to consult on a centrally prescribed set of requirements would serve. We have been clear that council tax support will not form part of universal credit in future, so a requirement to consult on schemes under that structure similarly does not seem needed.
The noble Baroness may be seeking to make clear that the consultation should explicitly seek views on the interaction between their proposed scheme and other current benefits, or the interaction between the scheme and universal credit. This is very sensible, but it does not require regulation. Local authorities are already required to consult on their schemes; we have been clear that we do not intend to prescribe how this consultation should operate, as local authorities routinely consult on matters and have settled policies and procedures, which we expect they will continue to follow.
I recognise that there is a great degree of interest from Members in this Room about how local schemes will take universal credit into account. I hope that some of the responses that I have given will provide greater clarity on that. We can perhaps discuss that before Report and have a proper session on it.
Local authorities’ schemes will be subject to consultation and authorities will need to be prepared to defend their schemes. Members in both Houses and from both sides of the House have expressed their support for the principle of localisation. We trust local government to administer the key services that will make a crucial difference to people’s lives in relation to benefits.
I hope that with that plethora of explanation, the noble Baroness will feel able to withdraw her amendment.
Lord Greaves
I may be the only person in this Committee who has not completely understood everything that has been said. If that is the case, I apologise. My noble friend the Minister seemed to say twice that under the default scheme people of working age who currently get 100% council tax benefit would continue to get the 100% reduction under the new scheme. Is that what she said? Under the default scheme, where is it proposed that that should be paid for, given that there is a 10% cut across board that does not apply to pensioners—and therefore it might be up to 20%? Then there are vulnerable people. If in addition to that people who currently get 100% council tax benefit continue to get that 100% reduction, will the cost of that fall on the remaining people of working age who are means-tested and get part council tax benefit, or does the council tax benefit assume that the council finds the money in some other way?
Baroness Hanham
I think that the last point that the noble Lord made is the right one. We have been at pains to point out that council tax support will come into the general business rates retention scheme support. The local authority will have to make its decision based on its entire income as to how it funds and creates support for council tax benefit. It is not restricted only to the amount of council tax benefit support related solely to that, which will come from the benefit system.
Lord McKenzie of Luton
Perhaps I could follow up on two points. I do not think that the Minister dealt with the question of consultation and timing. On a couple of occasions, the expression was used, “We continue to work on the detail of universal credit with the DWP”, and that is fine and we understand. But if when that detail emerges it has consequences for the schemes that local authorities are proposing, how will that fit into the timeframe? They are consulting now, they have to have a scheme in place by January, they have to engage with upper-tier authorities first and have two rounds of consultations. If they have done that on the current understanding of the default scheme as adjusted and of universal credit but the detail changes in a way that might be significant, how can they feed that into their final schemes?
Is it not right that, as proposed, you get a chance every year to change your scheme but you have to have that done by January in the preceding year? As a practical matter, the timing does not seem to fit, does it? If in October you get a raft of new information and presumably there is support for a further round of consultation on that, it will make it impossible to meet those deadlines—or extremely difficult. If authorities are consulting now to try to get the thing done in time, the timeframe becomes pretty impossible, does it not? That was one question—the need to go again on consultation because of new information.
The broader issue about being able to change the scheme in-year is one that we will come on to in a later amendment, but what work has been done by the Government either by the DWP or CLG about the interrelation of tapers on the basis of the information that we have at the moment—the applicable amounts and income amounts in the default scheme and what we know about the components of universal credit? How do those tapers currently correlate? Do we have much of an overlap, if any, between the withdrawal of the council tax support taper before you get to that position on universal credit? What is the crossover? What evidence do the Government have and what work have they done to try to evaluate that? That is also key to effective tax rates and therefore work incentives.
Baroness Hanham
My Lords, I am not sure whether the noble Lord would expect me to answer his last point, which was about modelling, today. That has largely been done by the DWP, and it would be more effective if I wrote to the noble Lord giving details of that and did not try to muddle my way through today. We ought to do it properly.
On the question of consultation and the scheme that local authorities are working on, I said very clearly that the current council tax benefit scheme is almost transferable into the one that they will have to operate from January. People who are already receiving council tax benefits and those in the pipeline will automatically be put in, so they will not require any more work done on that. As far as consultation is concerned, I have also dealt with this. The consultation does not have to be 12 weeks. Equally, say if you just have one consultation going out for your scheme, that will be back before the 12 weeks are up. Where there is a precepting authority involved, this is going to have to be a joint scheme and one would expect discussions to take place, or to have taken place, before the scheme was put out for consultation. It should be something that goes smoothly and seamlessly between the two.
We are satisfied that the work that has been done, the way this has been translated and transferred, and the amount of information that is available is absolutely sufficient for local authorities to be working up their schemes now.
Baroness Sherlock
At the risk of prolonging this, I wish to respond briefly. Although it is true that if a local authority were to implement the default scheme as it is now and to find the saving elsewhere then, on the basis of the assurances the noble Baroness has given the Committee today, individuals at the bottom would find themselves unaffected, but that will only be the case if the authority is able to find the money. A number of authorities clearly may decide not to do that, and they will have to make changes. Therefore, nobody can be assured from today that they will be protected from changes. I do not think the Minister is in a position to give that assurance. If she is, I invite her to intervene on me now and give it. I am delighted to pause.
Baroness Hanham
We are able to give that assurance because means-testing will be carried out so that people who have already been means-tested are going to transfer without any hitch or halt.
Baroness Sherlock
I am so sorry; this really is not false modesty on my part. If the authority I live in—and this is just for the sake of argument—decided it could not afford the default scheme and it took on another scheme then obviously the Minister is not in a position to give that assurance, is she? Or is she, even in those circumstances?
Baroness Hanham
If it takes on the default scheme, it takes it on exactly. If it has to use a completely different scheme, it would have to consult on it and indeed it might not be able to give exactly the same benefits.
Baroness Lister of Burtersett
I am sorry to prolong this, but I am getting a bit confused—well, not really, because I was confused to begin with. If there were a modified version of the default scheme, would that still count as the default? I think my noble friend is saying that some authorities will not be able to afford the default scheme as it stands because the 10% cut has got to come from somewhere, so if they take it out of the default scheme, would that still be called the default scheme modified or would it be considered a different scheme, which they would have to consult on?
Baroness Hanham
The default scheme is the default scheme, and the default scheme comes into operation in two ways. One is that the local authority does not have a scheme by the time we get around to 31 January next year, in which case the default scheme would be imposed. The second is that it can choose to use the default scheme as its scheme, and that will then still be the same. If it then does not have enough resources, it has to make the judgment as to where it gets those resources from. As I already explained to the noble Lord, Lord Greaves, that would not necessarily come just from the council tax support; it would come from its wider budget and whole programme.
Lord Greaves
My Lords, I think I understand this now and I am certainly beginning to look at this whole scheme in an entirely different light. My understanding in the discussions we had in previous meetings of this Grand Committee was that lots of authorities would be operating on the basis that everybody of working age would be means-tested and would end up paying something. We discussed at great length two or three Committees ago that this would result in a lot of people only paying very small amounts of money—£1 a week, and so on—and the difficulty of collecting this. I know one thing definitely and have been told another. I definitely know that my own authority is looking at a scheme that involves all council tax payers paying something, and I am told that that is typical of the schemes being looked at, certainly by councils in our part of the world.
We might find out in the next few weeks, but a large number of authorities will probably be surprised to learn that the default scheme involves 100% benefit or reduction for people who get it at the moment. The schemes that are being looked at in many cases at the moment do not involve that, which will mean that the authorities then have to look at where they will find the money from. On my previous intervention, the Minister said that the money would not just come out of the council tax reduction money that comes from the Government. We understand that; it is being cut by 10%. It is not being cut for pensioners or vulnerable people as defined in each area, and if it is not being cut for people who are already on 100% reductions that is another burden on somebody else. It either comes from the rest of the working-age population, whether in benefit or otherwise, who will be means-tested, or, as the Minister rightly said, it has to come from general council resources.
Some of us will have to make these decisions, such as the noble Lord, Lord Smith of Leigh, who is not here today, and we do not have those extra resources. We are desperately looking at ways of reducing our councils’ spending overall to comply with whatever grant settlement we get next year, and it is simply not going to be possible to say, “Here’s another burden that we’ll just take into general resources”. I do not believe that a lot of authorities will give 100% benefits to people who get them at the moment, and that is a major worry.
Baroness Hanham
My Lords, we are still on the default scheme. If the council is required to adopt the default scheme, the benefits remain at 100%. If it takes on the default scheme as a local scheme, it will make its own adjustments to whatever it believes that it can do. If it sets up its own scheme, the 100% will only come about for a limited number of people on very low income, and it can then taper it up and down depending on people’s income because they will be means-tested at that stage. I am trying to make it clear that the default scheme is the legal backstop for local authorities that do not have one on 31 January. They do not have to adopt it, but they can as their own local scheme. I hope that I have contributed as much as possible on this matter.
Lord Beecham
I hope not, because I am afraid that I have another question. Assuming that, as the noble Baroness says, the scheme operates as a default scheme—assuming that people have not been able to consult and do not have their own schemes, so the default scheme is in position—the 100% people will remain at 100%. To what extent does the default scheme provide for other categories of people whose benefits would, presumably, therefore have to be adjusted? Is there flexibility within the default scheme—I confess that I have not ploughed through it—to see the impact on other people, or would there be a requirement to provide the current proportion of benefit to those people? If so, the financial problems to which the noble Lord, Lord Greaves, referred would be compounded.
Baroness Hanham
My Lords, if the default scheme is taken on as the main scheme and not a legal backdrop—
Baroness Hanham
I understand that the situation is as it would have been had the council not been changing. The default scheme is the current scheme—the current council tax benefit scheme. That will simply transfer and people will be treated the same way for a year unless it is reset the following year. If it is the local scheme, it does that itself; then it can make decisions about the amount that is reduced for council tax benefit.
Baroness Sherlock
My Lords, I am glad that we have cleared that up. My understanding, therefore, so that we are all clear, is that local authorities have two choices. They either adopt or have imposed on them the default scheme or they create a scheme of their own devising, which may or may not bear some relationship to the structure of the default scheme.
The amendment is actually targeted at the second group of authorities. I have probably confused things by asking some questions so that I could better understand the default scheme, but in fact the amendment is targeted at those authorities that either do not choose to adopt the default scheme or on which it is not imposed. This amendment is aimed at those authorities that devise their own schemes and it was intending to say that they should be required to take universal credit income into account in any means test that they go on to apply to determine entitlement on the basis of income.
The case for that is very strong. Nothing that has been said today in any way diminishes it. It is in fact strengthened, if anything, by the intervention of the noble Lord, Lord Greaves. There is a real danger that in attempting to square the kind of circles that have been described, an authority will devise a scheme without having a full understanding of the consequences on either individual incomes for universal credit or of the national position in terms of what the Government want to do. That is problematic.
The Minister’s argument, finally, that it would not be practical to name universal credit because one could name lots of other benefits simply does not hold water. In fact, the purpose of this is not about the individuals who are on it: it is about the national policy conference. The reason I am asking this specifically is to enable the Government to make judgments about universal credit—a single integrated benefit for people of working age—to be able to do the things that, at some considerable length during the passage of the Welfare Reform Bill, we were told universal credit would do. The amendment simply seeks to enable that policy aim to be realised. The case is very strong.
Baroness Hanham
My Lords, this has been an interesting discussion. The trouble is that it has been negatived to some extent by the fact that there are already duties on local authorities, as described. With regard to Amendment 80, local authorities already have a duty to consult persons whom they consider likely to have an interest in their schemes under paragraph 3(1)(c) of new Schedule 1A to the Local Government Finance Act 1992. That is inserted in the Bill by Schedule 4, so that is already there. I do not think we can start setting out on the face of the Bill all those people and organisations to whom local authorities might want to put their proposals, so the amendment is not necessary. I do not say that it is not a sensible point; it is, but it is not necessary.
Of course, local authorities will have to consider carefully the number of potential applicants when they design the scheme, so that they have a sound basis for their financial planning. However, I do not think, and I know that it will not be accepted, that creating a requirement for local authorities to do so would be particularly helpful. To create an additional requirement would duplicate what should already be standard good practice in their financial management.
The amendment also requires authorities to publish as part of the scheme the steps that they will take to ensure that people are informed of their entitlement and what assistance they will offer. The noble Lord, Lord Shipley, spoke in favour of that. Sub-paragraphs (1) and (5) of paragraph 2 of new Schedule 1A to the Local Government Finance Act 1992 already require authorities to set out the classes of person who are entitled to a reduction and the procedure for making an application. That seems to cover more or less what the amendment is about.
In fact, local authorities will want to ensure that those who are eligible for support claim what they need to, so that they avoid going into arrears with their council tax, which would not help them or indeed the local authorities. Again, to stipulate how local authorities should do that is to put an unnecessary requirement on them when they are already responsible for the administration of council tax generally and the provisions that already exist.
We are absolutely clear—and let me make this very clear today—that people should claim what they are entitled to. It is absolutely true that not all eligible pensioners or people who are eligible for benefits take them up, and there are a number of reasons for that that I am sure noble Lords could explain. One of the reasons is the stigma attached to council tax benefits. Some people say that they do not particularly want their personal circumstances divulged, however beneficial it would be for them, and not everybody knows how to tackle what is sometimes quite a complicated system, although I accept that there are many organisations available to help them. Under the Bill, those organisations will be available to take claimants through the system, and they will. There is no barrier to people making a claim.
As it designs its scheme, the local authority will have to take into account the fact that it may not have all the claimants available to it to start with. Part of the reason for putting this scheme of business rates retention and council tax benefits into the hands of local authorities is that it is expected and hoped that local authorities will continue to encourage enterprise and business, as many local authorities do at the moment, to get people out of benefits and into employment. We hope there will be a balancing act between those who need and are entitled to benefits and those who are perhaps just working their way through them on a temporary basis. However, how its scheme takes care of that is a judgment for the local authority.
When I was speaking earlier, I pointed out a fact that is relevant here: between 1997-98 and 2009-10, council tax benefits doubled. We are not talking about insignificant sums of money but about huge sums of money. We are trying to ensure that we get unemployment down so that those benefits are not required in the same way, but the 10%—
Lord Greaves
I am again seeking information as I do not know as much about this as other members of the Committee. When the Minister says that council tax benefit doubled over that period, is that before or after taking account of inflation? It obviously makes a great deal of difference.
Baroness Hanham
My Lords, it is after taking account of inflation, so it is a very substantial increase. The 10% saving across the piece in the council tax benefit scheme is making a small contribution to help tackle the deficit.
Localising support for council tax increases financial accountability and helps to make local authorities fully responsible for decisions over council tax levels. They now have a requirement to make sure that that is transparent to people who are claiming it and to people who are helping with it.
Amendment 81 would not only prevent a reduction in funding to local authorities. It could, in fact, lead to an increase in government expenditure because it would require the Secretary of State to provide funds to cover all eligible claimants under a new local scheme, however the scheme had been designed. One of the things that would be quite difficult to work out is how many people are eligible for the benefit if they do not apply for it. The amendment is simply not credible or affordable. The saving scored in the spending review has to be delivered, and local authorities are charged with finding ways to deliver that.
It may be helpful if I tell noble Lords what they already know: local authorities will receive the same amount of money this year to support council tax benefits as they received last year, minus 10%. That will be fixed for seven years until the next business rates reset. Meanwhile, if they can get the number of council tax benefit claims down, if they can get people into employment, if they can make a scheme that goes across the whole of their business front, then from now on they will know how much they will get. It is extremely helpful to them because they can always work within those parameters.
Lord McKenzie of Luton
Will the noble Baroness clarify, with reference to this year and last year, precisely which years we are talking about?
Baroness Hanham
It is 90% each year for seven years, and that will start in 2013-14. It is based on the estimate for 2013-14.
Lord McKenzie of Luton
My Lords, I do not propose to detain the Committee long on this amendment, although it is influenced by the discussion we have just had about seven-year fixed resources. It deals with situations where the Secretary of State has agreed that an in-year payment is to be made under the safety net provisions of the business rate protection scheme. Such payments are to be made under regulations to be promulgated by the Secretary of State. The amendment requires that a payment on account under the safety net provisions should also be a trigger for consideration of additional funding under the council tax support arrangements. The point is obvious. As we have discussed before, the localisation of council tax support switches risk from central government to local authorities. That requires local authorities to estimate the effect of their local discount schemes, including take-up, on their band D equivalent numbers.
The challenges that that presents to local authorities in budgeting have already been discussed. In most instances, a significant, possibly catastrophic, reduction in the business rate base will have other consequences, which are likely to include employment—or, more likely, unemployment—consequences. Redundancies will place strain on the benefit system and certainly on any local council tax support scheme. Some of those events may be predictable, but some will not. They may be the result of decisions taken continents away. Some councils may be able to take the strain; others may not. All that the amendment would provide is a process which triggers consideration of additional funding being made available in-year to support unpredictable claims on council tax support schemes. I beg to move.
Baroness Hanham
As the noble Lord said, this amendment is shorter than some others and would expand the scope of the business rate safety net into the council tax support scheme, so that there would effectively be a safety net for benefit, as there is for the business rate. The provisions we have made for the business rate safety net will ensure that no council’s retained rate income falls by more than a set percentage below its baseline funding. Business rates provide a significant revenue stream for local authorities, and unexpected volatility of rates could have a significant impact on an authority’s budget, so it is right that we make that safety net available.
However, revenue from business rates is of a different order of magnitude from the cost of council tax support. In 2010-11, the contribution of business rates to the pool—that is, the net yield after allowances for collection costs—was more than four times the cost of council tax benefit expenditure. During the passage of the Bill, comments have been made about the impact of a large local employer closing down—the noble Lord used that as his example—on business rate revenue and demand for council tax support. There is a distinction between the two. Although there is a clear, direct link between the closure of a business and a reduction in business rate revenue, the impact is likely to be more complex in relation to demand for council tax support. To take one example, employees may not be residents of the borough or the council area; they may come from a much wider area, in which case that will affect other local authorities instead.
Councils have greater control over their council tax support scheme than over business rates, although they are encouraged to make sure that those increase. They will be able to design their scheme to reflect their local circumstances and, particularly, to work with their major precepting authorities to agree an approach to managing risk. Authorities will be able to plan and manage council tax reductions carefully, just as they already do for many other vital local services. Mechanisms are already in place to share the effects of a reduction in council tax collection rates between billing and major precepting authorities. They will enable financial pressures which result from increases in demand for support to be shared. In addition, we are making provision in the Bill to enable billing authorities to arrange with major precepting authorities to vary the amount of precept to be paid in-year to reflect any shortfall in council tax receipts. This could help to protect billing authorities from financial pressure in-year, until they manage to get the matter sorted out.
I hope that with those remarks the noble Lord will feel able to withdraw his amendment.
Lord McKenzie of Luton
I thank the Minister for her reply. Of course, I will withdraw the amendment as we are in Grand Committee. I accept entirely that the arrangements require an approach to managing risk and that, particularly in the early years, they will be new challenges for local authorities. They always have to manage risk, but the particular risks that come with the business rate retention and council tax support schemes are new and additional risks.
The Minister said that local authorities had greater control over their council tax support schemes. I accept that point, but they do not have that in-year control. One point that we will discuss at a later stage is the ability of the local authority to change and revise its council tax rebate scheme. My understanding is that it cannot do that in-year. If it can, I would be interested to know that. Even if it could, that would not necessarily help with the problem that we are trying to focus on here, when you have a catastrophic situation and a closure leads to big reductions in local employment. I accept entirely the point that it would not just be people in a particular locality; big factories, so far as they still exist, are likely to draw in labour from a number of authorities. In Luton about a decade ago when the Vauxhall car plant closed we saw what impact that had on the local economy. It would have had an impact on the council’s finances under these new arrangements. Having said that, I think that there is only so much merit in pressing the case and, for the time being, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, this has been a good debate. We heard a very powerful speech from the noble Lord, Lord Best. We have acknowledged in this Committee, on the Welfare Reform Bill and other committees his principled and powerful leadership on a range of important issues but I am sorry to say that we cannot travel the whole of the journey that he outlined for us today on this particular occasion.
I will come to Amendment 93ZA shortly, but our starting point is different. Although we have supported localism across a whole range of areas, our position on council tax support or council tax benefit is that it should be part of universal credit. If that is not possible, it should be a national scheme. That is the right way to structure it. Therefore, anything that moves us away from that position creates difficulty for us.
If Amendment 82 is carried, it would not only deal with the issue of removing the powers in relation to pensioners, there is a whole range of other issues that it would cover. We should look at the draft regulations, which we now have, which cover things such as temporary absence from the UK, persons treated as not being in GB, persons subject to immigration control and a whole raft of things which if central government do not put down the rules, would be pretty nigh impossible for local authorities to deal with consistently. Whatever improvements there may have been for pensioners, we do not want to diminish their current living standards. We are talking about those on council tax benefit: we are not talking about rich pensioners so far as this is concerned.
Amendment 82A in the name of the noble Lord, Lord Jenkin, is simply about consulting. It seems entirely reasonable: one could never really object to a process requiring consultation. The noble Lord, Lord Jenkin, also spoke to Amendment 88B. When I referred to it earlier, I had a slightly different take on it. His particular point is its interrelation with potential council tax referendums and how that timing works. Like the noble Lord, I would be interested to understand the Minister’s response on that. But there is another issue, which we touched on earlier. If you need to fix a local council tax support scheme in-year because you realise that something is going wrong—because you do not have the data right or you have the wrong amounts—what is the process for being able to change that in-year rather than having to wait for a year and change the scheme in January to operate in the subsequent year? That is a problem.
On Amendment 88D, if we are talking about transition provisions between council tax benefit and localised council tax support, there must be a role for the Secretary of State or for those currently responsible for the benefit system. Part of it would be how you would deal with back-dated claims—for example what happens across the dividing line? That cannot just be left to the individual decisions of local authorities. Surely, central government is entitled to have a say in that because it impacts on their bit of the council tax benefit system.
We had a preview of Amendment 93ZA from the noble Lord, Lord Best, on Monday. As we know, the discount is currently set at 25% in legislation, but with a power for the Secretary of State to change the percentage. It is not one of those things currently subject to local discretion. The origins of the policy set out in the helpful note provided by the Lords Library—and endorsed by my noble friend Lady Hollis, who was involved in creating the legislation at the time—explains that council tax consists of two elements: 50% being a property element and 50% a personal element. The personal element assumes two adults resident in a property. In circumstances where only one is present, a 25% discount is given. That is how it is derived.
The noble Lord argues for the setting of the percentage to be devolved to local government, particularly the billing authorities, consistent with the Government’s localism agenda and the provisions to them of powers to settle discounts for empty properties and second homes. Any change from the 25% discount might be argued to undermine the integrity of the council tax system, although in the context of broader things this might not be the most important issue. If the starting integrity of the system is to change, should that be done on an ad hoc basis at local level or does the responsibility rest with the Secretary of State? At local level, there is no opportunity to redistribute on the basis of need the extra revenue that change in the discount would engender.
Noble Lords have, as we have, referred to the IFS report, which analysed the proposition of a reduction of the discount to 17.5% but with pensioners being protected—and seemingly no other vulnerable groups being protected. It is not a proposal: it is simply an example of how it might work on the basis that the change would garner revenues that in total would match the 10% cut that the Government seek to impose. But that is not distributed evenly between local authorities. It would raise, for example, 14% in London and almost as much in the south-east, but only 8.5% in the north-east. On the IFS example, 20% of people in the poorest income decile would lose out. The big losers would be single people and lone parents in work.
So there are issues about going down this path, and those issues would be exacerbated and much less comprehensively addressed if done on an ad hoc basis at individual local authority level. We have not had the opportunity to study the distribution analysis of the noble Lord’s proposition, which we should clearly do before Report.
There may be a case for the Government to address the appropriateness of this relief and if they are to do so, to see how the revenues might be redistributed on the basis of need. But any change to that has to be done at national level. Dealt with at individual local authority level, it could certainly generate inconsistencies and distributional effects that we would not, overall, be comfortable with. I am afraid that on this particular amendment we are not able to follow the noble Lord.
Baroness Hanham
My Lords, I thank all noble Lords who have taken part from all sides in debate on the amendment. I hope that I will be able to provide some reassurance as we go through that all is not quite as terrible as has been put forward.
Before discussing the detail of these amendments, it might be helpful for me to set out the Government’s intentions in relation to regulations. On regulations in general, it is not our intention to prescribe closely the operation of local schemes in relation to working-age claimants. The Government have said that local authorities should have flexibility in relation to their local schemes. That is why very few elements of schemes in relation to working-age claimants are intended to be prescribed and any that are will be largely administrative.
The Government have been clear from the outset that we intend to protect pensioners from any reduction in support as a result of this reform, and support for that has been expressed on both sides of the House. This policy will be given effect through regulations. I confirm that low-income pensioners will be protected.
The default scheme, which we will discuss in detail when we come to group 38, is intended as a legal backstop to ensure that local authorities cannot avoid their duties to bring forward a scheme and so fail to offer any support to those in financial need in their area. That will be prescribed in regulations.
The Government also intend that, in line with wider government policy and existing council tax benefit arrangements, non-EEA nationals who have leave to enter or remain are subject to a prohibition on accessing public funds, and those nationals who are inactive or do not satisfy the habitual residence test will be treated as not being in Great Britain and will not have an entitlement to council tax reduction. We think that this is important to avoid cost pressures on local authorities, and will give effect to it in regulations.
As noble Lords will be aware, we have published statements of intent setting out what we intend to provide in regulations, and have published draft regulations for the default scheme and prescribed requirements, so there can be no doubt as to our plans.
I turn to the amendments. Amendment 82 would remove the ability of the Secretary of State to prescribe requirements for schemes by regulations under paragraph 2(8) of new Schedule 1A. The Bill provides that the Secretary of State may prescribe, in regulations,
“other requirements for schemes”.
As has been referred to many times, the Government have published a detailed statement of intent on regulations. That explains that this power will be used by the Secretary of State to impose requirements on authorities to make provision in their schemes for people of pension credit age—those who are referred to as pensioners—to exclude certain people of limited immigration status from schemes, and to put in place any key administrative requirements for all schemes.
The Government have made it clear that they intend to use prescription to retain, for pensioners, the criteria and allowances currently in place for council tax benefit. The Government have been clear that pensioners who have worked hard all their lives and have had no opportunity to increase their income, should not experience a reduction in support as a result of the introduction of this reform. The Government will achieve protection of pensioners by prescribing a rules-based scheme in regulations. As at present, that will be means-tested, so the amount of support will be based on individual circumstances and changes of circumstance will also be taken into account.
In protecting pensioners and giving consideration to the design of their local scheme, billing authorities will, of course, have choices about how they manage the reduction in funding under the reform. They will be able to choose whether to pass the reduction on to council tax payers, use flexibilities over council tax, or manage the reduction within their budgets.
The Government also intend that, in line with wider government policy and existing council tax benefit arrangements, people from abroad not currently eligible to apply for council tax benefit for the reasons I outlined before will not be able to apply for council tax reductions.
Finally, the Government set out in their statement of intent that they also intend to prescribe for all schemes a small number of administrative regulations and powers currently provided for under social security legislation and which will need to be provided for in future under the regulations we bring forward for council tax support—for example, the requirements for applicants to provide adequate information to local authorities in support of their claims.
The recent publication of draft regulations covering the default scheme and prescribed requirements, including requirements for pensioners, should put beyond doubt the Government’s intention in relation to prescribed requirements and the operation of the default scheme.
I therefore see no benefit in Amendment 82, which would leave low-income pensioners vulnerable to increased council tax bills. Persons currently unable to claim council tax benefit can benefit from local council tax reduction schemes, and mean that local authorities would not be required to put the effective arrangements in place for administering such schemes.
My noble friend Lord Jenkin referred to consultation. Amendment 82A would require the Government to consult on regulations prescribing requirements for schemes.
I recognise the importance of external scrutiny of our plans for the detailed framework by which local authorities will be required to operate their schemes. That is why, on 17 May, the Government published the statements of intent for the key regulations to deliver that policy and further statements of intent on data sharing and fraud on 9 July. They provide an opportunity for us to engage with local authorities on the detail of our plans before draft regulations are brought forward, and provide them with the key information that they need to develop those schemes. That will provide further clarity on the content of the regulations and enable local authorities and other professional groups to scrutinise them while in draft form. It will also make clear how we intend to use the key regulation-making powers in the Bill, while it is subject to consideration in this House.
Given the publication of statements of intent and draft regulations, there is no need for the additional requirement to consult local authorities that Amendment 82A would impose.
Baroness Lister of Burtersett
My Lords, perhaps I may crave the Committee’s indulgence and go back to an issue that we discussed at our last meeting. Although this is not technically about the default scheme, it is about vulnerable people and about carers. The Minister very kindly wrote to my noble friend Lord McKenzie and copied the letter to other members of the Committee. It responded to our concerns about carers not being mentioned as a vulnerable group. In her letter, the Minister said,
“The guidance we have published on the statutory requirements in relation to vulnerable groups does not refer to carers”—
as we said—
“but as was made clear in the discussion, it is not intended to be exhaustive”.
The guidance talks about disabled people, duties under the Child Poverty Act, homelessness, and even the Armed Forces covenant. When local authorities have ticked all those boxes, and when they have addressed the requirement on them to take account of work incentives, very few local authorities will say, “Hang on, let's see if there are any other vulnerable groups that we should be thinking about”, and turn their attention to carers.
I ask the Minister to take this away, not to put it on the face of the Bill, but perhaps the department would consider reissuing the guidance so that it specifically mentions carers among vulnerable groups. I have not heard the Minister say anything to suggest that she does not think that carers are a vulnerable group. So if the Government accept that carers are a vulnerable group, and as we do not have concern for any other vulnerable groups that are not mentioned in the guidance, is there any reason why they could not be put in the guidance? My fear is that, yet again, carers will be overlooked.
Baroness Hanham
My Lords, I thank my noble friend Lord Jenkin and the noble Lord, Lord McKenzie, for their amendments and the noble Baroness, Lady Lister, for Amendment 88, which stands in her name and that of the noble Baroness, Lady Sherlock.
It might be helpful, once again, to explain the Government’s intention in relation to the default scheme. I have done this a couple of times already today. The Bill provides that a default scheme should come into effect only where a billing authority fails to adopt a scheme before 31 January 2013. This is intended as a safeguard, to ensure that where a local authority fails to adopt a scheme by the deadline, there is still provision for people in financial need in that authority’s area to receive support with their council tax.
This scheme will be provided for in regulations and the Government have been clear that this default scheme should retain the criteria and allowances currently in place for council tax benefit. To this end, the Government have published a detailed statement of intent, setting out how they expect to provide for the default scheme in regulations, and confirming that the intention is to recreate, as far as possible, the current council tax benefit system in operation. Monday’s publication of draft regulations covering the default scheme should put beyond doubt our intentions in relation to the operation of the scheme.
These regulations also give an indication of how the default scheme will deal with claimants on universal credit, which we were discussing earlier. Regulations will need to take account of these claimants, but because of changes in the underlying calculation of the universal credit award, there may be some possible changes in the level of council tax support for those moving to universal credit. This is as a consequence of wider changes to benefits and the design of universal credit, and not a direct consequence of localisation. It is not intended that the default scheme will provide for any reductions in support where there is no change in circumstances; for example, which might be because someone has moved from an existing benefit to universal credit. Local authorities will still need to manage the 10% reduction in funding and there will therefore be a strong financial incentive for local authorities to avoid the imposition of a default scheme, as this will limit their ability to adjust awards to manage the funding reduction.
Amendment 83ZA would remove the default scheme from the Bill altogether. For the reasons I have explained, the amendment cannot be accepted. The default scheme is designed to be a safeguard to ensure that where a local authority fails to adopt a scheme by the deadline, there is still provision for people in financial need in that authority’s area to receive support for their council tax. That safeguard needs to remain in place.
Amendments 87 and 88 are intended to guarantee that under the default scheme there will be no reduction in the level of support for working-age persons and to put in place transitional protection for the persons whose support is reduced under the terms of the default scheme. Amendment 84 seeks similar protection for vulnerable groups.
I agree with the intention behind the amendments, but the Government already fully intend that the default scheme will retain the current criteria and allowances and do not intend there to be any change in the level of award where an individual’s circumstances are unchanged. In May, the Government published a detailed statement of intent on the default scheme, explaining that this will closely follow existing council tax benefit regulations, so the amendments are unnecessary.
The noble Baroness asked whether the statutory guidance would include carers. I think that is probably not necessary. The difficulty is that once you include carers, you have to include a whole lot of other people, which reduces the discretion.
Baroness Lister of Burtersett
The point is that a whole lot of other people are already in the guidance that has already been issued. I am not sure whether it is statutory, but I worry that so many other groups are mentioned. I know that the list is not exclusive, but carers should be in the list because if they are not, they will be overlooked. I am not asking for any change in the statute or for the noble Baroness to give an answer now but for her to take it away to consider whether the department could reissue the guidance so that it explicitly mentions carers.
Baroness Hanham
I am very happy to look to see what the guidance actually includes and whether that would up with us trailing a huge long list, but I will do that before our next sitting and let the noble Baroness know in advance.
Lord McKenzie of Luton
Before the noble Lord withdraws his amendment—I would not wish to keep him from his celebration and we pass on our best wishes to him for it—I note that, again, the Government refuse to give any practical help to local authorities on the issue of vulnerable people. We know why that is, as they are leaving local authorities high and dry to make those difficult decisions, not wanting to take any responsibility themselves. That will be a continuing theme of the Bill, and I am sure that we will return to it.
Baroness Hanham
My Lords, I cannot let that go unchallenged. It has been clear from the outset of the discussion on the Bill that the intention is to give local authorities the maximum flexibility to decide how they want the scheme to operate. The noble Lord may not agree with that, but it is not the intention of the Government not to give support but to ensure that local authorities manage their own affairs.
Lord McKenzie of Luton
In a sense, the noble Baroness is saying that the Government are imposing on local authorities the judgment on whether to help vulnerable people at the expense of slightly less vulnerable people. If the Government are imposing such decisions, they should take responsibility for making those judgments.
Lord Beecham
My Lords, this should be a fairly short debate. Given the limited time for consultation, particularly the limited period between now and the end date of January by which schemes have to be approved, the risk exists that some councils—particularly those in shire county areas, to which my noble friend Lady Hollis has referred fairly frequently throughout the Committee—will have difficulty in conducting a full consultation process. The Government have indicated that the normal three-month period may be reduced. However, in any event we will have a summer month—well, a month—when people are likely to be away. August is almost upon us, and that is not a good time to engage in proper or full consultation with the range of individuals, organisations and precepting authorities that will be required, particularly in the shire county areas.
Given the proliferation of schemes we are likely to see, there is therefore a danger that when people begin to compare one with another, as they no doubt eventually will, there may be a challenge to some authorities’ schemes. That will perhaps be in good part because the local authority has not been able to consult as fully as it would have wished or would be expected to do. Since that would be a consequence of this government-imposed timetable, particularly its start and end dates, it seems only reasonable in that event—providing that a court would be satisfied that it is a question of the externally imposed timetable, rather than any culpability on the part of the local authority—for the Secretary of State to reimburse the local authority for any costs.
I hope that this is an academic point and will not materialise in practice. It may be that the Bill is not necessarily the place for it. However, I seek some assurance from the Government that if an authority is caught out in these circumstances, they would look sympathetically at its plight and seek to make good any cost to the authority incurred otherwise than by its own neglect. That is because any additional costs will ultimately fall not upon the council but upon the very council tax payers for whom these benefits—or discounts, as they will become—are intended in the first place. That would be reasonable; there should not be many cases, but there may be some. It would be hard on an authority for its council tax payers to have to bear that cost, particularly in the shire districts that have to consult with a number of precepting authorities, including their county. I hope that the Minister will look at that position sympathetically, not necessarily in the form of legislation, as this is a probing amendment, but by way of a policy stance.
Baroness Hanham
My Lords, I thank the noble Lord for his explanation of this amendment. Paragraph 3(1) of new Schedule 1A to the 1992 Act requires local authorities to consult with their major precepting authorities, publish a draft scheme and consult on that scheme with,
“such other persons as it considers are likely to have an interest”,
in its operation of that scheme before they make it. The amendment seeks to require the Government to indemnify a local authority for costs associated with any legal challenge made to it in respect of a failure fully to comply with the requirements if that failure was because of any delay in the sub-paragraph coming into force or the late issuing of guidance or regulations. The Government have taken—and will be taking—steps to ensure that no local authority is in a position where it cannot comply with the requirements in Paragraph 3(1).
Let me clearly reiterate that local authorities have been aware of this policy and its proposed implementation for some time. The policy was first announced in the spending review of 2010. In August 2011, we published a consultation on this policy, followed by a government response alongside the draft Bill in December 2011. Since then, we have provided information and funding to help local authorities design their schemes.
On Report in the other place, the Government amended the Bill to allow for consultation on a scheme to take place before the Bill receives Royal Assent and the provision comes into force. Paragraph 3(2) of new Schedule 1A means this should not be a barrier to local authorities proceeding. The Government have published detailed statements of intent for the key sets of regulations and draft regulations for the two key areas, the default scheme and the prescribed requirements, including requirements for pensioners, while the Bill is still in this House. Since then we have provided information, tools and funding to help local authorities design their schemes. The Government have already published the guidance they promised on existing local authority responsibilities in relation to vulnerable groups and promoting work incentives. The Government have issued a funding consultation setting out provisional funding allocations for all authorities. We have also provided a free online calculator to help local authorities analyse the potential impacts of their proposed schemes, and we have announced and paid out £30 million of initial funding to help meet the costs of planning and analysing draft schemes.
It does not seem to me that there are any grounds for the noble Lord’s amendment, since local authorities already have the detailed information they need to design and consult on a scheme and need not be constrained by the timescale for primary or secondary legislation coming into force to comply with the requirements on them to consult. With this explanation, I hope the noble Lord will feel able to withdraw his amendment.
Lord Beecham
One basic premise underlies the Minister’s assertions, which is that the Bill will pass in its present form. I think that is a somewhat premature conclusion. Changes could be made. We are not yet at Report stage, let alone at Third Reading or Royal Assent, and authorities are being asked to proceed with these schemes in advance of the completion of the legislation. If the Government had accepted, as they should have done, the proposal to delay implementation, particularly in respect of this aspect of the Bill, there would not be a problem. There would be ample time to consult properly and, indeed, to prepare schemes thoroughly.
As for the information that is supplied, I have here two of the three documents that were published last Friday—I can just about hold them—entitled Draft Council Tax Reduction Scheme (Prescribed Requirements) Regulations. If authorities had been consulting before now—there were, no doubt, in general terms—they are going to have to go back and wade through this document, which is not 150 pages, but only 87 pages, coupled with the Explanatory Notes which, at first glance, explain very little. That is before the default scheme, which we discussed earlier this afternoon. I do not have a copy of that at the moment, but I think it is the 150-page document that the Minister said is very clear and apparently does not much change the existing scheme. I do not know whether that is the case because I have not seen the document. It would be interesting to know whether the Explanatory Notes refer to any changes between the existing scheme and the current scheme because if it was just the existing scheme, it would presumably not be necessary to publish anything. People would just be referred to existing schemes, so I am assuming there must be changes, otherwise it would not require the publication of anything very much.
The Minister referred to the consultation requirement. In fact, as my noble friend Lord McKenzie implied earlier, there are two consultations because you have to consult the precepting authorities first. In county areas, there is the shire county and there may also be a police authority. Sometimes it is part of the county council, and sometimes it is not. If we take the Thames valley, for example, there would be a precepting authority for policing covering a number of counties, so the districts in those areas will have to consult it as a precepting authority and perhaps also a separate fire authority. I am not sure about other areas, but in metropolitan areas, there will also be a passenger transport authority as well as the police and fire authorities, so there will be at least three precepting authorities to consult. District councils will presumably want to consult each other, if only because of the relationship with the precepting authorities. This is not a simple process. It is to be conducted not only in advance of legislation, but in a hurry.
It may be all right on the night, but if it is not, it is not likely to be the fault of authorities, particularly small authorities with limited resources. That has not happened. As the Opposition, all we are asking for is an understanding on the part of the Government if things go wrong in terms of a judicial review and that, if it can be established that the authority is not at fault, but simply has not been able to manage this complex process, then they will meet the costs. The noble Baroness has pointed out, perfectly fairly, that £30 million has been provided to help local authorities through the process. I do not think we are looking at anything like that amount in the event of a few charges by way of judicial review. The noble Baroness is not giving any ground tonight. I hope she will look at this again before Report stage and consult with colleagues and perhaps with the Local Government Association as well, which I do not think has expressed a view about this, but which may do well to consider its position. The LGA will no doubt help its member authorities, but these are not straightforward, simple matters. As I say, the whole thing rests on an assumption that may yet prove to be unfounded, that the Bill will pass in its present form.
Baroness Hanham
My Lords, before the noble Lord makes a decision about his amendment, it might be helpful to remind the Committee that when we were talking about the amendment of the noble Lord, Lord McKenzie, earlier, we said that we would write to him and set out the very few differences that there are in these regulations. I am advised that the annex to the Explanatory Notes sets out those limited number of changes and the relationships between the two lots.
Lord Beecham
I beg leave to withdraw the amendment, while hoping that we return to the matter.
Lord McKenzie of Luton
My Lords, perhaps I can move the amendment on behalf of my noble friend Lord Smith of Leigh. He did not provide me with a script, but I believe I understand what was in his mind when he crafted the amendment. This is a relatively straightforward issue. It requires that:
“Both billing and precepting authorities shall be entitled to hold such balances to deal with shortfalls in council tax receipts as agreed with their auditors”.
We have touched on this at various stages of our discussions. We have touched on the fact that both the business rate retention scheme and the council tax support scheme will make budgeting that more complex for local authorities. They will be challenged with new issues around the level of balances and what reserves should be held against them for contingencies that might flow. I imagine that if the provisions are agreed with auditors, that would be validation enough, but in moving the amendment I am interested to hear what the Minister puts on the record in this regard. This issue is important to a number of local authorities.
Baroness Hanham
My Lords, I thank the noble Lord for moving this amendment on behalf of his noble friend. I agree with him that local authorities will want to consider what sensible provisions they should make to manage their finances generally. Frankly, I do not think that the amendment is needed.
Individual authorities already decide what reserves they are going to budget for, and would be free to decide to hold reserves for the purpose of easing council tax benefit if they needed to. Determining the level and use of reserves is a matter for individual authorities, as part of their overall financial and risk management. There is no prescriptive national guidance on the minimum or maximum level of reserves, either as an absolute amount or as a percentage of the budget.
Reserves can help authorities to respond to unexpected situations, and give them room for manoeuvre on their finances, including helping to protect key front-line services. All authorities should keep sufficient reserves so that they have a financial cushion to meet sudden unexpected costs. What is sufficient should be determined by the authority themselves, in relation to their overall budgets and their individual circumstances.
Amendment 88C also requires the auditor to agree the level of reserves. I do not think that that would be appropriate, because that could prejudice the independence of the auditor, who might wish to comment later on the level of reserves. I do not think that the auditor could give a blessing to a certain amount of reserves before any auditing was done.
The overall level of reserves is agreed by the authority at the start of the financial year. Under Section 25 of the Local Government Act 2003, the chief financial officer is required to make a formal report to the authority on the budget and adequacy of the reserves. Although I am very grateful to the noble Lord for raising this issue, I do not think that the amendment is needed, or that the proposal that the auditor should agree the reserves would work legally.
Baroness Hanham
“LGFA 19881A In Part 1 of Schedule 11 to the LGFA 1988 (the Valuation Tribunal for England), after paragraph A18 insert—
“Power for member of First-tier Tribunal to act as member of the Tribunal A18A (1) A member of the First-tier Tribunal (an “FTT member”) may act as a member of the Valuation Tribunal for England.
(2) An FTT member may only act as a member of the Tribunal—
(a) at the request of the President and with the approval of the Senior President of Tribunals,(b) in relation to an appeal that relates, in whole or in part, to a council tax reduction scheme made or having effect as if made by a billing authority in England, and(c) if the FTT member is not disqualified from being, or acting as, a member of the Tribunal.(3) A request under sub-paragraph (2)(a)—
(a) may relate to a particular appeal or to appeals of a particular kind,(b) may be made only if the President thinks that FTT members are likely to have particular expertise that is relevant to the determination of the appeal, or to appeals of the kind, to which it relates.(4) An approval under sub-paragraph (2)(a) may relate to a particular appeal or to appeals of a particular kind.
(5) The President may withdraw a request at any time; and an FTT member acting as a Tribunal member in response to a request must cease to do so if it is withdrawn.
(6) References in this Schedule and in regulations made under paragraph A19 to a member of the Tribunal include an FTT member acting as a member of the Tribunal.
(7) But sub-paragraph (6) does not apply—
(a) to paragraph A7, A8, A9, A10 or A12 (which make provision about the appointment and removal of, numbers of, and payments to, members of the Tribunal);(b) to regulations under paragraph A19, if and to extent that the regulations provide that it does not apply.(8) The Valuation Tribunal Service may make payments to the Lord Chancellor in respect of the expenditure incurred by the Lord Chancellor in paying remuneration, allowances or expenses to an FTT member whilst acting as a member of the Tribunal.
(9) In this paragraph—
(a) references to an appeal include a review by the Tribunal of a decision made by it on an appeal,(b) “council tax reduction scheme” has the same meaning as in Part 1 of the Local Government Finance Act 1992 (see section 13A(9) of that Act).””
Baroness Hanham
My Lords, these amendments enable First-tier Tribunal judges and other members to sit as members of the Valuation Tribunal for England when requested to do so by the president of the tribunal for England, when that request is approved by the Senior President of Tribunals. That is so that the expertise of First-tier Tribunal members, who currently hear appeals relating to council tax benefit, can be utilised in determining appeals on decisions made on council tax reduction schemes—something which the noble Earl, Lord Lytton, was keen to see cleared up.
The Government are clear that there will be a single appeals process for unresolved disputes on claims for council tax support by a body independent of the local authority. The majority of those who expressed an opinion on the matter in the consultation document and at engagement events support that view.
The Department for Communities and Local Government has agreed with the valuation tribunal and the Ministry of Justice to enable members of the First-tier Tribunal to sit as members of the Valuation Tribunal for England when requested to do so.
When determining a person’s entitlement to a reduction under a scheme, a billing authority may need to carry out a detailed assessment of a person’s means. That may be necessary to comply with the regulations prescribing reductions for persons in receipt of pension credit, if the default scheme is in place, or if a billing authority’s own scheme includes a means-tested element. It is therefore important that the valuation tribunal can access the right expertise in considering appeals which relate to means-testing. The amendments allow the valuation tribunal to be supplemented by members of the First-tier Tribunal for this purpose.
Amendment 88E inserts a new paragraph A18A into Part 1 of Schedule 11 to the Local Government Finance 1988 Act to allow a member of the First-tier Tribunal to act as member of the Valuation Tribunal for England. Paragraph A18A(2) places conditions on when a First-tier Tribunal member may act as a member of the Valuation Tribunal for England. It may only be at the request of the president of the Valuation Tribunal for England and with the approval of the Senior President of Tribunals in relation to an appeal that relates, in whole or in part, to a council tax reduction scheme, and if the First-tier Tribunal member is not disqualified from being or acting as a member of the Valuation Tribunal for England.
Paragraph A18A(3) imposes conditions on whether requests may be imposed for a First-tier Tribunal member to act as a member of the Valuation Tribunal for England. Such a request may relate to a particular appeal or to appeals of a particular kind and may be made only if the president of the Valuation Tribunal for England considers that members of the First-tier Tribunal are likely to have relevant expertise. Paragraph A18A(4) allows the Senior President of Tribunals to approve a First-tier Tribunal member acting as a member of the Valuation Tribunal for England for a particular appeal or for appeals of a particular kind. Paragraph A18A(5) allows the president of the Valuation Tribunal for England to withdraw his request at any time, and requires a First-tier Tribunal member acting as a Valuation Tribunal for England member to cease to do so if the request is withdrawn.
Paragraph A18A(6) provides that references in Schedule 11 of the Local Government Finance Act 1988, and in regulations made under paragraph A19 of that schedule, to a member of the tribunal include a member of the First-tier Tribunal acting as a member of the tribunal. Paragraph A18A(7) makes certain exceptions to when references to a member of the tribunal includes a member of the First-tier Tribunal acting as a member of the tribunal, specifically paragraphs A7 to A10 and A12, which make provision about the appointment and removal of, numbers of, and payments to members of the Valuation Tribunal for England. These do not need to apply to acting members of the Valuation Tribunal for England because they will continue to hold office on the terms and conditions under which they were appointed to the First-tier Tribunal.
Paragraph A18A(8) empowers the Valuation Tribunal Service, the body that provides administrative support to the Valuation Tribunal for England, to make payments to the Lord Chancellor in respect of the expenditure incurred by the Lord Chancellor, in paying a First-tier Tribunal member remuneration, allowances or expenses, while acting as a member of the Valuation Tribunal for England. Further work is being undertaken with the valuation tribunal and Her Majesty’s Courts and Tribunals Service to determine the most efficient approach to administering payments to First-tier Tribunal members. This amendment ensures that the Valuation Tribunal Service has the power to make these payments, should it be concluded that this be the most efficient approach.
Amendments 88F to 88H make consequential amendments to the Local Government Act 2003, which are needed as a result of new paragraph A18A(8). With these explanations, I hope that noble Lords will feel able to approve these amendments.
The Earl of Lytton
My Lords, I welcome in general the amendment and will not detain the House very long. It follows what I have been espousing earlier in our debates—namely, the streamlining and consolidation of the appeals process. However, I have two questions for the Minister. As I have not given prior notice of either question, I would fully understand if she would prefer to reserve her position and write to me later. First, will the benefit hearings element, which will now be transferred to the Valuation Tribunal Service, be hybridised with assessment appeals? My concern has always been that once the benefit comes under question and there is an appeal on the question of benefit, it is only a minor step for an advisory service to advise a benefit claimant or potential benefit claimant to appeal also the assessment, or possibly the liability. The question is how are they going to be dealt with, when previously they would have gone to the tribunal for the benefit element and the question of the assessment—in other words the banding—would have been dealt with through the valuation tribunal. If they are going to be consolidated in some way, will they be completely aggregated together or will the benefit element have its own listing and programme? The reason I ask this particular point is because my understanding is that there is a considerable backlog of listings for the valuation tribunal, so the risk is that moving the benefits cases may exacerbate what is already an unsatisfactory situation. How they are managed will be critical.
My second question relates to paragraph (8) of the insertion, relating to the valuation tribunal service making payments to the Lord Chancellor. That is fine, but can the Minister confirm that the Valuation Tribunal Service will be given additional financial resources commensurate with the costs it incurs in dealing with what would otherwise have been benefits tribunal cases, which have been transferred to it? I hope that the Minister will be able to clarify both those points.
Baroness Hanham
My Lords, those questions are quite detailed and if the noble Lord will forgive me, I shall write to him with the answers, as I think he suggested, and make sure that the Members of the Committee receive copies.
Baroness Hanham
“6A The Local Government Act 2003 is amended as follows.”
Baroness Lister of Burtersett
My Lords, I take a rather different position, as the noble Lord would probably expect. Some of us here are refugees from the Welfare Reform Bill, which sat for what felt like many years, but certainly for many months. One of the few things that we achieved on that Bill, partly in response to amendments from the noble Lord, Lord Best, was a commitment to monitor various aspects of the changes.
That is important, regardless of what the noble Lord has just said. We are making a big change to the basic safety net by removing it from being a national benefit to being a local one. At the very least, we need to know as a Parliament what impact that is having on some of the poorest people in our communities. I am sure that the Minister will do this, but I cannot believe that the Government have no plans whatever to collect some form of information so that we know what effect it will have, especially if the DWP take-up statistics are now in doubt.
If we can achieve nothing else in this Committee, it would be good if we could achieve some commitment to monitoring the impact of what is a very significant change. My noble friend Lady Hollis has explained very well why it is such a significant change to our income maintenance provisions.
Baroness Hanham
My Lords, I thank noble Lords for their contributions. It will not be entirely a surprise when I say that I support my noble friend Lord Deben’s general emphasis on this issue.
Paragraph 7 of new Schedule 1A to the Local Government Finance Act 1992 is inserted by Schedule 4 to the Bill and enables the Secretary of State to require authorities to supply specified information to the Secretary of State. The Government, in their equality impact assessment of this reform, made it clear that the powers could be used to collect information to support future evaluation of the policy.
Council tax support will become part of the council tax system that we have been through today. The Government already collect key data for the council tax system, including data on exemptions and discounts. We are currently working with other government departments and local government to determine the necessary data that will be required in future as part of the council tax system, or through other mechanisms, to monitor the policy and how best to collect this. To ensure proper scrutiny, new requests for data from local government will need approval by the single data list gateway group, which has been established by this Government to consider and challenge new data requirements from local government.
Amendment 92 requires a report on the impact of work incentives. To do so would place another administrative burden on local authorities. The purpose of the policy is not to make local authorities report to the Government on work incentives; rather it is to encourage local authorities to get people back into work. It will not be in the interest of local authorities to lock their residents into poverty and low aspirations. They will want to design schemes which support claimants into work, and the department has issued guidance helping local authorities to understand the importance of work incentives and how they can design schemes which support the objectives of universal credit.
The second part of Amendment 93ZB would require the Government to adjust funding allocations to reflect any changes in the number of eligible claimants. The amendment does not make it clear whether this is funding from within the council tax support scheme or additional funding from outside. Funding for council tax support will be included as a fixed allocation within the business rate retention scheme. Councils will have the responsibility and flexibility to deal with these on a local level. Councils, in designing their schemes, will need to consider the risk of variation in demand. In relation to in-year fluctuations in demand, mechanisms are already in place to enable billing authorities and major precepting authorities to enter into arrangements. This will enable financial pressures as a result of unexpected increases to be shared.
The Government do not think that it will be necessary or helpful for local authorities to be asked to provide that a report be published in Parliament. There are transparency requirements on local authorities to make sure that all of what they do is understood and made clear and, where possible, put on the internet. We think that that will be sufficient to ensure that there is wide knowledge of what each local authority is doing.
Lord McKenzie of Luton
My Lords, I thank the Minister for that reply and the noble Lord, Lord Shipley, for his support. The noble Lord made the point that two years may be more appropriate than three, and I think that we would happily take that on board when we approach the subsequent stage.
My noble friend Lady Lister dealt with a point made by the noble Lord, Lord Deben, about the significance of the change that we have here. About 5 million people are in receipt of council tax benefit at the moment, and those people—the most disadvantaged and poorest in our community—are the ones who are going to be subject to this new system. Our intention is not to limit the localising process, although we do not like it, this is simply about the Government understanding the consequences of their policies. From what the Minister said, it seems that there are potential requirements on authorities to provide a range of information anyway, so that provision does not seem to be limiting the Government’s thirst for localism. The impact on work incentives is crucial. It is a major plank of the Government’s policy, not only on the business rate retention scheme but to the council tax support scheme. The whole thing is designed and driven by trying to get more people into work. There are issues about where the jobs are going to come from and how that is going to work, but it must be of interest to the Government to know how that part of its policy will work in practice. I cannot see why it would not be.
We will return to this issue on Report. It is important that there is a transparent process back to Parliament. It does not negate what local authorities will do or limit the powers or scope that they have under the Bill. All it asks for is a report by the Secretary of State back to Parliament to evaluate how it is working in practice and whether it is delivering what the Government believe that it will—and what we, for our part, are sceptical about. Given that and given the hour, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, Amendment 93ZBA is a narrow and technical amendment. It relates to long-term empty dwellings and the power given to local authorities to terminate entitlement to discounts and increase council tax by up to 50% of the applicable rate, so councils will have the power to charge up to 150% of council tax provided that the property has been unoccupied and substantially unfurnished for more than two years. It is accepted that the term “substantially unfurnished” is not specifically defined anywhere in legislation and has been the subject of case law. Clause 11(9) appears to treat property as unoccupied despite short interim periods when it was occupied. However, such intermittent occupancy might imply that the property was not substantially unfurnished during that period, so it would cease to be a long-term empty property. That would seem to negate the purpose of Clause 11(9), so the amendment seeks to ensure that any concomitant period when the property was not substantially unfurnished is equally ignored. I beg to move.
Baroness Hanham
My Lords, this short amendment specifies that in determining whether a property has been unfurnished for any period of six weeks or less during which it was furnished should also be disregarded. Clause 11 sets out that a dwelling is classified as long-term empty and subject to a premium if it has been unoccupied and substantially unfurnished for a continuous period of two years. Any period of six weeks or less during which the dwelling was occupied is disregarded. The amendment would add a second consideration of time to the application of the period by requiring a billing authority to take into account any periods during which the dwelling was furnished. This would add an unnecessary level of complication to the administration of the empty homes premium. It would potentially require billing authorities to monitor the interplay of periods of occupation and furnishing of a dwelling. Clear criteria for the scheme and ease of administration are highly desirable for billing authorities and, perhaps more importantly, council tax payers to know where they are.
Lord Deben
I am mystified about why the Government have not merely given local authorities the power to make these decisions as they wish. I do not understand why we still want to control them on these matters. If this would add complication, why do we not get rid of the complication that is here already and say that local authorities can make up their own minds?
Baroness Hanham
I think my noble friend was unfortunately not here during the earlier stages when we went through this point in some detail. I resisted those amendments. I hear what my noble friend says, but that is not the situation. I hope the noble Lord, Lord McKenzie of Luton, is willing to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I do not want to prolong this but I am not sure whether we are at cross purposes. The amendment was meant to be helpful and quite narrow. If the legislation is saying that despite the fact that the dwelling is occupied, it is treated for certain periods as being unoccupied—it is understood why that would be the case—the problem with that is that when it is actually occupied, is there not a greater risk that it will be treated as being not substantially unfurnished, because it would need to be furnished for somebody to occupy it? All this amendment tries to do is to ask: when you disregard that period of occupation, why not also assume it to be “substantially unfurnished”? Unless you do that, in a sense you negate in large measure the effect of subsection (9). It may be that the Minister wishes to take it away but that was the only purpose of this amendment. It is not meant to otherwise complicate it or create other difficulties, or to disrupt and undermine the localism agenda. It is a very narrow point.
Lord McKenzie of Luton
I thank the Minister for that and look forward to the reply in due course. In the mean time, I beg leave to withdraw the amendment.
Baroness Hanham
“(2) This section comes into force on such day as the Secretary of State may by order made by statutory instrument appoint.”
Baroness Hanham
My Lords, this minor government amendment allows the Secretary of State to commence the provisions of Clause 12 by order, rather than having them come into force automatically on 1 April 2013. The Government remain committed to the principle that mortgagees in possession of a dwelling should be liable for council tax but are proposing this amendment for practical reasons. As stated in their response to consultation on this reform, the Government do not intend to implement this provision until discussions have taken place with the mortgage lenders sector, leading to satisfactory and workable administrative arrangements. These discussions are being pursued and the Government intend to implement the provisions as soon as practical. However, I move this amendment and hope it is accepted.
Lord McKenzie of Luton
My Lords, we clearly do not disagree with this amendment but I note a certain timing discretion given in respect of these circumstances that is not allowed to local authorities for the big challenges that they have, but that is a debate for another time.
Local Government Finance Bill
Baroness Hanham Excerpts(12 years, 3 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Beecham
With respect, a decent basic family income is needed. That is the starting point. I entirely agree with him about the other things. Matters for local concern include how much should be put into the school meals service, what price should be charged for school meals, and how you promote the take-up of these benefits. That is a strong function of local government, particularly as the Government, as I said in a previous debate in Committee, declined to say, in answer to a parliamentary Question of mine, that they would make efforts to increase the take-up of benefits. The £1.8 billion of unclaimed council tax benefit—much of it, by the way, due to owner-occupying pensioners—is a matter that local councils could and should be promoting.
In my authority, I helped to initiate the welfare rights service in 1974, when I was chairman of the social services committee. Under administrations of different political colours, it has been a very successful authority in promoting take-up of one kind or another. However, that is not the same thing as having a sound basic income. Of course, some authorities have been looking at options. I have here 13 pages of options about local council tax support and one of them is to remove child benefit income disregards. At the moment, that is a national provision. That is one option that they are considering and no doubt they will be consulting, along with the other 40 or 50 recommendations, in the short time that they have before they have to implement them, as we heard earlier. The effect of that on 2,025 families would potentially be an average difference per week of £3.09. That is not a lot to anyone in this room but for people who are living on the margins, that £3 a week is quite significant. That is something that, under the dispensation of the noble Lord, Deben, that particular council has on the table, although I am not saying that it will choose that. I do not think that this is at all acceptable.
We are debating this matter in the Moses Room. We have Moses and the “Judgment of Daniel”. It occurred to me that the judgment of another of my co-religionists might have been relevant in these debates, the judgment of Solomon, as that is what we are looking at. We are looking at utterly impossible decisions about how you carve up—not in this case a child—child benefit or many of these other benefits. That is not acceptable in a modern society.
To return to the remarks made earlier this afternoon by the noble Lord, Lord Deben, there is certainly a balance between local and central. The Government are offloading responsibilities to localities in a way that is absolutely irrelevant to the needs of the people who most need that basic entitlement which, thank God, has been extended to them since we got rid of the Poor Law and that kind of local decision-making which was in the hands of a minority of people which so damaged the lives of generations of our citizens.
Baroness Hanham
My Lords, I refer to the comments just made by the noble Lord, Lord Beecham, and by one or two other Members of the Committee about the present situation. The noble Lord has defined people in poverty and children in poverty and what is happening now under a national scheme. It is not a scheme that is operated by local authorities but one that is operated nationally. I am sure that the noble Lord will have known of many people who have looked for disability allowance and carers’ allowance, who have not been granted them. Do not start by thinking that the current scheme is brilliant because it is not. There are certainly disparities across the country where there are different needs. There may be different needs in cities or in rural areas for children in poverty and children in need. It is for local authorities to decide where those vulnerable people are. There will be more disabled people and pensioners in one local authority than there will be in another. Would it not be right for that local authority to have the right to make the decisions on what is required and make a scheme according to what it knows and who lives in the area? We have had a long dissertation today on vulnerability but it actually turned out to be yet another go at the scheme itself.
The fact of the matter is that the council benefit scheme was removed entirely from universal credit and there is therefore not the slightest point in trying to equate the two and include the scheme again. We are dealing with a situation where localism and local authorities are going to deal with council tax benefit, otherwise there would not be any such benefit—or else there would have to be some form of top slicing to enable the money to be raised. Let us get real about this. Let us be absolutely clear what we are talking about. We are talking about putting the scheme locally because we believe—I accept that the Opposition does not—that local authorities can be trusted to develop schemes that are relevant to people in their areas.
The noble Baroness and one or two others talked about the dividing line between what happens regarding those schemes in Hammersmith and Fulham, Kensington and Chelsea, Rotherham and Preston. Local authorities are already administering schemes. They make decisions daily on criteria regarding who is eligible for one scheme or another. They do that in relation to children, old people, health and public health. They are making decisions all the time. Why say that they cannot make decisions on this? Of course they can and they consider what schemes they should put together.
The noble Lord, Lord Beecham, produced 20 options. If I was putting together a scheme such as this, I would expect at least 50% of the options to be totally unacceptable. I would know that they were totally unacceptable and that they would never get further than the discussion stage. However, you have to look at those options and take them into account. We need to shift this discussion on to the basis of looking at what local authorities are doing and what they need to do. The council tax benefit scheme is already there with its criteria and all its ramifications. Local authorities know what the current scheme involves.
I simply do not accept the arguments that have been put. I very much thank my noble friend Lord Deben for one of his rare but gallant performances, and for providing some sparkling entertainment between him and the noble Baroness who moved the amendment. The whole discussion turned into an interesting event.
I have screeds of notes that I can tell you all about. Let us start with the setting of guidance on vulnerability, which the noble Baroness, Lady Browning, asked to be included in the Bill. I do not know of any guidance in a Bill, but I know that guidance can be positively directed. The guidance is out today and people can look at it to see what it involves. There is no definition of vulnerability, which needs to be dealt with at a local level. Local authorities are already working within the definitions and they know what they are. Noble Lords look sceptically at me, but if local authorities do not do that, they are not very good local authorities and it is time that someone took a decision about having them changed. Local authorities are well aware of their responsibilities and the guidance will help practitioners to understand the statutory framework in relation to vulnerable people because that is already there. We discussed that earlier when my noble friend Lord Attlee was answering from the Front Bench.
The guidance will remind local authorities of the statutory framework in which they operate and their existing responsibility in relation to people who are vulnerable. Those responsibilities are also included in the statutory duty. Local authorities will have to take account of the equality duty; that is very relevant to the point made by the noble Baroness, Lady Lister, about disabled people. They have a statutory responsibility to look at that in making local schemes and to have due regard to the need to advance equality of opportunity between people who share the relevant protected characteristics. That is there and they will have to look at it.
I am sure that everybody here knows the relevant characteristics covered by the equality duty. They are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, and sex and sexual orientation. The disabled fall very clearly within those criteria. The equality duty is not prescriptive about the approach a public authority should take in order to comply with its legal obligation. However, authorities do have to think consciously about the need to do the things set out in the aims of that duty. I am sure that local authorities will not want to be found wanting under those circumstances. Carers are already covered under the legislation—I think it is this legislation. They will have to be taken into consideration in the same way as part of this.
Baroness Sherlock
Under what legislation are carers to be taken into account? I am not sure what the noble Baroness is referring to.
Baroness Hanham
Oh crumbs, I will stop swinging from the lights. The council tax benefit regulations take carers into account and I am sure that local authorities would want to do that.
Lord Greaves
I apologise to my noble friend, who is doing rather well. In what context will council tax benefit regulations apply when council tax benefit is abolished?
Baroness Hanham
I suspect that they will stay in place, but I will answer that later. I will write to my noble friend. I do not want to be wrong because I am doing very well here.
Baroness Lister of Burtersett
It seems unlikely that council tax benefit regulations will apply once council tax benefit is abolished, so rather than prolong the Minister’s agony, perhaps she will write to us as to what statutory authority will ensure that carers’ needs are taken into account as part of the vulnerability guidance.
Baroness Hanham
I do not want the noble Baroness to think that any of this has put me into agony. We will write about council tax benefit; but it is all there under the default scheme.
I was asked a number of questions—in fact, there have been a number of stirring speeches—and I have already responded to my noble friend Lady Browning: I do not think that guidance will be in the Bill, but the guidance is there now and she can see what it is.
I am sorry that I cannot remember who asked the question, but I think it was the noble Baroness, Lady Hollis, about how the precepting authorities and the precepted authorities will work. There will be a requirement to consult: the billing authority will have to consult with the precepting authority to make sure that their policies are aligned. That seems to be the most sensible way of doing it and, presumably, if there is a great difficulty between one and the other, they will resolve it themselves.
Baroness Hollis of Heigham
My Lords, that is absolutely true, even more so in two-tier authorities where 75% of the expenditure that falls on local residents is through the county council precept. The precepting authority does not have to do the same as the billing authority, which has to devise the discount scheme.
I understand the noble Lord, Lord Greaves, on the postcode lottery, because I would defend local decision-making as far as possible. The point here is that what a local authority has in terms of resources will depend on the accident of the demography of its particular locality. If only 30% of its population are pensioners, it will have to find a lower degree of cut on people’s working age than if 60% of its population are pensioners. That is an accident of demography. Equally, when anybody seeks help with their council tax discount, it will be determined not by their own efforts, their willingness to vote or the resources of the local authority, but by how many pensioners and other vulnerable people are ahead of them in the queue. That is not localism; it is rationing by queue, with central government having already determined that certain constraints, such as the number of pensioners, shall be imposed on the system. In that sense it is random—you need not call it a postcode lottery, but it is one. The size of cut that your locality will face is accidental, and it will not necessarily bear a resemblance to your particular need. Even though it may be identical in the neighbouring authority, it will experience a different income because the demographics will be different. That is not reasonable.
I suggest to the noble Lord and the Minister that if there were no proposition to find £500 million of cuts, there would be no such scheme about localising council tax benefit before us today. This is not localism; it is the exporting of cuts to localities by central government and then dressing it up in the fancy clothes of localisation issues, even though people’s needs have not originated by virtue of the locality and the random demography of that patch will determine who gets what. That is not localism. It is exporting cuts without any constraints, which will be experienced differentially by vulnerable people who happen to have been unlucky in the lottery of living in one authority rather than another. I regard that as deeply unfair.
As my noble friend Lord Smith said about where the cuts will fall, it is not about centralism versus localism but about the centre exporting its cuts. The noble Lord, Lord Best, may speak to his amendments on a subsequent day in Committee. The noble Lord, Lord Shipley, was absolutely right. Given this distinctiveness between local authorities, there will be judicial reviews. Mencap will run them if CPAG does not, according to how they are treated. They will probably have a very good case.
The Minister said that local authorities should, in her words, develop schemes that are relevant to their authorities. That challenges the core of my argument. She assumes that vulnerability and poverty are so peculiar and distinctive to a particular local authority as to justify separate local schemes. I simply do not accept that for one moment. Whether you are autistic, have a disability, are a carer with an elderly mum or are a child in poverty, it is not generated by your locality although it may be experienced in your locality. Given that it is not distinctive to your locality, it is not relevant to your local authority. Therefore, there should be a national scheme.
I leave the Minister with two questions. Who will she exclude from the scheme? We know that pensioners are automatically covered. Unfortunately, we have not had the pleasure of seeing the guidance because it did not come out on Friday but on the very day when we are sitting. Therefore, we cannot cross-refer to it, which is shame. The Minister says that vulnerable people will apparently be protected. The working poor will also need to be protected, so who is not? That is 100%. Who is not protected? Who does the Minister think should see their council tax benefit cut, given that pensioners, vulnerable people and the working poor and their incentives are protected?
Secondly, if there was no £500 million cut, does the Minister think that any local authority in the land would seek to establish its own distinctive council tax scheme and to pull it out of universal credit? She knows that would not happen. I have put two questions to her. She is welcome to respond to me—to tell me what is wrong with council tax benefit, who is already covered but should be excluded and whether, if we did not need £500 million of cuts, any local authority would touch this scheme with a barge pole. I think everyone in this Room today knows the answer to all those questions. They are not answers that enforce the Minister’s argument.
Baroness Hanham
I have answered the questions that the noble Baroness has asked me today if not on previous days. I am sure we will return to them. We have had an extremely wide debate today, although we are not over our time. I repeat that local authorities know very well who their local people who need help and support are. That is a very localist issue. The noble Baroness may not agree with me but those are my words on the subject. She gave me the opportunity to say so.
Baroness Hollis of Heigham
My Lords, I simply disagree. According to the knowledge of the local authority—or not as the case may be—individuals may see their entitlement to income support decreased. However, the time is late; I beg leave to withdraw the amendment.
Local Government Finance Bill
Baroness Hanham Excerpts(12 years, 3 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Beecham
My Lords, I envisage that “all interested parties” will include business. However, for the avoidance of doubt it would be helpful if—assuming that the Minister gives her blessing to the amendment in one form or another—she would confirm that that is the case. Clearly, since the rationale of the proposal in the first place is to incentivise local government and its business development policy, however valid that may be, it would make sense to involve business in any consultation about changes to the policy.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, I thank the alliance for its comments on the amendment. In particular I thank my noble friend Lord Jenkin for his explanation of the proposed new clause. I do not suppose that any noble Lord will be surprised to hear me say that I do not consider that such a provision is appropriate or necessary.
I fully understand that in the current system, where business rates are not retained locally, changes to national business rates policy do not affect the level of funding that authorities receive. However, in future such changes could impact on the level of funding available to a local authority. I am sure that Members of the Committee will understand that the Government may need at some stage to make changes to the national business rates policy for a variety of reasons. In the majority of cases it is likely that any changes will have been consulted on, but this may not always be the case. Changes to reliefs are a matter for the Chancellor, and a deferral system that gave businesses the opportunity to defer payment of 60% of the increase in their 2012 business rate bills as a result of the RPI uprating was announced in the autumn Statement. If the Government had consulted on that, businesses would have had to wait at least two or three months longer to receive the benefit, which in some cases could have meant the difference between shutting or remaining open. I use that as an example.
I assure my noble friend that where the Government implement a change to national business rates policy that will involve a net additional cost to local government—a point that was raised by my noble friend Lord Tope—this will be picked up through the new burdens policy. It will be treated as a new burden in line with our commitment to keeping the downward pressure on council tax as far as possible. Given this clear commitment that provides an assurance to local government, I hope that my noble friend will feel able to withdraw his amendment.
Lord Jenkin of Roding
My Lords, I am grateful to my noble friend for that explanation. Of course I understand that the change may work both ways. If local authorities are going to benefit from the change, the argument not to have consultation but to get on and make the payments is much stronger. However, if there is a change that will increase the burdens on a local authority, my noble friend gave an undertaking that there would be consultation—so I cannot understand why this should not go in the Bill. It would be very reassuring to local authorities and would not place an undue burden on central government. If the Government were going to change the policy to the disadvantage of local government, there is no reason why a three-month delay should not be a perfectly satisfactory way of dealing with the statutory obligation to consult. Of course we do not vote in Grand Committee, but there is a stronger argument for this amendment than perhaps my noble friend acknowledged. Perhaps she might like to look at it again.
Baroness Hanham
My Lords, I made the point, which the noble Lord accepted, that there may need to be flexibility on this. I gave the example of changes in the autumn Statement that would have been delayed if there had been consultation. It was a perfectly reasonable point. Without exception, the Government will want to consult where appropriate and where time allows, but there will be occasions when it is not in anybody’s interests to do so for reasons of speed. The proposed new clause would just constrain their ability to do that. Putting it in the Bill would be less than helpful.
Lord Jenkin of Roding
My Lords, I hear what my noble friend says and we would wish to consult those advising us on that. I take the point that this is a wide-ranging amendment but, with different drafting to which we could return on Report, we might be able to write something in on this. Having said that, I beg leave to withdraw the amendment.
Earl Attlee
To make a quick comment about my intervention on the noble Earl, I was merely observing that he had been speaking for 20 minutes. I allowed for the fact that he was probably coming to the end of his remarks. Also, this is a self-regulating Committee. If the Committee wants to take a longer speech, the Committee can do so.
Baroness Hanham
My Lords, I am not sure that I can wind this up in 20 minutes, but I will do my best, gracefully, as I go along. I first thank the noble Earl for raising this subject in the way that he has. I am also extremely grateful to him for the discussions that we have had following the previous day, when I pointed out to him that if I had to answer every amendment one by one I would have 30 pages of speaking notes, which might take us longer than 20 minutes.
With the noble Earl’s agreement—and, I now hope, the Committee’s—I propose to tell the Committee what the noble Earl’s four main themes are, and will then write on each of the specific amendments so that the Government’s answer to each is there. That will help the Committee at the next stage. I am manifestly not going to be able to answer all the points today.
The answers are grouped under the noble Earl’s points about the valuation system not being well managed; that it should be independent of the Treasury; that the Valuation Office Agency and the Valuation Tribunal Service have been adopting, as the noble Earl put it, several bad practices; and that there are abuses by a small number of rating advisers. Those are the four themes that I will go through and, following the Committee sitting, we will make sure that every Member of the Committee and the Library has a response to each of the amendments. I thank the noble Earl for grouping them together, as it could have been even longer had he chosen to speak only to two or three at the same time.
First, on the resourcing and management of the rating and appeals system, ratepayers expect their rating assessment to be correct, and for appeals to be resolved quickly. This will always be the case, but under the rates retention system it would become increasingly important that the rating system delivered a good service for both ratepayers and local government. I appreciate the noble Earl’s concerns regarding the backlog of appeals in the rating system. We share those concerns. The Valuation Office Agency is working flat out to clear over 250,000 appeals by the end of March 2013, including the majority of the outstanding appeals against the 2005 rating list. It has recruited additional front-line staff and has transferred staff from other work areas to speed up the clearance times for these outstanding appeals. Around 75% of all appeals on the 2010 list to date have resulted in no change to the rateable value, but we are well aware of how significant business rates are to all businesses and that this makes the fast and efficient processing of appeals vitally important. Likewise, the Valuation Tribunal Service is proactively working to ensure that appeals that cannot be resolved through initial discussions with the Valuation Office Agency are listed and dealt with by the tribunal. In fact, only some 2% of listed cases result in disputes being brought before a tribunal panel, with the rest being settled between the parties.
I hope that I have been able to offer some comfort to the noble Earl that the valuation and appeal system will be able to cope with the rates retention. Let me also assure him that the resourcing and performance of the Valuation Office Agency and valuation tribunal are a matter for regular discussion in the Government, especially now as we move into the rates retention system. As with all public bodies, the Valuation Office Agency and valuation tribunal have to deliver their services in challenging financial circumstances, but we are fully aware of the important role that they will play in the rates retention system and we will ensure that they have the necessary capabilities to meet these objectives.
The second theme of the noble Earl, Lord Lytton, is the Valuation Office Agency’s response to rates retention. An example of those capabilities is the way in which the Valuation Office Agency has responded to the planned introduction of rates retention. Since as early as late last year, the Valuation Office Agency has been working with local government to understand what local authorities will need to budget effectively under rates retention. It recognises that there will be step change in its relationship with local government and it has established a dedicated project team for rates retention. This has already led to several discussions with local government and with the Local Government Association. While I understand the concerns of the noble Earl, I hope that he will agree that to date the Valuation Office Agency has responded well to the rates retention scheme and is working with local government to ensure its smooth implementation.
The Valuation Office Agency is independent. An essential part of any system of tax is that the public have confidence in their tax assessments—not only in the accurate level of those assessments but in the manner in which they have been reached. I agree with the noble Earl that the independence of the Valuation Office Agency is important. That is why valuation officers who perform their statutory functions, such as the assessment of individual rateable values, act independently of Ministers. In this respect they have to answer to the courts rather than to the Government.
We also have to recognise that the Valuation Office Agency is a public sector body, spending public funds, and is part of the delivery system for business rates and council tax. That is why it is right that the Valuation Office Agency should answer to the Government for its overall performance. As such, the Valuation Office Agency forms part of Her Majesty’s Revenue and Customs and reports to Ministers in the Treasury for its work. It also accounts to Parliament—this is the point about the report—in the form of an annual report, and senior officials in the Valuation Office Agency can be called to give evidence to Select Committees.
While I appreciate the noble Earl’s point, in practice we have to strike a balance to preserve both the independence of the Valuation Office Agency’s statutory functions and the need to maintain the accountability of public servants. The noble Earl’s amendment would prevent the Valuation Office Agency from reporting to either the Treasury or the Department for Communities and Local Government, and under those circumstances I do not believe that we could deliver that accountability.
The noble Earl also raised concerns about some of the practices and procedures of the Valuation Office Agency and the valuation tribunal. Having just stressed the importance of the independence of the Valuation Office Agency when exercising its statutory functions, I think that the Committee would be disappointed if I signalled a willingness to interfere in its day-to-day work. I appreciate the concerns that the noble Earl’s amendments have raised in such areas as invalid appeals and the use of a strike-out by the valuation tribunal. We have powers to make regulations on any matter relating to the valuation tribunal and we have made regulations under those powers that describe when a strike-out can be used. However, in line with other tribunals, we do not describe all the necessary procedures in those regulations, but instead allow the valuation tribunal to make directions. Those directions describe the procedures that must be followed in taking an appeal through to a valuation tribunal hearing. The Secretary of State has given the valuation tribunal, in line with other tribunals, the power to strike out appeals where the appellant has failed to follow the directions.
This is not a matter that we take lightly. It is important for the effective operation of a fair judicial system that a valuation tribunal is able to set directions and enforce them through the use of a strike-out. The tribunal will consult its users before it introduces any standard directions, and any parties will be made fully aware of the requirements, by means of practice statements and information leaflets, when they make an appeal. Therefore, while noting the noble Earl’s concerns, I do not believe that we should change the current system. Allowing these matters to be set out in directions rather than regulations will ensure that the tribunal can lay down procedures that reflect the nature of the court and are responsive to changing circumstances. The system would not be improved through our direct intervention or by bringing all the procedures into regulations.
The noble Earl referred also to abuses by some agents. He raised valid points about abuses of the system by ratepayers’ representatives. I know that he works closely with the Royal Institution of Chartered Surveyors and the Institute of Revenues Rating and Valuation. Both organisations have clear professional standards. The Valuation Office Agency includes guidance on its website about employing a rating agent and how to contact these organisations for advice, so it would not be appropriate to regulate in this area. I hope that the noble Earl will agree that by stringently and consistently applying professional standards, the professional bodies and the Valuation Office Agency can address some of the abuses that he mentioned.
I have not addressed every amendment—as I said I would not. However, I thank the noble Earl for the knowledge he brought. I hope that he will feel able not to press his amendments on the basis of the explanations provided and of the assurance that, before Report, he will have a reply to each one.
I was asked by the noble Lord, Lord McKenzie, whether under the current system local government pays all costs of mandatory reliefs. It pays between 0% and 75% of the costs of reliefs for eligible businesses and some not-for-profit agencies. If a local authority chooses to go beyond the existing rate reliefs to grant extra relief using the business rate discount powers in the Localism Act, it can meet the cost locally. If not, the cost will be reimbursed. However, from next April the system of funding business rate reliefs will change as part of wider reforms. We will shortly publish a consultation paper setting out the details of this. The basic principle is that changes in rates income, including changes in relief, will be shared 50:50 with central government. I hope that that answers the noble Lord’s question.
There may be other points that noble Lords wish to pursue with me. I think that I answered the point of my noble friend Lord True about the fact that a number of important issues have been raised, and individual replies will be given on all the amendments so that we can consider them further at a later stage.
Lord McKenzie of Luton
Perhaps the noble Baroness is in a position to answer the question about how a system of central lists would work alongside local and central shares for business rate retention purposes.
Baroness Hanham
I would rather leave that and answer all the questions together, so that there will be a composite answer to all the points raised.
Baroness Hanham
My Lords, this may be a convenient moment to adjourn the Committee until 3.30 pm on 16 July.
The Deputy Chairman of Committees (Viscount Ullswater)
The Committee stands adjourned until 3.30 pm on 16 July.
Local Government Finance Bill
Baroness Hanham Excerpts(12 years, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Shipley
My Lords, I think I agree with the comments of the noble Lord. There is an issue here that relates to the deletion of “major”. Will the Minister respond on the content of the Localism Act? On the rights and powers of precepting authorities, my memory is that some crucial amendments were made to the Bill on Report, which enabled the protection of the rights of parish councils and neighbourhood planning councils. Is the Localism Act sufficient to deliver the resources that should lie within the money, particularly that raised through the community infrastructure levy, to very small neighbourhood areas? I would appreciate the Minister’s guidance on that point.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, I thank the noble Earl, Lord Lytton, for introducing this little amendment. Neither he nor other speakers will be totally surprised when I say that it is not acceptable in its current terms. I shall tell him and the Committee why.
We recognise that parish councils underpin many neighbourhoods across England. They have been given a specific role under the Localism Act. Local, parish and town councils are specifically mentioned as being able to generate neighbourhood plans. As has been said, they are the focal point for a wide range of local involvement and action under the Localism Act. For some parish and town councils, that range of activity and involvement will include promoting economic growth but they do not have the same financial levers to deliver growth as principal authorities do. I know—the noble Earl has just said so—that some town and parish councils are keen to receive a share of business rates. That was evident not only from what the noble Earl said but from the Government’s consultation on rates retention last year, when several parish and town councils expressed in their response a desire for a change in this matter.
However, the local government resource review was set up to look at how principal authorities are funded, with a view to giving them greater financial autonomy, strengthening the incentives to support growth in the private sector and the regeneration of local economies, and reducing their reliance on central government funding. The funding of parish councils is therefore outside the scope of the review’s terms of reference. The Government’s proposals for business rates retention are focused on changing the allocation of business rates, which previously fed into formula grant, which is not paid to parish or town councils. Therefore, allocating parish and town councils a proportion of business rates would be at the expense of the principal and major precepting authorities, thus weakening the growth incentive. I just add that of course all parish and town councils have a precepting power so that in general they are able to cover their costs. Although I accept that that may not be a great contribution to growth, it is certainly something that they are able to do.
The Government consider that it might be appropriate to reassess this position in the context of an untimed, unnamed and unexpected fundamental review of the business rate retention scheme, but I would advise noble Lords not to hold their breath on that.
As I said at the outset, the noble Earl will not be surprised when I say that I cannot accept the amendment.
Earl Attlee
I thank noble Lords for their helpful explanations of these amendments. They deal variously with aspects of the local government finance report, particularly around the consultation arrangements that will apply. I agree that proper engagement is very important to ensure a successful outcome.
The Bill provides that the central and local shares, and the basis of calculation of payments flowing to and from local authorities, will have to be set out in the annual local government finance report. As we do currently, we will continue to consult local government on a draft local government finance report in the autumn before laying the report before the House of Commons in January or February each year. The noble Lord, Lord McKenzie, accepted this point in his opening remarks.
Amendment 25, tabled by the noble Lord, Lord Smith, and I think spoken to by the noble Lord, Lord McKenzie, seeks to bring forward the laying of the final local government finance report. Although I can sympathise with the good intentions of the noble Lord in bringing forward this amendment, I cannot recommend that the Committee accepts it. Amendment 25 would bring forward the process by three months from the current timetable.
The Government have always endeavoured to give local authorities the information they need as early as possible. The noble Lord, Lord McKenzie, asked me about the timetable. The current process for the local government finance report is as follows: the summer consultation is in about July and sets out the basis of calculation; the draft report comes out in approximately November and has the detail; and the final report comes out in January 2013. As for the future process, we may not need to carry out the summer consultation in future years unless there are substantial changes to the calculations.
In the past, the local government finance report timetable has been driven by the availability of up-to-date data to make the necessary calculations. Under a rate retention scheme, this will still be the case. For example, the September RPI figure, which will be used to uprate tariffs and top-ups, will not be available until later in the year. In reset years, the need for updated data will increase.
Although I cannot accept the noble Lord’s amendment, I can assure him that the Government will continue to use their best endeavours to ensure that local government, as far as possible, has the information that it needs to undertake its budgeting processes. Although I understand the intention behind each of the amendments in this group, I ask noble Lords to withdraw them. I believe they are either unnecessary, since, in practice, consultation with local government will continue to take place as it does now as a matter of course, or, in the case of the timing of the report, undesirable, since they may limit our ability to use the most up-to-date data for calculations. I am sure that that is not what the Committee desires.
The Earl of Lytton
My Lords, I shall speak very briefly on Amendment 26. I am sure that the noble Lord, Lord McKenzie, would not thank me for sitting silently when the matter revolves around the question of non-domestic rating. There are two words in the clause that the proposal seeks to amend. One is “diligently” and the other is “payable”. A great deal hinges on those two words.
I previously explained at Second Reading and in comments made in the debate on the Queen’s Speech that there is a problem with the management of the tax base, which is implicit in the bundle of rateable values that afford the basis on which this particular bit of local government finance arises. I would have to say that diligence may be there in abundance, but efficacy is not. Later on—although I suspect not today—we will come to amendments that I have tabled where I set about trying to deal with some of the shortcomings implicit in the present system.
There is no unwillingness to implement a proper and fair system at all levels of central government, government agency and local authority. But if the system is underfunded and suffers from a lack of degree of care and maintenance input, problems will arise. What may be diligence to one body of people may look like neglect to others. I am particularly concerned that if the term “payable” means what would otherwise have accrued to the billing authority in this sense but does not for whatever reason, that represents the horns of a dilemma, bearing in mind that, as the noble Lord, Lord McKenzie, said, the billing authority has no responsibility for the maintenance of the tax base. In other words, it has no stake. Some of my amendments try to address that. As matters stand, the billing authority has no role in the accuracy of the list or indeed whether something is in the list as a non-domestic hereditament or not.
It concerns me that, if the Government’s own Valuation Office Agency cannot catch up with this, to try to make that somehow by implication the responsibility of the billing authority must be wrong in the absence of additional resources in which to achieve it. Clearly, there are no additional resources because we are talking about a 10% cut. If it came to be interpreted by the courts, although I am no lawyer, I fear that the words “diligently” and “payable” may have the sort of meaning that I rather fear and the noble Lord, Lord McKenzie, fears might be attributable to them.
It could put the billing authority in an extremely difficult situation and could have knock-on effects throughout a large number of billing authorities with the potential for what I can only describe as a large degree of mayhem in local government accounting for any given year until it works through the system. I support the principle of what has been said.
Baroness Hanham
I thank the noble Lord, Lord McKenzie, for moving the amendment and I hope that I can reply to most of the points that have been raised. Amendment 26 seeks to remove the obligation on local authorities to act diligently, which are the words that have been questioned regarding the collection of the non-domestic rating income due to it under Sections 43 and 45 of the Local Government Finance Act 1988.
This section focuses on the need to establish the payment that will have to be made by the billing authority to the Secretary of State in respect of the central share that is due. It is obviously important that there is a clear understanding of what is meant by non-domestic rating income in this context, and this paragraph confirms that the Secretary of State will introduce regulations that provide that clarification.
In preparing those regulations, we are clear that the Secretary of State should be taking into account not just the income that the billing authority receives, but the amount that it would be reasonable to expect any authority to collect if it acted diligently. That is the amount that is due to it, and if it does not get that and its collection rate is below 100%, it is still being assessed on the former amount. This is not a new concept. The principle of diligence is well established, as the noble Lord, Lord McKenzie, intimated, in the 1988 Local Government Finance Act in its treatment of a billing authority’s contribution to the business rates pool; for example, Part 2 of Schedule 8.
Local government is therefore familiar with the principle of due diligence as part of its responsibilities for collecting non-domestic rating income. It would send a rather unfortunate signal if we were to suggest a lessening of the responsibilities of local authorities to ensure that the business rates that are due to them are actually paid. I think that most local authorities understand and make enormous efforts to ensure that they get the maximum amount of business rating that they possibly can. I certainly remember being challenged when we got up to 97%; now we want to get to 100%.
Amendment 27 relates to the regulations that will be introduced to establish the administrative arrangements to be put in place for processing payments of the central share. We are clear that we intend to be as accurate as possible in making the calculations for the amount of the central share. However, it is obviously prudent to ensure that mechanisms are put in place to deal with those scenarios where it is subsequently determined that the payments to the central share that have been handed over by billing authorities are either lower or higher than those required. Paragraph 7(2)(b) of Schedule 1 makes it clear that the regulations to be introduced by the Secretary of State on the administration of central share payments may make provision to deal with under or overcontributions. Having reflected on that paragraph, and the proposed amendment, it is not clear to me in what way the proposed amendment will improve the clarity of the intention of that paragraph.
Amendment 30 would prevent the Secretary of State including, within regulations governing the calculation of payments to be made by billing authorities to major precepting authorities, adjustments to reflect either costs that fall on billing authorities or different circumstances that will need to be reflected in any payment schedule; for example, we envisage that, in defining non-domestic rating income, the regulations will make an adjustment for the cost of collecting the business rates income. Otherwise, there is an obvious undesired outcome that the billing authority has to absorb the cost of that administration alone. Similarly, the definition of income will reflect specific circumstances where the rates collected may be apportioned slightly differently; for example, as we confirmed in our statements of intent, it is our intention that all the business rates income from new renewable energy projects will be retained by the planning authority. The regulations would enable the relevant adjustments to be made to reflect such circumstances.
Amendment 31 relates to the circumstances that might apply following an audit of a billing authority’s calculations for the purposes of making payments to its major precepting authorities. We hope that there will be few, if any, occasions, where the audit of a billing authority’s calculations and information certified by the audit did not match what was supplied to the major precepting authority. However, there might be occasions when this is the case. Paragraph 9 confirms that regulations may make provision for the use of the certified information in relation to payments to the major precepting authority. Use of certified information in this way would mirror the arrangements set out in paragraph 40(6), which provides that the Secretary of State should be able to rely on certified information and existing non-domestic rating pooling.
Transparency over the funding to be available, and the basis of the calculations used to determine that funding, will clearly be important to everyone to establish confidence. This section sets out that the regulations may include provisions to establish what might happen where there is a mismatch between the information supplied and the certified information produced by the audit. In such a scenario, we envisage that all parties would want to understand the nature of the difference and how the certified information and calculations might be used to correct, where necessary, any mismatch. In my view, the regulations are absolutely the right place to provide that additional clarity on the use of the certified calculation or information.
Amendment 39, tabled by the noble Lord, Lord Smith, and spoken to in his absence by the noble Lord, Lord McKenzie, would replace the current flexibility in the Bill and instead require payments from central government to local government to be made in just two instalments. I hope that I am able to reassure noble Lords that it is our intention, subject to consultation with local government, to spread payments in respect of the rates retention scheme, both to and from local authorities, over the course of a year. We intend to do this by setting up a schedule of payments over the year. We will consult on the number of instalments over which the payment should be made. However, we believe, at this stage, that the two payments envisaged in this amendment would be too restrictive under these circumstances. I ask the noble Lord, with this explanation in mind, to withdraw the amendment.
The noble Lord, Lord McKenzie, asked about mandatory payments. I understand that will be outside the central charge. I may need to write to the noble Lord, but mandatory payments are clearly important as they cannot be ducked. I understand the question of sports and leisure clubs is still under discussion, and perhaps we may be able to deal with that at a later stage.
The Earl of Lytton
My Lords, can the Minister clarify something further for me following what I said a short while ago? Let us imagine the situation of a popular coastal town, in which there are a large number of properties that may be used seasonally for holiday purposes. Many will in fact be people’s second homes and may even get a reduction when assessed for council tax because they are second homes. Because of the seasonal nature, it is difficult to track whether these are going to fall above or below what I believe is the 140-day threshold of occupation for holiday purposes. I have to say that I am not sure whether that is for general tax purposes rather than local tax, but the question then is what their whole or main use is. In theory, if one is using the property year-round for holiday lettings, that is clearly a change of use, but there is no requirement to go for planning consent and it probably does not require any building regulations control. There may be some issues to do with health and safety, but how would the billing authority know what stock lay out there and what it was used for?
I appreciate that the Minister may need to come back on this, but in such a situation, how would a billing authority know whether it was behaving “diligently” or whether it was supposed to go around tracking down who all these people are? When I did an investigation last year into holiday homes, I found that a very large number of what I understood to be holiday homes, which were clearly being advertised as such through letting agencies, were in fact subject to a council tax assessment. If we are not careful, we will be putting an absolutely impossible burden on the billing authority, if “diligently” causes it to fall foul of something that is going to be extremely difficult for it to catch up on.
Baroness Hanham
In reply to the last point of my noble friend Lord True, if I can provide anything useful, of course I will. My noble friend is the leader of a council and, as far as I know, he has been acting under the duress of being presumed to be acting diligently ever since he took over. This has been part of the Local Government Finance Act 1988 since it was passed. It is not new. It is entirely the same wording as local government has been operating under for the past 24 years and it is well understood. Local government finance officers must also understand it. It means that you go about getting in the money that you are required to have to the very best of your ability. The challenge—particularly now, with the economy in the situation that it is—is to get in as much as possible of the amount that you should have.
I am not sure whether the Government will judge the level of diligence but it is perfectly open to someone else to challenge whether a local authority has acted diligently if, for example, its revenue drops substantially. I do not think there is anything more that we can say about it but I will be more helpful if I can. However, this is a very well worn path, which is probably no different from what we will do.
The noble Earl, Lord Lytton, raised the question of holiday homes. I know that he has extensive amendments coming up later. The local authority collects only the money as assessed against whatever the nature of the property is. If a valuation office, which must value all properties, values a holiday let as a normal domestic property, so be it. The local authority does not challenge that. It is left to the valuation office or anybody else to suggest that perhaps a property is being used as a business and might need to be looked at again. Therefore, holiday homes are not particularly relevant to this matter at the moment. I hope that is helpful.
Lord McKenzie of Luton
My Lords, I thank the Minister again for her response to these amendments. On the issue of acting diligently, this is a probing amendment; I did not necessarily want the words deleted from the text. I wanted to understand how they might be applied in the current situation. We are in a different situation. Previously, the collection of business rates was turned over to central government and came back via a formula. That formula drove what local authorities had. It is going to be different in future; that is what the system is about. The Minister said that this is well tried and tested. How many challenges have been made under these provisions in the past three years? Who have those challenges come from? She hinted that they might come from anyone. It would not necessarily be the Government who have to take this view. This is important, particularly in the light of the comments by the noble Earl, Lord Lytton, whose knowledge of the rating system is profound and will be very helpful to us in this Committee. He can spot nuances that would not be apparent to some of us at least. We need more information on this. We will look to bring something forward on Report if we cannot get some clearer idea.
Will the Minister at least deal with the question of whether there is a right of appeal and what the sanction will be? If a local authority was deemed not to have acted diligently, what would the Government do? Would they gross up the business rate they receive in the calculations that are made? What is the sanction? Is it one that only government can apply? Is there a right of appeal against it? This raises lots of questions.
The other amendments were effectively probing, apart from the amendment about mandatory and discretionary rate relief. Quite apart from the specific circumstances that Sporta has written about—I understand there is some discussion on them—there are issues of principle here. How will it work in future for new provision that under the old system, and under the new system, would be subject to mandatory relief? The Government would have picked up the whole of the tab for that, but now it gets shared with the local authority. The local authority picks up half the cost which, other things being equal, is likely to make it less inclined to grant relief, not because it would not wish to, but simply because it would not have the resources to do it. Is that analysis right, or is there a different analysis? I know there are issues about how the baseline is set and how the existing provision features, but can we at least have a bit more about that as well?
Baroness Hanham
Mandatory is mandatory. Mandatory means that you have got to do it. I am more concerned about the discretionary aspect. There are two lots: a mandatory grant and a discretionary grant. As I understand it—I am sort of swinging backwards and forwards here—the mandatory grant will be taken into account in the share. It would not be deducted, as it were, from the local authority’s income. I will write to the noble Lord on that because we do not want confusion. It seems to me that if it is an absolute requirement to pay it, there must be some payoff from that. Local authorities determine what they should collect and what they write off. Their auditors check it. I shall write to the noble Lord further on the mandatory grant because I do not think we are getting anywhere.
With regard to due diligence, it refers in practice to the sums that a local authority writes off as bad debts. It is for a billing authority to determine those sums and for the authority’s auditor to determine that they are reasonable. Due diligence would seem to me to work on the basis that you use your best endeavours. The noble Lord asked whether anyone has ever been challenged on it. I think that is going to be very hard to unearth because local authorities would be the only ones to know. If we have anything useful on that, I will let the noble Lord know, and also whether there could be an appeal. It might be helpful and save the noble Lord a lot of trouble on Report if we lay that out more clearly for him and for Members of the Committee, which I will do.
Lord McKenzie of Luton
I am grateful to the Minister. I am happy to leave to correspondence the issue of due diligence, the consequences, and what appeal rights there may be. I hope that we will know in good time for Report so that we can revisit it if we need to.
I will just have one more go at mandatory relief. I go back to the document that the department itself issued: technical paper 2 Measuring Business Rates. Paragraph 4.22 states:
“The main consultation paper explained that there would be no changes to the current system of reliefs, or to the criteria that determine eligibility. The Government does not believe that, under a rates retention scheme, the cost of mandatory relief should be borne entirely by the authorities in whose area it arises”.
The same follows for discretionary relief.
Particularly in relation to discretionary relief, that must be a deterrent. I presume that that comes because of the 50:50 share. From what the Minister said earlier, are the Government reviewing this issue to reconsider whether there are any changes to the impact of the legislation that they might introduce? This does not affect only sport: I am sure that the department has had representations from a number of entities on this. Again, we would certainly wish to explore this further on Report if we cannot get some clarity or solutions relating to this by the time we get there.
Baroness Hanham
My Lords, the answer to the noble Lord’s point is that it will be part of the consultation in the summer. Consideration is still being given to the position on reliefs and the consultation will produce an answer. I hope that by Report we will know for certain what the answer is. But I take the noble Lord point’s completely about something that you have to do and how that will be shared. Discretionary seems to be more something that is within the ability of the council to decide. But I do not want to dig myself any deeper into a hole here. I will leave it and write to the noble Lord. I understand that the noble Lord is happy about due diligence.
Baroness Sherlock
When the Minister is writing, will she help us to understand not just the impact on local authorities but the consequences for those bodies to which they might have contracted? Also, what impact do the Minister and the Government think that that might have on localism and the big society, for example?
Baroness Hanham
That is a little wider than the amendment, but we will look at Hansard and see.
Lord McKenzie of Luton
I do not think that the Minister is right to categorise my position as ”happy” on this, but I am content that there is a way forward and we will get some further information. Cordially, I beg leave to withdraw the amendment.
Lord True
My Lords, briefly, I support what has been said by my noble friends. I understand why my noble friend and her colleagues in the Treasury have put forward this proposal but, without repeating points that I made at Second Reading, the acceptance by many authorities of the transfer from one system to another is an acquired acceptance of accumulated unfairnesses—as some would call them—of all varieties. I hope that my noble friend will consider favourably some of the points that have been made by my noble friends, such as this factor and the kind of turbulence and uncertainty that the noble Earl has just been referring to—and I gave the example of the extraordinary movement in our business rate revenue of about 11% between the last two years—the fact that, in the future, we cannot foresee it and that we are going way beyond the public spending survey period.
Baroness Hanham
My Lords, if the noble Lord, Lord Jenkin, was here, I would tell him that I am grateful for his amendment and the explanations that have been given on his behalf by the noble Lord, Lord Tope.
It might help noble Lords if I remind the Committee—if it needs reminding—how the rate retention scheme will deal with the spending needs of local authorities and how it will handle the changes in rates income that authorities will experience at a revaluation. When the scheme is first set up in 2013-14, we will determine whether authorities have to pay a tariff or whether they receive a top-up payment. To do this, we will compare the local share of the business rates that an authority collects with what I shall simply call the baseline funding level, which is essentially the number that currently falls out of the formula grant process. In other words, it is the share of money that the Government believe each authority should have, taking account of its needs and resources—a calculation that is done currently.
Therefore, at the point that we set up the rate retention scheme, we will have fully taken account of the needs in the same way as we do now under formula grant. Thereafter, we do not intend that the rate retention scheme will take account of needs again until the system is reset, and we have already indicated—and noble Lords have said they understand this—that our aspiration is to have the first reset in 2020 and to have resets only every 10 years thereafter; so 2020 would be eight years after the introduction of the scheme. This is to ensure that there is a sufficiently long time between resets to incentivise growth. If, instead, we were to adjust tariffs and top-ups every year, or every few years, to reflect changing needs, we would completely destroy the incentive effect that this scheme is designed to achieve.
As noble Lords will recognise, if authorities are to be encouraged to invest in growth, they need to be certain about the reward that they will get. As has already been pointed out, authorities will often incur costs as a result of growth and, just as often, those costs are incurred before the rewards from increased rates materialise. If the rate retention system were to be set up in a way that risked authorities incurring costs but then not seeing rewards because tariffs and top-ups had been adjusted, they would have no incentive to invest in growth.
How long the system needs to be stable for is a matter of judgment. Amendment 36 of the noble Lord, Lord Jenkin, would effectively require a reset for needs every five years to coincide with a revaluation. The Government believe that this period is too short. The timeframe over which investment is made and over which costs and rewards materialise will very often be longer than this, a point that was made by many of those responding to last summer’s consultation on the scheme. This is why after 2020 we intend to reset the scheme every 10 years. However, as I indicated last time, we will always retain the ability exceptionally to reset earlier if, for example, we found that the needs and resources had got significantly out of line.
Lord McKenzie of Luton
That was helpful, as I have been trying to understand the difference between a full reset and a change in the tariffs and top-ups. What factors would be taken into account? The noble Baroness said that need is going to be ignored, which would certainly bother a number of us. How is that going to be achieved?
Baroness Hanham
My Lords, the needs assessment will be the same as the assessments for the baseline that were made initially. As I understand it, you would have to revaluate against that baseline. Any adjustments needed to that as a result of the revaluation would be made on the financial basis that there is no change to the amount a local authority is receiving unless there has been some change in the baseline or in the ingredients of the baseline. I think that is correct as to how the assessment will be made and, again, I will write if it is not.
Lord Tope
I am very grateful to the Minister for that explanation and to all noble Lords who took part in this debate, which raised some interesting and useful points. We will read it carefully in Hansard and I am quite certain the noble Lord, Lord Jenkin, will read it with even more care and interest. I do not speak for what he may intend to do when he has done so, but in the mean time I beg leave to withdraw the amendment.
Lord Shipley
Perhaps I may intervene for a moment in relation to Amendment 37 to probe the meaning of the word “need”. I should like to raise an issue concerning exempt student households. It is becoming an increasingly serious matter on which I would appreciate the Minister’s guidance.
Student households are exempt from council tax. They are also exempt from business rates where it is a house in multiple occupation but owned by a landlord. The principle has been that councils get reimbursed from the national pot. In the past couple of years, that has not been happening as it should, and in some cases there is around a 25% deficit so that only around three-quarters of the income that would be expected is being received, yet local services are being provided without all the income that is necessary to pay for them.
I understand that the consultation that is taking place over the summer with local authorities will look at this issue, but I am seeking an assurance from the Minister that the matter will be taken very seriously. In the past, need has been taken to include full reimbursement of the loss because student housing is exempt.
Baroness Hanham
My Lords, as I was about to say, the noble Lord, Lord McKenzie of Luton, was asking about the consultation on the needs and the formula. That is part of the summer consultation, so it will be dealt with before we meet again on Report. I am not going to muddy the water before that, so I will leave that there. I do not think there is any intention to change the exemption from council tax for students and business premises.
The first reset will start in 2013-14 and the Government will set out in the local government finance report all those elements sought by Amendment 38, but only in 2013-14 and in any reset year. I do not need to go through again the arguments I have already deployed in relation to Amendments 35 and 36 but, as I have already said, outside of a reset year, we do not intend to reset tariffs and top-ups to take account of need. We have been through this. This is because the scheme is designed to produce, and we intend it to deliver, a significant incentive for local authorities to promote growth. We think that incentive would be destroyed. Instead, we intend that the scheme should give authorities absolute clarity for a period of up to 10 years—clearly it will be eight at the start—about the payments that they will receive or make to central government. This will give them the strongest possible incentive to respond to business concerns, secure the necessary investment and increase their income through sustained growth.
I am sure that the noble Lord, Lord McKenzie, will recognise that, for these reasons, the Government cannot accept either of these amendments, and I hope that he is persuaded to withdraw Amendment 37 and not to move Amendment 38.
Baroness Donaghy
Will the Minister clarify her answer to the question asked by the noble Lord, Lord Shipley? She indicated that the system would not change. Is that the system of a couple of years ago or the system that seems to have been drifted into on student accommodation?
Baroness Hanham
It is as it pertains at the moment, which is that students are not charged council tax and the owner is not charged business tax. I think that is correct, and there is no intention to change that.
Lord Shipley
I should be very happy to have a written note about this prior to Report. It would help us enormously. The issue is that the exemption should be fully refunded to local authorities; as I understand it, in the past few years it has not been. It is becoming a problem for places that have large numbers of houses that are wholly exempt because they are wholly occupied by students. There is simply no income at all.
Baroness Hanham
My Lords, I will write to noble Lords on both those matters. Clearly there is a slight difference of emphasis and it would be more helpful if I wrote to the Committee.
Lord McKenzie of Luton
My Lords, I thank the Minister for her reply. Of course, we are in the Moses Room so I shall withdraw Amendment 37 and not move Amendment 38. Before I do so, I return to the issue of the baseline and needs and resources. Even if one accepts that the formulation used when setting the baseline is a fair and reasonable basis on which to do so, what evidence do the Government have to suggest that it is capable of holding in an appropriate way and that there will not be a divergence of needs and resources over seven years, 10 years or any other period?
Baroness Hanham
My Lords, when I was winding up I said that the Government would keep this under review and that, if there were a major change, the Government would be prepared to look at it on an individual authority basis within the local government finance settlements. Is that what the noble Lord, Lord McKenzie, is asking?
Lord McKenzie of Luton
In part it is. I can see that the Government might feel moved to adjust the formulation following a very significant change. However, we are talking about people’s lives here. Incremental changes to support can have a dramatic effect on them. I have looked at the impact assessment and the assessment of economic benefit, which was a fairly opaque document. I am trying to identify what work the Government have done so that we do not need to worry about resetting after three years, five years or any other period, and so that we are confident that, broadly, those parameters will hold over that period.
Baroness Hanham
I will let the noble Lord, Lord McKenzie, know. Whatever the calculation up to that point, the intention is to ensure that there is a settled time between resets in order to establish growth and benefits from that. I have said that a couple of times. The noble Lord will not expect me to answer now on all the calculations. I shall take a look and, if I can get further information for him, I will do so in due course.
Lord McKenzie of Luton
I am grateful for that and look forward to the further information. It seems that, in all this, the incentive effect takes priority over the needs issue, which is unfortunate. However, for the time being, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I formally put on the record that I am pleased to be part of this expanded but temporary coalition. The case has been well made. The broader point that the noble Lord, Lord Jenkin, made is well worth pursuing, and I would be happy to talk to, and possibly again support, him and extend this coalition in those limited circumstances.
Baroness Hanham
If the noble Lord is going to join the coalition, why not from the Front Bench, given the way things are going?
This group of amendments presents a good opportunity to discuss the key element of the rates retention scheme; that is, the operation of the levy and the safety net. From the outset, we have signalled our intention that the rates retention scheme will include a safety net mechanism to protect local authorities from significant downward shocks to their income. We did so in recognition of the inherent volatility in the business rates system, to which my noble friend Lord Palmer has just referred, that can see rates income vary from year to year, principally because of appeals, to which the noble Earl, Lord Lytton, referred, which are generally out of the local authority’s control, or a sudden change in local economic circumstances as a result of, for example, the closure or relocation of a major business. The safety net will be funded by a levy on the disproportionate benefits that some authorities would otherwise experience simply because of their high initial business rates baseline. The detailed calculations required to determine whether a local authority is to make a levy payment or receive a safety net payment and, if so, the amount of any such payments will be set out in regulations, which will be subject to the affirmative resolution procedure under paragraphs 20 and 23 of the schedule. In both cases, those regulations will need to set out the precise detail of what is to be measured and how it is to be measured, and the provisions in paragraphs 20 and 23 give the scope to be able to include all relevant items in defining income for the purposes of the calculations. Amendment 41, moved by the noble Lord, Lord McKenzie, seeks to remove some of that scope by removing the ability in regulations to make provision for the calculation of levy payments to be by reference to some factor other than retained business rates income.
I shall lay out how we think the calculations will work. The noble Lord, Lord McKenzie, will be aware that we intend to set a proportional levy at 1:1, which will mean that all authorities can expect to retain up to 1% growth in their baseline funding level for every 1% growth in their authority’s business rates baseline. This will require the authority’s retained rates income for the year to be compared with its baseline starting level. In other words, that is the rates income we initially calculated that the authority would collect—its business rates baseline—plus or minus any top-up or tariff before applying the levy rate to the difference between the two. The initial comparison or the application of the levy rate could be described as another factor.
We are also trying to create a legislative framework that will stand the test of time. Noble Lords have already referred to the need to keep the safety net under review, and we agree with that. A consequence of keeping it under review is that we may at some point in the future want to redefine how the safety net works and we may—who knows?—want to include a reference to other factors. If a future Government were to do that, they would, of course, have to get the agreement of Parliament to those changes through the affirmative resolution procedure, so the right level of scrutiny is clearly available.
There is no secret conspiracy here. We do not intend to take account of some other mysterious factors. The provisions as they stand simply enable the way the levy payments are to be calculated to be set out in regulations. It is true that they may also provide some flexibility, but we have no plans to do anything other than provide for a proportionate levy on retained business rates income, as I have set out.
I have more sympathy with the noble Lord’s Amendment 42—that must be the first time I have said that since we started.
Baroness Hanham
Don’t get too excited. The amendment for which I have more sympathy, Amendment 42, seeks to ensure that there is a period during which authorities can challenge the calculation of the levy payment, but I do not believe that it is necessary to set that out in regulations. The basis of the calculations is, as I have explained, to be set out in regulations and local authorities will have ample opportunity to comment on that. Individual calculations will be based on the information supplied to local authorities, so there should be no reason for the calculations to be wrong.
However, I appreciate that local authorities have concerns, as this is something that we have discussed in the working groups that we have with them. Although I am not convinced that a requirement in the Bill is appropriate or necessary, I shall take this away to give further consideration to how we might meet those concerns. That is my sympathetic bit.
Turning to the discussion on the safety net threshold, prompted by Amendments 43, 45 and 45A, noble Lords will be well aware that decisions about the levels of the safety net threshold and the levy ratio are very closely linked. They must balance a range of competing issues and they cannot be divorced. While the safety net needs to offer protection against significant shocks in the local rates base, as I mentioned earlier, it will be funded by other local authorities through the levy. Therefore, the levy ratio must be set at such a level as to generate sufficient income to fund demands on the safety net at the chosen support threshold. Equally, that level must be such that it continues to offer an incentive to authorities to pursue growth.
We have carefully considered all these issues and believe that the levy ratio at 1:1, together with the safety net support threshold in the range of 7.5% to 10% below baseline funding, offers the best combination on balance. We will be consulting local government over the summer before any final decisions are taken. Therefore, although I appreciate the intention behind the noble Lord’s amendments, I am not in a position to accept them.
I think that Amendment 44 tabled by the noble Lord, Lord McKenzie, is unnecessary. I understand his aim but he will no doubt appreciate that we will of course want to keep the operation of the safety net under constant review, particularly during the early years of the scheme. If we believe that it is not offering the right level of support, we will change it.
Finally, with Amendment 46 my noble friend Lord Jenkin seeks to ensure that provision is made for the effect of appeals on an authority’s income—a matter raised earlier by the noble Earl, Lord Lytton. We recognise that the impact of rating appeals on an authority’s income is outside the control of the authority but we do not believe that this amendment is the way to deal with it. Instead, as I have previously explained, we will be building two significant protections into the scheme. First, we will be reflecting appeal losses in the initial calculation of tariffs and top-ups. In other words, we will set the level of tariff or top-up as though authorities have collected less income from rates than is the case, recognising that over time they will lose some income on appeal. Generally, we have put in place the safety net so that, where authorities lose more on appeal than is allowed for in the initial calculation, they will be substantially protected through the safety net payments.
With those assurances, I hope that the noble Lord will feel able to withdraw his amendment.
Lord True
My Lords, I think I understood what my noble friend said and I am grateful for her generally positive response. However, I think I heard her say that the high-income authorities will pay for the funding of the safety net. Of course, I do not know how a high- income authority is defined. If it is a tariff authority—and my authority expects to be a tariff authority—I have just given an example: one appeal has had the effect of knocking 4% off the overall business income. I do not expect the Minister to answer this point now but I hope that there is not an assumption that every tariff authority is necessarily able to bear that sort of short-term turbulence. I should just like to put that point on the record.
Baroness Hanham
Within that, the authorities that will pay the levy are those described as having a disproportionate increase. That is an authority that may have the ability to raise an enormous amount of new money. If the tariff is there and an income is not coming in or is dropping, you cannot be described as having a disproportionate income.
Lord True
I am grateful for that, but that is probably something better dealt with in correspondence. Is anyone from Westminster here? In short-term parlance, we all understand that Westminster is the kind of authority thought of as being disproportionate, with due respect to my friends in Westminster. Could officials let us know about that disproportionate definition tariff? Obviously, if the authority that has to finance the safety net should also be one of those gaining from it, we are in a slightly odd situation as I read it.
Baroness Hanham
I will write to the noble Lord. My understanding is that as long as you have sufficient income left as a tariff authority, you probably would not justify help from the safety net. It is for those who lose an enormous amount of income and are not able to cope with that because it is below the base line. None the less, I shall have the noble Lord written to about that.
Lord Jenkin of Roding
My Lords, I am grateful for what my noble friend said about looking again at the issue raised by Amendment 46, but I am not sure that I wholly understood. I do not want to anticipate the argument that we might have on any amendment that she might bring forward on Report, but I understood that she said that one thing that the Government might do would be to try to take into account the impact of appeals. Is that what she said? How can you know before the appeal has been heard? I just do not understand. It is just another estimate, whereas the amendment is looking for full compensation for that. I am not sure whether I have properly understood what my noble friend said in her earlier response.
Baroness Hanham
It must be extremely difficult to work out in advance how many appeals will be won or lost. There will be an assessment of what that will be and it will be taken into account at an early stage. The noble Lord is asking for full compensation on every appeal that is lost or won—if it were the other way round, we could take money back. At present, if it is likely that a lower amount of rates will be collected than expected because of outstanding appeals, that will be taken into account. That is some form of compensation, it seems to me.
Lord Beecham
My Lords, we are talking about a safety net, but it seems that both the number of holes in that net and their size are to be estimated. It is quite a difficult position. The formulation of the noble Lord, Lord Jenkin, seems much more rooted in objective fact and would give a degree of certainty. Should the Minister not take this matter back for another look?
Baroness Hanham
My Lords, I am happy to do that. The historic figures, which will be used across the country, will be used as the basis of what we have been talking about. We can try to bottom out the detailed calculations between now and Report. It is probably more helpful if I write to Members of the Committee so that they can see what they are. However, the rates system is not new; we have had a system of business rates for ages. At least some of it will not change at all. There have been rates and appeals for all that time. There is not a huge difference in the mechanism but the results may be slightly different. I will write to noble Lords about that as well; it will be a long letter.
Lord McKenzie of Luton
My Lords, I thank the noble Baroness again for her responses to these amendments. She said that business rates have been with us for a long time. They have but what is before us is a fundamental change in which risk moves from central government to local authorities. It is a lot of risk for local authorities. Like a number of noble Lords who have spoken, I understand that something is embedded in the baseline figures, but I am not convinced that that fundamentally deals with the ongoing problem that the noble Lord, Lord Jenkin, has outlined. Like the noble Lord and others, I will read the record on that. I am sure that it is something to which we shall return.
I was on the point of being overjoyed by the Minister’s response to Amendment 42 but was less so when she was not able to accept it. However, I am grateful that at least the spirit of the amendment is alive and that it will be taken away for further consideration.
On Amendment 44, I accept that there will be ongoing routine monitoring and assessment of how the safety net will work. That is not inconsistent with there being some formal report to Parliament on how it has worked and what its effects will be. We will certainly wish to return to it on Report. In the mean time, I beg leave to withdraw the amendment.
Lord Palmer of Childs Hill
My Lords, the noble Lord, Lord Jenkin, has covered most of this but I wish to add a few words on Amendment 47. This ensures that the Secretary of State must consult on whether the remaining balance on the levy account is redistributed to local government or rolled over to the following year. I really feel that this amendment is trying to prevent this legislation from resembling the National Lottery, where if someone does not win a prize it is rolled over to the next round. Here, instead of there being a balance that is distributed to the people whence it came, we are suggesting that it is rolled over to the next lot of recipients in some lottery-type arrangement. All this amendment is trying to do is to limit the levy to the period to which it relates and to those who have contributed to the levy within that period.
Baroness Hanham
My Lords, we are in danger of amending the amended. These clauses were amended in the other place as a result of some of the concerns there. These amendments would reverse changes to the way that the Government distributes surplus levy income that were made in the other place. I recognise the noble Lord’s intentions in tabling these amendments—indeed they reflect much of the Government’s proposed process for distributing the levy surplus when we first introduced the Bill in the other place. However, as the Bill was amended to meet concerns raised there, I cannot accept these amendments. We have said that any surplus levy income that is not needed to fund the safety net will be distributed back to local authorities. We will not simply hold larger and larger surpluses.
Amendments 47 and 48 propose that the Secretary of State should consult with relevant authorities in advance of determining how much levy surplus should be distributed back to local authorities and set out the basis of distribution of levy surplus in the annual local government finance report. Although I sympathise with the intentions behind these amendments, setting out the distribution of any levy surplus through the local government finance report rather than through regulations is not the best approach. In fact, there are unintended consequences of this approach, in particular for the timings of payments to distribute the levy surplus.
When the Bill was discussed in Committee in the other place, concern was raised that the proposed process for distributing surplus levy was a bit long-winded. Setting out the basis of distribution through the local government finance report would mean that even when the Government had taken a decision to distribute some or all of any surplus back to local government, authorities would have to wait six months to a year before they saw the money. As a result of that, the Government agreed to look into speeding up the distribution and therefore amended the Bill—which is how it stands now—so that the process for distributing levy surplus, and the basis of that distribution, could be set out in regulations, ensuring that the payments can be made immediately after the decision to make them is taken.
Furthermore, to provide appropriate parliamentary oversight, the Government ensured the regulations would be subject to the affirmative procedure and hence subject to the approval of both Houses of Parliament. Regulations will need to be in place well in advance of any levy surplus being distributed, so authorities will have the certainty that the noble Lord is seeking. Once the regulations are in place, they will have this certainty each and every year until and unless they are revoked.
Amendment 49 requires the Secretary of State to report to Parliament the reasons why any remaining balance of the levy account has not been redistributed within three years. Again, although I recognise the intention behind this amendment, I do not believe it to be necessary. I reiterate that it has always been the Government’s default position not to hold back excessive amounts of surplus levy. The levy account will also operate with a high degree of transparency—the payments made both to and from this account will be easy to identify, as will the overall balance. Furthermore, the Comptroller and Auditor-General will report on the account and lay this report before Parliament in the same way as he currently does in the report entitled Pooling of Non-Domestic Rates and Redistribution to Local Authorities in England. This will provide Parliament with adequate opportunity to raise the issue of the levy balance, if required, through the normal processes.
On the basis of these arguments and the fact that this has already been amended, I hope that noble Lords will not press their amendments.
The Earl of Lytton
My Lords, apart from the redistribution of this levy to local authorities, it remains the case that it is funded by what is paid by businesses on their non-domestic premises. I simply wish to have an assurance from the Minister that under no circumstances could this be used or treated as any sort of contingency fund to overcome inherent deficiencies and time lags in the system. As I have previously pointed out in the context of this Bill, non-domestic ratepayers are getting a bit of a raw deal in terms of what they pay per square foot by comparison to other contributors to local government finances. Their values are based on 2008 antecedent valuation date figures, for which they are paying ever more through the processes of transition, in circumstances where their own economic situation is increasingly challenged. Furthermore, I believe that the Valuation Office Agency has admitted that there is an element in the national non-domestic multiplier for losses and adjustments resulting from appeals.
Baroness Hanham
My Lords, I have already said that if there is a surplus on the levy it will be redistributed to local authorities as soon as possible and in agreement with them. So I do not think that the noble Lord’s comments are valuable at this point. There is a very straightforward intention here. The levy that arrives from a surplus of growth within some local authorities, if there is an excess of it, is distributed back. I must say to the noble Lord that I have 30 pages of response to amendments that he has put down on all these matters, so perhaps we could deal with them all at that stage.
Lord Jenkin of Roding
My Lords, I listened to my noble friend with care. Due to the extraneous noise overhead, I am not sure that I heard it all. This Room is rather vulnerable to the helicopters flying overhead. I got the impression that she feels that there is merit in what we are saying and that she understands that her regulations will in fact deal with it. Would that be a fair summary?
Baroness Hanham
I am happy that the changes that were made in the other place will ensure that the levy is redistributed as quickly as possible, in consultation with local government, and that will be laid out in regulations.
Lord Jenkin of Roding
Indeed, if that is going to happen, that is not unsatisfactory.
Can I have an assurance that the regulations that this clause provides for will be available by the time we get to Report?
Baroness Hanham
We have said that we will have all regulations available before we meet again.
Lord Jenkin of Roding
In those circumstances, I hope that my noble friends in the expanded coalition will agree that I withdraw the amendment.
Baroness Hanham
My Lords, this has been, as I thought it would be, a very interesting debate. I am not necessarily going to be able to give noble Lords all the enthusiastic encouragement that they look for but there is no doubt that this is something that will generate more discussion, and I accept that.
I know from the noble Baroness’s Amendment 51 that there has been a search for the words “TIF” and “enterprise zones” to be spelt out in the Bill. They are not specifically identified but I assure the Committee that the provisions under paragraph 37 of new Schedule 7B deliver both TIF 2 and enterprise zones. An amendment that names TIF in the Bill is therefore unnecessary.
Before turning to the substance of the amendments, I want to say that it has been interesting that the whole discussion has been on the basis of TIF 2 and none of it on TIF 1. I need to point out that the measures in the Bill relate to TIF 1, TIF 2 and enterprise zones. For the benefit of the record, I think that at some stage we need to spell out what TIF amounts to.
However, we want to clarify the position and remove misunderstandings about what is possible or not possible within the policy. I think it would be fair to say that noble Lords have not really acknowledged that, as a result of the Bill, all local authorities will have unfettered access to a share of business rate growth to increase their potential borrowing. As things stand at the moment, under TIF 1 it will be possible for local authorities to undertake developments unfettered. They can do so with their normal prudential borrowing.
TIF 1 rests wholly within the business rate retention scheme and the core feature of the rates retention system, including the levy and reset. Beyond that, the Government will not impose any further constraints, and local authorities will be able to get on with it. I know that the criticism has been—
Baroness Kramer
We did not raise TIF 1 here because it is more of a reset issue, but will the Minister acknowledge that, with the way the reset works, the capacity to do TIF 1 will be exceedingly limited because the whole project has to go from conception to completion and complete repayment within a very narrow reset period? The consequence is that certainly by year two or year three it will be absolutely impossible to raise the financing because nobody will have any certainty that there will be a flow of business rates beyond the end of the reset date to complete the payment cycle. Perhaps the Minister will acknowledge that it is a de minimis amendment. The language may not be de minimis but the effect of the way in which the reset period works makes it de minimis.
Baroness Hanham
I will persist with my view that there is an advantage here for local authorities in that they will have the opportunity with tax increment financing within the reset period of seven years, and then, with the longer reset period, 10 years, to help with those projects. In addition, the Government will guarantee long-term certainty over revenues and enterprise zones—as mentioned by the noble Lord, Lord Beecham —meaning that local enterprise partnerships, with which the revenue will sit, will be free to undertake long-term borrowing without any central government controls. Those are the two areas which do not come under TIF 2.
Finally, the Government stated, and made clear, in the 2011 Budget that they will support a limited number of TIF 2 schemes in the core cities, to which the noble Lord, Lord Shipley, referred. The Secretary of State may specify, in regulations made under paragraph 37 of new Schedule 7B, that business rates uplifts, from a very clearly defined area, will be disregarded from the levy and reset calculations for a specified period. The amendments specifically concern this measure.
The Government are fully committed to supporting growth. I noted carefully what the noble Lord, Lord Best, said about housing and about housing construction stimulating the economy. We will continue to have that debate, but the measures to do that are currently in place and are not related to TIF. There have also been a lot of questions about the £150 million in support from TIF for what will amount to a limited number of core cities. Some of those core cities have been announced today and are currently putting forward substantial and interesting proposal bids for this money. I have no doubt that it will work its way through the system.
Amendment 51 seeks a way to get TIF 2 reclassified as non-public sector debt, to which I say, “Oh dear”. Business rates are a tax, and taxes are uniquely established by the tax-raising power of government. Therefore, TIF 2 must be recorded as government borrowing. There is absolutely no choice to be made about how TIF 2 is accounted for—it is not the Treasury sitting on our shoulders here, it is the Office for Budget Responsibility that has made that decision. It is an independent body and has made very clear how this will score.
Furthermore, core cities that are successful in the TIF 2 competition will be undertaking additional borrowing that has not already been reflected in the Government’s local authority self-financed expenditure forecasts. The Government have been clear that we will need to limit the amount of TIF 2 that occurs so that the Government remain within the wider deficit reduction plans.
In respect of balance sheet issues concerning enterprise zones, the policy to allow rates to be retained within the zones will lead to an increase in the local authority self-financed expenditure forecasts and will be scored as public expenditure. As the business rates retention system does not start until April 2013, no costs have yet been accrued. The Government are working with local enterprise partnerships on forecasting these costs and will be discussing the detail with the Office for Budget Responsibility ahead of the Autumn Statement. That may give some substance for the noble Lord, Lord Beecham, who says I have not answered any of his questions. Given this, it is not possible to take TIF 2 schemes off the balance sheet, as the amendment seeks.
Amendments 52 and 53 would not only remove important controls from the system—I have already explained the importance of maintaining the Government’s fiscal deficit policy—but would add further layers of complexity to the operation of the scheme. That would potentially impact on all the calculations of central shares and precepting authorities, removing the certainty that precepting authorities would have about the income they were to receive in that year. Noble Lords will not be surprised when I say that I cannot accept their amendments. I will not be surprised if they say they are going to return to this at a later stage.
Baroness Donaghy
Can the noble Baroness clarify whether, when the Office for Budget Responsibility made clear that this could not be off-budget, it gave a full explanation as to why it said this, and whether the Government have to accept what the Office for Budget Responsibility says? I wonder if it is a swing of the pendulum against the outcome of PFI. Having a fuller picture of why that independent body said this might give us the opportunity to explore the subject further rather than just accept that it is closed.
Baroness Hanham
With regard to the point about whether we have to accept what it says, the answer is yes. The OBR advises the Treasury, but what it says pretty well has to be taken on board and dealt with in the way it says. I do not think I have a note at the moment of the reasons behind what it said. If they are in the public arena, I will make sure the noble Baroness knows what they are.
Baroness Donaghy
Does that mean that, on all subjects, every statement made by the Office for Budget Responsibility will be accepted by the Government?
Baroness Hanham
Sorry, I have to keep looking over my shoulder for. It would be better for me to quit looking over my shoulder and say that I will answer with detail in writing.
Baroness Kramer
My Lords, I am absolutely fascinated by the comments on the Office for Budget Responsibility. It is incumbent on the Government to provide us with the analysis or the statement that it made that requires this from its perspective to be on books because it would be very interesting and beneficial to everybody to get the comments of the accounting community and some of the various international standards boards. It would mean that we could have a fully constructive discussion. I cannot think that any of that could possibly be confidential. In fact it would be perfectly odd if it was confidential to explain why one made a decision that something needed to be allocated to one particular set of accounts or another. That would be exceedingly helpful.
It would also provide us with the criteria, because obviously there are many different ways to structure TIF projects. If various poor cities are bringing forward their proposals in such a way that they have inadvertently set them up so that they fall on books when, with some further thought and different structuring, they could be off books, that would be extremely sensible for everyone to know. That surely must be in the public arena, so I look forward to that.
Having heard the tone of this meeting, the Minister is exactly right to understand that this is an area that we would wish to pursue. I so much appreciate all of the various speeches and analysis that have happened from the noble Lords, Lord Jenkin and Lord Best, and others. It underscores the importance to local authorities up and down the country who are trying to drive forward economic growth in their communities and see TIF as a very significant tool with which to be able to achieve it.
I thank the Minister for her explanation, but she is exactly right: we will continue to push and I hope that she will take the issues back.
Baroness Hanham
My Lords, as the noble Lord has acknowledged, we discussed in earlier amendments a number of the things that he has raised, focusing too on the case for requiring the Secretary of State to undertake reviews of resources and need, and for the Secretary of State to take account of changes in relative needs and resources in resets of the system. Given those exchanges, I will not rehearse all the arguments again as they will be on record.
However, it will not surprise the Committee that I cannot support the amendment, as it would fundamentally undermine the purpose of our changes to the funding of local government. There are two key principles at the core of those changes. The first is to deliver a powerful incentive for local authorities to drive growth in their area, and to benefit from that growth. I remind the Committee that such authorities are all around the country; growth is not a southern phenomenon.
Secondly, we are clear that the arrangements should deliver strong protections to those areas that are less able to generate growth or where the business rates are less than the needs of that area. That takes in tariffs, top-ups and levies. We have made clear that baseline funding levels will be equivalent to what councils would have received under the formula grant. As a result, each local authority’s baseline funding level, and therefore the calculation of its tariff or top-up, will be based on figures that take account of the different needs of each area, so our changes will recognise relative needs.
Having established the baselines, an integral part of our proposals is to provide certainty and predictability to councils. Those authorities that have a lower business rates base need to have certainty that their top-up payments will remain fixed, subject to being uprated by RPI annually. Those authorities that, at the beginning of the scheme, have spending needs in excess of their business rates need to have confidence that any tariff that they are paying is fixed—again, subject to being uprated by RPI.
That level of stability in the scheme is crucial to enabling local authorities to carry out their budget planning. At the heart of our arrangements is enabling local councils to benefit from growth. To maximise that incentive effect, we have set out an aspiration to allow 10 years before resetting tariffs and top-ups. At the start of the scheme, the statement of intent that we published in May confirmed that we would not expect a reset to take place before 2020—and I have acknowledged that that is eight years, not 10.
The use of a lengthy period between resets was also strongly supported by respondents to the consultation that we undertook last year on the parameters of the proposals. However, we have also been clear that in exceptional circumstances we could consider the need for a reset to be undertaken on a different timescale. This could reflect on significant changes in need and resources. Noble Lords can be reassured that we are not blind to such possibilities.
Noble Lords will also appreciate that each year we will publish a draft local government finance report which will be subject to consultation and approval in the other place. I am sure that authorities will use the opportunity provided by the provisional settlement, as they always have done, to make their views known on the resources available to them. As always, we will listen carefully to any such representations.
However, at this stage we are confident that we have developed the right balance between providing an appropriate timeframe for councils to benefit from the incentive effect while also providing stability and security for councils. A period of only three years between resets would not achieve that balance and would, in my view, undermine the incentive effect.
The amendment also proposes text on the designation of tax increment finance schemes. As we discussed, TIF is very firmly part of our proposals, and paragraph 37 already provides the appropriate powers to facilitate such schemes and to ensure that the business rates from such schemes are disregarded for the purposes of setting top-ups, tariff and levy amounts. With those explanations, I hope that the noble Lord will be able to withdraw the amendment.
Lord McKenzie of Luton
I thank the Minister for her response. I think that we have aired issues of reset and TIF enough for today. However, I want to return to the first part of my noble friend’s amendment. I did not have the chance to discuss the background with him so I am interpretingwhat he may have intended, but it gives rise to an issue about what that local government finance report will routinely look like in the future.
Obviously, the first year will have particular features, but if we look at current local government finance reports, there is a whole raft of information and regression analysis that drives the formula grant and helps establish need right across the country. What will happen to that in the future? Presumably, the information will not routinely need to be available on the Government’s proposition in that report, so what will it look like? What will it contain? It will clearly have to contain certain information that has to precede the decisions and payments and so forth that flow from the Bill, but what will be the core of that and will it have details about the revenue support grant and the basis on which it might be distributed?
Baroness Hanham
I am not going to detain the Committee tonight. We have the details and I will make sure that the noble Lord has them. The ingredients of the local government finance report, which will be annual, will probably change from time to time, but if I may, I will write to the noble Lord with the details.
Lord McKenzie of Luton
I am grateful to the Minister and beg leave to withdraw the amendment.
Baroness Hanham
My Lords, the problem of adult social care does not rest with the local authorities alone. The noble Lord, Lord Beecham, has already pointed out that there is a similar responsibility on the National Health Service. If this problem had been capable of being resolved, it would have been by now. I recognise the noble Lord’s frustration coming to this Bill as a result of his work on the Dilnot commission, and I understand it fully. However, everybody here will be aware of the ongoing discussions every time you turn on the radio or television. There was another discussion last night on “Newsnight” on these serious problems, which are, at the moment, more or less intractable. The last thing I want to do is to try a light touch on this. I appreciate fully that this is a very serious matter, but so do the Government. The Government are wrestling with this, like previous Governments did. If the noble Lord was dealing with social services in 1970 and was then leader of a council, he and I at both stages were dealing with having to reduce expenditure and increase and toughen criteria.
This has long been a problem and it has gradually got worse because of the demographics and the general increase in costs. We are now against the background of an enormous deficit—which was not the responsibility of this Government but which we are having to deal with—which is not helping the situation either. As I said at Second Reading when the noble Lord, Lord Warner, brought this up, the Government—as he and others know—are committed to publishing a White Paper shortly that goes across both departments. I confirm that my department is in regular touch with the Department of Health about it. The White Paper will set out the plans to transform care and support. I recognise very clearly that this is beginning to absorb an enormous amount of public funding.
Clearly, the battle is to decide whether any personal contributions have to be made or whether there are other routes. If you are forcing people to sell their houses, you are in very difficult territory. I understand the reason the noble Lord, Lord Warner, brought this up. I am not going to accept the amendments for the reason that this is not solely a part of local government and it is certainly not a part of what we are discussing at the moment. I only add that the Government have already allocated an additional £7.2 billion over four years to adult social care, so we are not pulling back on our commitment to it. We are very much committed. We now have to wait for the White Paper. I very much hope that the noble Lord will not return to this at a further stage.
Lord Warner
Well, my Lords, that was all very interesting from the Minister. I suppose I thank her for it. I am not sure that I was very convinced by any of it. To get it on the record, this Government set up the Dilnot commission. They encouraged us to produce a report within 12 months, which we dutifully did. It is now 12 months since we reported, and there has not been a peep out of the Government about what they want to do. I do not mind if they do not like it, but they might have had the decency to suggest another approach that they would like. However, what we have had is silence and all the signals—from the cross-party talks and elsewhere—are that what we will get next week is a White Paper and a draft Bill that will be extraordinarily silent on the subject of money. I am a very patient sort of chap. I am very happy to wait until I see this document and what the arguments are and to consider it over the Summer Recess. I do not approach that with any great optimism. I am happy to withdraw the amendment on this particular occasion but I do not give any assurances to the Minister that I will not come back to this on Report, refreshed after the Summer Recess.
Lord McKenzie of Luton
My Lords, I am happy with that and do not think it is going to take very long. I start with an apology for tabling these amendments just yesterday, but they arose out of the debate we had on Tuesday and I make no apology for returning to the issue of the local and central share, and what this entails. We accept entirely that the Government intend to use the central share for the purpose of local government in England, although, as defined, this does not have to mean actually paying it to local government. This is what the statement of intent promises. It is also clear that for the first two years of the scheme, revenue support grant will be made available to local authorities to keep them whole, because their local share of business rates will be below the control total set by the 2010 spending review.
This amendment looks beyond these years and requires revenue support grant to be paid in any year when the central share is positive. It is of course at this stage just by way of a probe, because it begs a lot of questions and we need a lot more detail to make it secure. However, it is designed to give the Government the chance to say how they are going to use the central share and on what basis. They must have some notion. What principles will be applied after 2014-15? Will its use be driven by a needs/resources approach or on some other basis? What is that basis?
I was going to have another go at a question I posed previously. I think it may have been dealt with in the letter I received from the noble Baroness—for which I thank her—just before Committee started. I have not yet had a chance to absorb it. I will perhaps reserve my powder on that particular issue but the substantive issue remains as to what that central share will be used for after those initial two years and on what basis will any use of it be determined.
Baroness Hanham
My Lords, I thank the noble Lord for dealing with the amendment briefly. I think that other members of the Committee, who look like they are gathering their papers together, will be grateful if I can be equally brief. As the noble Lord said, we have covered quite a bit in previous amendments and I hope that my letter to all members of the Committee will deal with some of those issues. We know, and I have explained, that the central share will be repaid in total to local government. I acknowledge that it will come back in a way that is not in the control of local government but it will come back in the form of specific grants, initially with the revenue support grant part of that. The revenue support grant might reduce in due course, but, if it does, the local share will increase. It will be a balancing act between one and the other. Because of the relationship between the central share and fiscal control, it is conceivable that there could be a situation where no revenue support grant was paid but the Government would still be collecting some small amount of central share that they would again return to local government via specific grants.
In general, the proposition is that everything that goes to government by central share would go back to local government by other specific grants, some of which are laid out. We have had some discussion about that. I have had discussions elsewhere on what the specific grants would be and I hope we may be able to throw more light on that in the not-too-distant future. I hope that the noble Lord will withdraw the amendment.
Local Government Finance Bill
Baroness Hanham Excerpts(12 years, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord McKenzie of Luton
My Lords, I shall speak also to Amendments 2, 3 and 4. At the start of our deliberations, it might be helpful if I set out our approach to these Committee proceedings. This is a framework Bill. A tremendous amount is being left to regulation-making powers in the Bill—at least a couple of dozen powers on my count—which comprises just 19 clauses. We accept that the framework has been filled in in part by recent statements of intent and that there is a plethora of technical and other papers, but that is not the same as having a complete set of draft regulations. We will therefore use the opportunity of this Committee to probe the detail of what is intended and get as much as we can on the record. We will also seek to insure, where appropriate, that those regulation-making powers give the maximum opportunity for parliamentary scrutiny, hence these amendments.
Clause 1 introduces new Schedule 7B, which contains the nuts and bolts of the business rate retention scheme. It provides, among other things, for certain of the new regulations to be by way of the affirmative procedure and the rest by the negative process. This group of amendments adds to those that should fall into the affirmative category.
Amendment 4 concerns paragraphs 37 and 38 of the schedule. The Delegated Powers and Regulatory Reform Committee recommended that regulations made by virtue of paragraph 39 should be subject to the affirmative procedure because they impose a liability on a billing authority. This is what the amendment seeks to achieve. Paragraph 39 refers to regulations under paragraphs 37 and 38, and it is presumably those that should be subject to the affirmative procedure. Although we will want to discuss the detailed provisions later in our deliberations, we assume that the Government accept the Delegated Powers Committee’s recommendations on this matter, even if not our precise wording.
Amendment 1 deals with paragraph 6. This requires, following a local government finance report, payments of the central share of non-domestic rates to the Secretary of State. However, the regulation-making power includes the power to define what non-domestic rate income is and what adjustments can be made to amounts payable. We will discuss some of the detail of this later, but the power to define what income is for the purposes of the local/central split, including judgments about authorities acting diligently, is, we suggest, significant and should be subject to the affirmative procedure, at the very least on its first use.
Amendment 2 seeks to bring the provisions concerning payment on account under the safety net arrangements within the affirmative procedure. Again, we argue that this is much more than a mechanistic provision concerning calculation. It is potentially very significant for some authorities. It covers the circumstances in which safety net payments might come about. We welcome the fact that other regulations relating to the levy and safety net are to be subject to the affirmative procedure and consider that the same should apply to paragraph 26. So far as we can tell, the issues around payment on account are not covered in the statement of intent or in the government response to the resource review consultation. The consequences of catastrophic reductions in year of a business rate base, likely to be accompanied also by an upsurge in eligibility for council tax support, need serious consideration and should be subject to the affirmative procedure.
Finally, Amendment 3 focuses on paragraph 30, which deals with transitional protection payments. These are existing arrangements designed to dampen the effect of changes to business rate liabilities arising from revaluation. This could have a significant implication for the business rate retention scheme, and it is proposed to take the effect of this outside of the scheme. This requires regulations concerning calculations of a billing authority’s deemed rate in income and actual rate in income, including judgments about whether an authority has acted diligently. This is, again, a very significant provision, which should be subject to the affirmative procedure. We are in uncharted waters over lots of these areas, on a range of key issues, and we should do all we can to strengthen the parliamentary scrutiny. I beg to move.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, as the noble Lord, Lord McKenzie, said, this is framework legislation—as indeed is Local Government Finance Act 1988, which precedes it. It is therefore to be expected that there will be a number of detailed matters which will be dealt with in regulations. The appropriate level of parliamentary scrutiny for each set of regulations will differ depending on the precise subject matter at hand, and we have carefully considered the appropriate level of scrutiny for each of them.
This is why provision is already made for a number of regulation-making powers in the Bill to be subject to the affirmative procedure, as the noble Lord acknowledged. Regulations under paragraphs 8, 20 and 23, for example, which all deal with the calculation of various payments under the scheme, will be under affirmative order. The Government have made these regulations in particular subject to the affirmative procedure in recognition of the need for the highest level of parliamentary scrutiny over such types of finance provisions, given their significance and impact within the rates retention scheme.
Similarly, the tariff and top-up payments that will flow to and from local authorities will be determined by the local government finance report for a year, which must be approved by resolution of the House of Commons. That again affords the appropriate level of parliamentary scrutiny over key payments within the scheme.
All other regulation-making powers in connection with the non-domestic rating in the Bill are subject to the negative resolution procedure, as the noble Lord said. This is in line with the approach that is currently taken in the existing Schedule 8 to the Local Government Finance Act 1988, and also reflects the more technical or administrative nature of those powers. These include the regulations specified by the noble Lord in his Amendments 1 and 4.
The Delegated Powers and Regulatory Reform Committee, as the noble Lord has acknowledged, has carefully considered the Bill in advance of our debate today. The fourth report of the Committee, published on 21 June, considered that not only is the balance in new Schedule 7B between provision in the Bill and provision in delegated legislation “about right”, but also that the level of parliamentary control over regulations set out in the Bill is, subject to one exception which I will come on to in a moment,
“appropriate according to the relative significance of the various powers conferred”.
Noble Lords will not therefore be surprised when I say that I agree with the conclusions of the Delegated Powers and Regulatory Reform Committee on this point and therefore cannot accept their amendments.
We have carefully considered what the appropriate level of parliamentary scrutiny should be for each regulation-making power in the Bill, and our approach is supported by the findings of the Delegated Powers and Regulatory Reform Committee, whose responsibility it is to consider such issues. However, I hope that the noble Lord’s disappointment in my response will be tempered by my confirmation that we will bring forward an amendment at Report to make those regulations made by virtue of paragraph 39 subject to the affirmative procedure. I think that that is what the noble Lord was looking for. This is the exception to which I referred earlier, and in line with the recommendations. With those explanations, I hope that the noble Lord may feel able to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for her reply. Of course, I will withdraw the amendment given where we are. I am pleased that the Minister has confirmed that government amendments will be tabled to deal with the recommendations from the Select Committee. But I shall dwell for a little on two provisions to try to explain further why we believe that their significance is such that they should be subject to wider parliamentary scrutiny.
On payments on account of the safety net, the provision was put in the Bill, as the Minister knows, to give local authorities that are suffering in year from a significant downturn in their business rates an opportunity to get support during the year rather than wait until after the year, which is the general structure of the scheme. In the circumstances in which those opportunities present themselves, it is of crucial importance to local authorities to know what the rules of that provision are. I would have thought that it was also important for our scrutiny of something of that magnitude, which is not simply an issue of narrow accounting but an issue of real substance as to how a key part of the business rate retention scheme will work. I shall not dwell further on the paragraph 6 issue, other than to say that this is not just about accounting for the debits and credits; it is about a definition of income for the purposes of these provisions. I am sure that I will not manage to change the Minister’s view on the matter this afternoon, but we would like to reflect on it because these are significant provisions that deserve wider parliamentary scrutiny. I beg leave to withdraw the amendment.
The Earl of Lytton
My Lords, the noble Lord, Lord Beecham, made a perfectly correct reference to some comments that I put to him. Indeed, I have made comments in the context of this Bill before. Before I go any further, I ought to declare various interests: as a practising chartered surveyor, a member of the Rating Surveyors’ Association and a member of the Institute of Revenues, Rating and Valuation, which explains my interest in the valuation aspects of business rates.
There is a growing issue that creates a greater than usual level of uncertainty with regard to the yield of business rates. I referred previously to the number of outstanding non-domestic rating appeals. I believe that the current total is around 144,000 or 146,000. Even if you get rid of the repetitious ones, the true total probably sits at around slightly more than that—so, 80,000 or 90,000 appeals. Some of these go back to the 2005 rating list.
Business rate payers are getting increasingly concerned that access to justice is effectively being denied to them. A typical lead-in period from the time when an appeal is lodged to the time when the Valuation Office Agency is able to make any sort of substantive comment, I am advised, is in the order of two years—and that is not to the time when it actually gets before the valuation tribunal, when the valuation officer can actually open his book and address the issue. I do not blame the Valuation Office Agency for that. I think that the Committee should be aware that this is fundamentally to do with the agency being starved of the necessary resources. It is being starved of the personnel and starved of the resources to upgrade its computer technology; its computers do not interleave with the valuation tribunal’s computers, and so on and so forth.
Businessmen are particularly concerned because the non-domestic multiplier—that is, the multiplier that is applied to the rateable value in order to provide, as it were, the gross amount of the rates payable before transitional relief and other things—contains an element for potential losses to the tax base arising from successful appeals. So businesses up and down the country are bearing the cost of this contingent risk factor which is implicit in the fact that we are dealing with a system that is lacking in the necessary resources.
My point in raising this on Second Reading was to outline that this is the nature of the animal that is about to be bestowed—or, rather, its risks are about to be bestowed—on to billing authorities. I think that this needs to be addressed. I do not know how this relates to whether the Bill should be brought into force in 2013 or subsequently—I make no comment about that. I just say that there is an in-principle issue about the maintenance and management of the tax base that, if you do not get it right, will be in the nature of passing the buck, an issue that the noble Lord, Lord Beecham, raised on Second Reading. This is a risk factor. I think that it would be entirely wrong, although— I declare another interest as president of the National Association of Local Councils—that does not make me unaware of the risks that are being imposed on the principal authorities, which are represented here by their president, my noble friend Lord Best. I think that it is right that, when we are dealing with these matters of principle, we actually address them at this stage. This is part of the tapestry—the backdrop—over which an awful lot of the other bits that we discuss will have to be viewed.
Baroness Hanham
My Lords, I thank everybody who has contributed. I particularly thank my noble friends Lord Tope and Lord Jenkin, who have broadly said what I will say. I do not think that local government really wants us not to proceed at this stage. This has been in the offing for some time; people are well aware of what is coming about and there have been many discussions with them. Therefore, the suggestion that local government will not be able to implement the rates retention system from 2013 is not correct. Local government will have all the information that it needs to implement the rates and retention scheme effectively, before it has to do so. We will be publishing draft regulations before Report in October. Other information in terms of consultation of the technical detail of the scheme is going to be available over the summer and there will be draft secondary legislation in the autumn before the draft local government finance report is due. Therefore, by autumn, all the information necessary for the implementation of the business rates scheme will be out, even if some of it is in draft. Other information will then be available tying in to the local government finance report, which has to be laid, as it is part of the whole system.
The noble Earl, Lord Lytton, has raised a question that I hope we may defer, because he has tabled a major amendment about it for later in the debate. Indeed, some of the points raised by the noble Lord, Lord McKenzie, are also the subject of amendments. We might have a better opportunity to discuss them later. While I understand the noble Earl’s views that this is, or should be, part and parcel of the scheme, we think that that could and should be dealt with separately. As I said, we will come to points on appeals later on, but in setting up the retentions system we will make an adjustment to reflect the cost to local government of outstanding and future appeals, so there will be some amelioration.
We have worked pretty collaboratively with local government throughout the development of these proposals. In March 2011, we published the terms of reference of the local government resource review and in doing so we clearly set out the aims and the scope of our proposed reforms, as well as the timetable for implementation. We have since consulted local government on numerous occasions. In July 2011, we published a consultation on the design of the rates retention scheme and, in August 2011, we published a further eight technical papers to provide more details on these proposals.
We have listened to what local government has said. This was evident in our response to the consultation published in December 2011 and, indeed, that consultation continues today. The Bill that we are debating is the product of this attentive engagement and consultation. It has, of course, received pretty considerable scrutiny—perhaps unlike the Localism Bill—in the other place and there has been a gap since then for people to think about it and to ask for any information that they do not have.
We will continue to work with local government as we proceed. First, there is our working group made up of local government representatives, including the LGA, which is contributing to the policy and technical debate for the information that will be coming out shortly. There is a further consultation later this month on the technical details underpinning the scheme. There is plenty going on still to shape the legislation going forward.
In terms of our approach to the implementation, we believe firmly that the existing timetable should be adhered to. Before the new rates retention scheme is introduced in April 2013, local authorities will be consulted on their baseline funding before the end of this year, and after a debate in the other place they will receive their final settlement in early 2013. That follows the normal practice that has existed for years. I can remember discussions on local government finance taking place: we always thought that it was a bit tight, but it has always been at the end of the year, sometimes in December. That will be there. This means that the timescale for agreeing baseline funding in advance of April 2013 will be the same as happens currently for the first year of a multi-year settlement. Local authorities will be able to use that information to inform their local budget setting in a timely manner, as they always have done.
I strongly believe that we should be able to implement the rates retention scheme from 1 April and that it is desirable to do so, because local government is expecting it. Moreover, the Bill contains provisions to amend the date of introduction to a subsequent financial year should this be absolutely necessary, although I do not think that noble Lords should hang on to the coat-tails of that. It seems inevitable that such a clause would be included in legislation; there often are clauses in case the absolutely extreme happens. I do not expect the extreme to happen over business rates; I expect them to be implemented by 2013 for all the reasons that I have given noble Lords about the consultation, the discussions and the information that has been presented. Broadly, unless there are major changes to the draft regulations—and I suspect that, even if there were changes, we would be able to cope with them—we will be able to proceed as I propose and get there satisfactorily by the beginning of the next financial year.
For all those reasons, I reject the amendments. I am conscious that I have not commented on the intervention of the noble Lord, Lord Smith, but perhaps I can pick up those points later.
Lord McKenzie of Luton
My Lords, I thank the Minister for her response to the amendment, which I will in due course withdraw. I follow on from the wise words of my noble friend Lord Smith, who has incredible practical experience of leading a major council. I was unclear from the Minister’s reply whether we had the assurance that all draft rates will be available by the time we get to Report, or all the information needed. There is not necessarily a position on that; all the information that somebody needs is one thing, but seeing it in terms of regulations that will, we hope, in due course go through the parliamentary process is something else. The Minister said that the timeframe is consistent with the current timeframe of the local government financial settlement. Well, yes—but this is not a routine local government finance settlement. It is a significant change, so aligning it timewise is not necessarily appropriate. The noble Lords, Lord Tope and Lord Jenkin, both said that there would be disappointment if there was a deferment. That may be the view of some but I know that it is not the view of everyone.
I am not sure that we fully covered the issues raised by my noble friend Lord Beecham and the noble Lord, Lord Palmer, about reserves, particularly the issue around CIPFA advice. It would be good if the Minister covered that before we put this matter to bed.
The noble Earl, Lord Lytton, again made a very powerful point. I was struck by his contribution at Second Reading. Summarising the concerns, he said that risks are about to be bestowed on billing authorities but the maintenance of the tax base is with central government. That mismatch is a real issue. Later in our deliberations we will come to some amendments that may enable us to go into that, but I am not sure that there is not a broader issue about having the ability to test the appropriateness of the rating system to bear the weight of this new way of dealing with local government finance. However, we will have to see when we get to those amendments.
Perhaps the noble Baroness would deal with the issue of reserves and clarify whether we are talking about draft regulations or about information in another form. We have had lots of statements of intent, which have been very helpful, but they do not amount to fine detail. If we have draft regulations by Report, when is it expected that they will come into effect? What is the rough timetable?
Baroness Hanham
My Lords, the regulations that are going to be of significance will be in draft form. I guess that that will be most of them and any that are not will not be worrying us. I think that I can give the Committee an assurance that the draft regulations will be available for us to consider by Report. That is what I would want to happen and I take that on board.
I apologise for not having picked up my noble friend Lord Palmer’s comment about reserves. I shall have to write to him about that, although I ought to know how they are interlocking. Unfortunately, I did not hear the Secretary of State’s speech at the local government conference but I am sure that, whatever he said, he was not getting at local government in any way. However, there are a number of aspects of reserves—main reserves and specific reserves—and perhaps I may write to Members of the Committee before the next stage to give them the information that I think they are looking for. I hope that that will satisfy that aspect of their queries.
Lord Palmer of Childs Hill
No, I am not a vice-president of anything. In addition to the comments that I and the noble Lord, Lord Beecham, made about reserves—specific and non-specific—one also needs to take into account the restrictions imposed on local authorities by external auditors. External auditors used to come under the Audit Commission but now they are a stand-alone operation. They require a certain level of reserves on the balance sheet, and it would be difficult if central government were to impose requirements on those reserves. External auditors say that you have to have £5 million, £10 million or £15 million in reserves to make everyone feel comfortable, but I have always said when making speeches that I think they make people feel too comfortable. However, that is what the auditors say and they will qualify your accounts if you do not do that.
Baroness Hanham
I return to the fact that unfortunately I did not hear, and do not know, what the Secretary of State was referring to. Of course, reserves are part of local government finance and part of control systems in local government. I should like to make some further inquiries about how that interlinks, if it does, with what we are talking about—the business rate retention scheme—so that I do not mislead the Committee. I know that the provision and use of reserves—and sometimes councils have large reserves—could potentially be used to help to ease the current financial situation. I shall not say anything more about that because I do not know what was said but I shall come back to it.
I was also asked about the police authority, and again I apologise for not picking that up. As I understand it, and I shall write if I am incorrect, the police authority will make the precept because it will be in place until November. It would be pretty unreasonable to ask a new police commissioner to come in to sort that out in the short time available. Therefore, what he or she inherits from the police authority will be what goes forward for the first year. After that, the police commissioner will set his or her own precept. I am not being prodded from behind and being told that that is incorrect but I will let noble Lords know if it is not correct.
Lord Smith of Leigh
I am sorry to intervene again, but that contradicts what I was told on Friday. Because of the problems of timing, the police commissioners would want to set the budget for the year from 1 April. In fact, I have just written a letter to the Home Office to ask whether we can do something about that because it makes timing very difficult.
Baroness Hanham
If there is a disagreement on that then I must make sure that we know the answer. I have given the answer that I think is correct.
Baroness Hanham
My Lords, I am grateful to the noble Lord, Lord McKenzie, for introducing this amendment. Within it he raises some other points which we will come to later, particularly regarding the 50% retention issue, which is the subject of later amendments. However, I do not think that this provision is necessary. On a point of principle, the lack of a specific provision for making representations to the Government does not prevent anyone, or any authority, from doing so at any time. Nor do the Government need any particular legislative provision to be able to consider a representation. If an individual authority feels that it is in difficulties, it is perfectly entitled to come to the Secretary of State and say so.
Receiving and considering representations is a fundamental part of the Government’s work and the Government consider and respond to representations from members of the public and from local government every day. Representations constantly take place on local government finance, for example. I therefore do not think that we need this provision. I am not clear that the proposed new clause would bring any additional practical benefit to what will be an already transparent process, and I will explain why.
Under the rates retention scheme, the annual local government finance report will set out the tariff payments that individual authorities in the regime will be required to make to central government and the top-up payments that individual authorities will receive. There will continue to be an annual local government finance settlement and an annual local government finance report. A draft of this report will be shared with local authorities before it is laid before the other place. The report may be implemented only if it is approved by Members of the other place.
The Government intend to fix tariffs and top-ups at the start of the scheme and then link them in future years to the retail prices index. In future, the Government intend to fully reset the scheme only to reflect any reassessment of authorities’ needs, with the exception of the first reset period, at intervals of about 10 years to create the strongest possible incentive effect. I think that the noble Lord supports that view although he is concerned about individual authorities, but I think that I have addressed that point. In years where a reset does not occur—anywhere between one and 10 years—tariffs and top-ups will change only by RPI. At the very least, therefore, it will be clear to all, from the calculation of tariffs and top-ups in the annual local government finance report, whether a reset has taken place. It will be open and clear.
In practice, of course, we would expect to let local government know well in advance when the Government intend to reset the system. We have done this already by signalling the intention to reset the system for the first time following implementation in 2020. That is in seven years’ time. However, it remains the case that in any year, during the course of the debate on the annual local government finance report, Members of the other place would be perfectly entitled to ask the Secretary of State what representations he had received during the course of the year about whether it was appropriate to reset the system and why he had chosen not to act upon them.
Specific provision is not needed here for the Government to be held to account properly about resetting the system. It is an inherent part of the system through the transparent annual local government process. I therefore believe that the amendment is unnecessary and I hope that the noble Lord will withdraw it.
The noble Lord asked what would count as an exceptional circumstance. That is slightly difficult to see until you see it, although such a circumstance could arise if resources became significantly out of line with needs. The noble Lord asked me previously what the safety net will cover. It will cover situations such as a major company collapsing with the consequence that the business rate is wiped out. That goes back to the previous amendment, and I apologise for not picking it up.
I hope that the noble Lord feels able to withdraw his amendment.
Lord Beecham
Will the Minister look again at subsection (2) of the amendment to which she implicitly referred? The amendment would require the report in any year to refer to,
“any representations ... received from local authorities on whether it would be appropriate to re-set the system”,
and to the Secretary of State’s decision and the reason for that decision. The Minister rightly says that people could ask a question or a succession of questions about that. This amendment systematises that process so that it is clear and seen as an integral part of the annual financial report. I cannot see the difficulty in the Government accepting that it should be part of the information base to be considered alongside the whole of the rest of the local government finance settlement at the appropriate time. Would it not be more convenient for Ministers to do it that way rather than to have to reply to a succession of questions, perhaps over a different period, not necessarily tied in to the process of approving the report?
Lord True
I am sure that the noble Lord, Lord Beecham, was extremely successful in secret with that one Government with whom he had a good relationship once upon a time.
I do not wish to detain the Committee. I would simply say that surely the problem with a system like this one is that you will then have emulous enthusiasm, so that if the authority of the noble Lord, Lord Beecham, makes representations and they are going to be published in a report before Parliament, someone will come to me or to my noble friend Lady Eaton and say, “Why has your authority not made representations?”. So we will have lots of local authorities asking directors of finance to put in their representations so that they can be published and ticked off in a report to Parliament. I do not think that we should bureaucratise this too much until it seems, with experience, that the Government are suddenly not prepared to hear representations on the system. Then we can look at it. However, I think that there is a risk of overbureaucratising this and that it could be a make-work rather than provide a solution. I appreciate the intent with which it is offered but I hope that my noble friend will stick to the position she set out.
Baroness Hanham
Yes, I will. We feel that this would be overly bureaucratic. As I laid out in my response, this can happen. If somebody has a reason or a need for a reset, or they think that they have, they can make representations. I do not think that that requires legislation. I do not intend, unless I am pushed at another stage, to accept that it is necessary at all, as such provision already exists. There is already a process by which that can happen.
Lord McKenzie of Luton
My Lords, I am grateful to the Minister. We have probably aired this enough, at least for this occasion. I am grateful in particular for the acknowledgement that exceptional circumstances exist when issues are out of line with need. That begs a whole range of other questions, but having that on the record is useful. We might want to explore it further at a later stage, but for now I beg leave to withdraw the amendment.
Lord McKenzie of Luton
That is a very interesting question. We have an amendment coming up which is intended to probe the heads under which various categories of institution are counted as qualifying as English local government. It is a possibility but we can specifically probe that when we come to the next group of amendments.
This really is the most troubling aspect of these proposals. Unless I am missing something, it is an area where we do not have enough information. On one basis, we might be happy with a share that is not 50% but 30%, and on another basis we would not want any central share at all. Under Amendment 9, my noble friend Lord Smith probed why we have that particular formulation. I am sure that the Minister has an answer.
Amendment 17 touches on the hugely important issue of not only having information about the current year but being able to project what is likely to happen in subsequent years, particularly in an environment where councils are having to save every penny they can and take painful decisions about cutting back on services.
Amendment 12 in the name of the noble Lord, Lord Jenkin, seeks to ensure that the quantum of the central share will not grow from year to year. Given the RPI increase in rateable values, this should mean that the percentage of the central share gradually declines.
However, we need to be mindful that all these matters could be achieved by central government charging grants against the national business rate collection so that both central and local shares decline in amount— effectively top-slicing. Perhaps we can have amendments to deal with that, as we need to protect against that possibility.
Amendments 21 and 22 in the name of the noble Lord, Lord Jenkin, offer a rather novel approach, which dictates a gradually reducing percentage share of a billing authority’s central share and a gradually increasing percentage of a billing authority’s local share, so that whatever is top-sliced—if anything is—what remains is increasingly skewed to the local share. I think that that approach has some real merit. I should be very happy to engage in discussions to see how it might be developed and made watertight if it is to be included in the legislation so that the Government do not have a way round it. Subject to what the Minister says about the distribution of the central share, we would seek to support that.
Amendment 16 in the name of the noble Lord, Lord Best, seeks to preclude the determination of a local and central share after the financial year ending 31 March 2015. Whether we can support this depends on what happens to the central share. If its application provides a means of redressing possible adverse distributional consequences of the BRRS, there may be an argument for its continuance. Otherwise, it is the business rate scheme that will drive the distribution of the control total, or its equivalent. Even if the rebasing is fair at the point that tariffs and top-ups are established, the dynamic does not mean that it will continue in that way until the reset date.
I shall comment briefly on a few of the contributions to this debate. The noble Lord, Lord Greaves, made the point that whether the figure is 50% or somewhat higher, it will not necessarily change the world for some authorities, particularly smaller ones. I would echo that from Luton’s perspective. My noble friend Lady Hollis reiterated the point about cutting the link between business and local government through the nationalisation. However, we should not berate the noble Lord, Lord Jenkin, any further; I think that he has redeemed himself by his approach, and he has certainly done so with his introduction to this debate, which was very constructive.
The noble Baroness, Lady Eaton, talked about the RSG distribution and the formula grant. I think she was referring to how you set the baseline and the parameters that are going to be used, and we are going to have some debate on that. If the resetting is not going to be for seven or 10 years, getting that as right as possible is hugely important. It might be—we might get some good news from the Minister—that it could be ameliorated in part by use of the 50% central share, but I am not sure that we are going to get that news this afternoon. I am looking forward to the Minister’s reply.
Baroness Hanham
My Lords, so do I. I am grateful to all noble Lords who have spoken to their amendments. They asked a number of questions, in particular, the noble Lord, Lord McKenzie of Luton, at the end. Some of them I will be able to deal with, but some I will not. I think the sensible thing is for me to make sure that we give a written response to questions where there is a need for detail so that we can come back to them at the next stage or have discussions in between, if that is necessary on the full information, not all of which I have today.
I shall start with Amendment 9, which was moved very shortly by the noble Lord, Lord Smith, and seems to require about six pages in reply. I am going to have to skim through this extremely important matter which has clearly shaken the tree a bit. On the face of it, Amendment 9 makes a very simple change to the accounting arrangements for the central share but, as the noble Lord, Lord Smith, probably knows, it has a far greater effect than it may seem.
I shall say a little about how the provisions will work. Paragraph 1 of new Schedule 7B requires a “main non-domestic rating account” to be kept for a year. Most payments to and from local authorities in respect of business rates will be made into and out of this account. The exceptions are levy and safety net payments, which we will come on to later.
Paragraph 2 sets out the payments to be credited to, or debited from, the main account. This includes sums received from local authorities in respect of the central share. We have said that the central share of business rates would be used for the purpose of funding grants to local government outside the rates retention scheme. I shall return to that later. The provisions that enable this are set out in sub-paragraphs (3) to (5).
Amendment 9 seeks to make it clear that the sum that can be debited from the account in respect of the central share shall equal the payments received by the Secretary of State from authorities in respect of the central share. That sounds very simple and sensible, but in fact it does not take account of the Government’s intention to use some of the central share money to fund the transitional protection payments provided for in Part 8 of the schedule. This is because, following revaluations, the Government are obliged by current legislation to put in place a transitional relief scheme, so that business ratepayers whose bills increase significantly can see their bills phased in over a number of years. The transitional relief scheme is paid for by similarly phasing down the bills of those ratepayers who see their liability fall significantly as a result of a revaluation. Earlier, the noble Earl, Lord Lytton, was discussing the effect of appeals on precisely this area.
In the context of the rates retention scheme, this means that some authorities could see lower income as a result of the transitional scheme being put in place for ratepayers and some higher as the transitional scheme unwound. That is clearly an untenable situation. Authorities’ income is supposed to reflect their success in promoting development and not the technical vagaries of the transitional relief regulations, so we have always said that we would take transitional relief completely outside the rates retention scheme and provide for a separate series of payments to and from authorities depending on whether they see more or less income as a result of the transitional relief scheme. Part 8 gives effect to this.
The payments themselves, however, will be credited and debited to the main rating account. I hope that the Committee is following this. The scheme will be set up to balance over time but, in any year, we may pay out more to authorities than we get in. So the current wording in paragraph 2(4), which Amendment 9 seeks to change, demonstrates that if there is a deficit, it can be met from central government’s share. In other words, central government will bear that cost. So while central government could choose to debit less than it has received from authorities by way of central share income, it cannot debit more. On the strength of this explanation, I hope that the noble Lord, Lord Smith, will feel able to withdraw his amendment.
I turn now to the remaining amendments in this group. The noble Lord, Lord Jenkin, explained very clearly and plainly what he is trying to do. Amendments 12 and 21 would effectively mean that the central share could never be increased, since it could never be greater than the previous year’s central share. Amendment 16 would set the central share for the current spending review period only, and Amendments 17 and 22 would fix the central and local share—or a trajectory for them—over a number of years.
The noble Lord, Lord Jenkin, and other noble Lords asked about increasing the local share. We have always made it clear that over time we would hope to increase the local share, particularly once we have the finances back on track. It is difficult to see how legislatively we could allow that bearing, in mind that this whole question of the economy is such a difficult area at the moment.
We have also made it clear that in setting up the rates retention scheme, our aspiration is to provide for a long period between resets of up to 10 years. The corollary of that is that the central and local shares and also the tariff and top-up payments will be fixed for the duration of the reset period. By definition, the 50% rate would go on for 10 years unless there is an amendment. Between resets, therefore, we do not anticipate central and local shares changing from year to year. The 50% will last until 2020. That will give local authorities much greater long-term certainty about their financial obligations to central government and the funding that they can expect to receive from government than under the current three-year spending review process. However, the Government must retain the ability to alter the local share of business rates where it is necessary to maintain affordability and protect the interests of the taxpayer and the wider economy. However, it would be imprudent to presume that there might never be a time when we might need to increase the central share.
The percentage approach to the central and local shares of business rates was adopted in response to views expressed in last year’s consultation about the potential risk of being expected to pay a fixed sum in business rates to central government. By sharing business rates on a percentage basis, some of the reward of positive growth, but also some of the risks of negative growth, will be borne equally by central government. The Government have, and always will have, an interest in public spending, and it is unrealistic to expect the Government to take their hands off it completely and to constrain themselves, as Amendments 12, 16, 17 and 21 suggest.
I will have to write to noble Lords about some of these points because I may not have the answers, but I was asked how the 50% share was set. How did we get there? The Government have considered a range of factors involved. If the information about the setting of the 50% share is not available before the next stage, it will be available in the local government finance report in the figures for business rate totals. That may not be soon enough for noble Lords.
Lord McKenzie of Luton
Can I just clarify this? The detail of the clarification is to come but, in respect of 2014-15, is it the case that the local share that derives from that calculation is equal to, or about equal to, the control total that the Government are seeking to apply to local government and that there is no extra in there?
Baroness Hanham
It is going to be based on the base from this year. Every local authority will be equal when it starts on this system, but the tariffs and top-ups will bring that to the equality base when there is too much in one and not enough in the other. So that will be the first shuffle to get the equality base across the piece.
Lord McKenzie of Luton
If the Minister could just clarify this, it would be really helpful. As I understand it, the local and central shares have been calculated by reference to the lowest of the control total years. I understand why arithmetically that is so. In respect of that year, is the 50% local share that comes from that calculation equal to the control total for that year? Is it the case that there is no extra in the central share and that just enough has been left for 2014-15 to be able to apply the control total and keep it intact, or has central government taken more than that?
Baroness Hanham
The Government will provide revenue support grants to make up the difference between the local share of the business rates and the spending control totals for local government in 2013-14 and 2014-15, having taken into account the amounts needed. Noble Lords asked about the new homes bonus. In future years, the total amount of grant funding will be determined through spending reviews and the Government will set up the base for distribution in the annual local government finance report. I do not think that that will answer the noble Lord’s question, but I will write to him.
Baroness Hanham
And I had better write to the noble Lord, I think. That seems pretty fair.
I was asked about the specific grants. The funding will be from the central share and the finance for specific grants, and that will include the revenue support grant. I will write on the specific grants that already exist and tell the Committee what is included.
The noble Baroness, Lady Eaton, asked about the local authorities’ pool and how the money gets distributed if they go into one with others. Frankly, that will be a matter for the pool to decide; they will regulate themselves. We would expect there to be a local government lead on that so that they can receive payments and that formal arrangements would be agreed on the operation of a pool, so it will be governed by some sort of constraints.
The noble Baroness, Lady Hollis, asked who paid and who gained, but that rather depends what you mean by who pays and who gains. We have always said that no council will be worse off as a result of its business rate base at the outset of the scheme. That was what I was trying to explain about the base, the tariffs and the top-ups. I am sorry if I did not come across well, but that is what the situation is. The information that the noble Baroness sought will be available at a point of the draft local government finance report. That will be my answer to some of the questions: that the information will be ready for a bit later on, I hope before we consider this matter further. I hope that that covers the points made.
There have been a lot of discussions, some of which we will come to on further amendments. I note what the noble Lord, Lord Tope, said about local government’s disappointment regarding the split. I appreciate that that is the situation, but we ought not to ignore the fact that by making the local business rate stay with local government, even if things are then done to it, we are setting a very sensible principle: giving the business rate to local government and maintaining it with it. That principle can then be worked on in the future, regarding how much is left. However, I think we have established an important principle here. I hope the noble Lord is happy to withdraw the amendment.
Lord Smith of Leigh
My Lords, that was a very interesting grouping of amendments, which received a wide range of contributions. I congratulate the Minister on the scope of her responses. She gave a full and helpful answer on the first amendment that I moved, Amendment 9. I will obviously read what she said in Hansard, and if necessary come back. She was definitely trying to be helpful in understanding it. However, she did not really respond to Amendment 17. She noted at the time that she was not sure whether there would be continuity, but perhaps she would like to write to me on that one.
I thought that the debate was really interesting, because it got some way to the fundamental parts of the Bill. The contributions of the noble Lords, Lord Jenkin of Roding and Lord Greaves, seemed to be a contradiction. We all want the Bill to achieve growth in local areas for the country. However, to use a Lancashire expression, I say to the noble Lord, Lord Greaves, that 50% of nowt is nowt and 100% of nowt is nowt. Therefore, it is not really going to help in those areas where there is no growth.
Baroness Hanham
I thank noble Lords for this short but none the less important amendment. I understand the concerns that prompted the amendments in this group, but I hope that I can persuade noble Lords that they are unnecessary.
Currently, the Government determine how much local government spending the country can afford and set local government grant totals.
The Deputy Chairman of Committees (Lord Bichard)
My Lords, there is a Division in the House. The Committee will adjourn for 10 minutes.
Baroness Hanham
My Lords, as I was saying before I was rudely interrupted by the television screen, currently the Government determine how much local government spending the country can afford and they set local government grant totals—both formula grant and specific grants—accordingly. Redistributed business rates income is then used to fund formula grant and any difference is made up from revenue support grant. That is the situation at the moment. The more business rates there are in the system, the less revenue support grant is needed, and vice versa. Therefore, since 1990, business rates have been used in partial replacement of revenue support grant.
Although the mechanism is different under the rates retention scheme, the principle is exactly the same. The business rates retained through the central share will be used to finance both revenue support grant and specific grants in the same way as they are currently used to finance formula grant. Earlier the noble Lord asked me, although I was not able to answer, whether grants relevant to local government from other departments are included. They will be put into that one pot, so all the grants will be relevant. Therefore, we cannot see why the Government would need to accept Amendment 14, as it would place greater restrictions on central government than currently exist. I hope that, looked at in this way, the noble Lord will agree not to press his amendment.
Amendments 10 and 13 accept the principle that the central share should be used to finance other grants but seek to ensure that this happens only if the Government are satisfied that the overall needs of local government will be met. The overall need of local government will be, as it is now, a factor that, along with the wider economic situation, will inform the amount of specific and revenue support grant that government will provide to local authorities.
At future spending reviews, the Government will have regard to the resources available to authorities from their own resources—council tax and, in future, retained business rates—along with the overall spending needs of local government and the fiscal situation of the country, to determine how much grant should be provided.
I hope that, having reflected on the nature of the spending review and the reality that the overall needs of local government will be fully considered as part of that process, the noble Lord will agree to withdraw his amendment. The Bill contains assurances that any money paid by way of central share will be used by government only for the purposes of local government.
On Report in the other place, amendments were made to the Bill to make clearer what was meant by “local government” in this context. The list set out in paragraph 2(5) of Schedule 1, however, was not intended to be exhaustive. Rather, it was illustrative of the sorts of bodies that would be covered by the phrase “local government”. Amendment 11 would have the effect of making the list definitive—something that it was never designed to be, and therefore I cannot accept the amendment. It could otherwise be added to or detracted from and have something else substituted.
Amendment 24 would require the Secretary of State to set out in a local government finance report what payments the Secretary of State had made from the central share. I have rather more sympathy with the principle of this amendment and, although the details are probably over the top, we have discussed it and I think we have said that it will be available just before the local government finance report. However, I must say to noble Lords that the amendment is unnecessary. It will be clear from government accounts how much revenue support grant and specific grants central government have paid out in any year. It will also be clear how much has been collected by way of the central share and debited from the national accounts. It will therefore be obvious whether the Government have used the central share money in support of local government.
Nevertheless, I am prepared to think about whether, regardless, it would be helpful to set this out in the local government finance report in respect of an earlier year. Because of the timing of the outturn data, that would mean that we could not set out this information except in respect of the two previous years, which might make it a little out of date. However, we will consider that and talk to the LGA about it. I hope that, having heard those comments, the noble Lord will be happy to withdraw his amendment.
Lord McKenzie of Luton
The noble Baroness dealt with the question of whether the list in sub-paragraph (5) is complete, and the answer was that it is not. If it were, however, what other bodies would be on there? Would it be a vast range? Can she give us a clue as to which others might have sat on that list?
Baroness Hanham
I think I have said all I can say. The list is not complete and others can be substituted or interposed if necessary. Those will arise at other times but I do not know what they are. If we have information on or a sort of idea of which others we might be talking about, I will let the noble Lord know, but at the moment it is simply left that other bodies may be included.
Lord Palmer of Childs Hill
My Lords, I support my noble friend Lord Best because there is a need to take into account revalued and increasing rateable values of properties. The analogy used by the noble Lord, Lord Beecham, reminded me of development land tax where when agricultural land got development planning permission its owner had to pay substantial extra taxation. We are in danger of looking at how much individuals, companies and corporations make as a result of Crossrail or whatever. If the land has increased in value as the property has increased in value, it ought to be a factor in the calculation of what the local authority receives. The point made earlier was that local councils such as Westminster would gain by the redistribution. Projects such as Crossrail spread that gain through rural areas and the like. I do not think that the fact that some local authorities may gain because of a national or regional development is a reason not to give that local authority the benefit of having an increased rateable base. If you look at new floor space, there are many places where that will not happen. Some noble Lords showed a degree of pessimism when they spoke about how things will devalue rather than increase in value. We have to look positively at how we should encourage local authorities to do infrastructure and to encourage infrastructure, even if it is Crossrail or whatever, so that the valuations of those properties increase and local authorities can see the benefit. That would incentivise local authorities to co-operate on those matters.
Baroness Hanham
That was an interesting, if unexpected, debate. When it started, I was very touched by the fact that I had a little note that said, “The purpose of Amendment 15 is not entirely clear”. My reply may not be totally applicable either, but somewhere along the line we have clearly raised really important points. We are going to have to look again at the amendment, but in the mean time, I will tell the Committee what we thought it was about, and if it does not quite tie up, we will sort it out, I am sure, between now and the next stage.
I am advised that the amendment in its current form could not stand as it would insert an amendment into Schedule 8 which, as a result of this Bill, will cease to apply for any purpose in England. That is the first problem. Even without this technical deficiency, we have a bit of a problem. We fully respect the noble Lord’s views that under the rates retention scheme authorities should be able to benefit from rental growth as well as physical growth. Westminster has been touched on by several speakers, but for authorities such as Westminster or, potentially, for my ex-authority Kensington and Chelsea, the potential for physical growth is much more limited than for others as there are very constrained sites with developments all through.
The efforts of local authorities to make their areas more attractive to business are not quite as limited as some would like to pretend. Efforts that have resulted in a steady increase in rental values and hence rateable values will arguably go unrewarded under the rates retention scheme. The duty of government is to legislate for a rates retention scheme that is workable for the whole of local government, not just for some authorities. For that reason, we could not devise a scheme that allowed local authorities to keep any part of the growth in rateable values. To explain why, I need to explain to the Committee how the revaluation works, although I hesitate to do that because the noble Earl, Lord Lytton, will understand this far more than I do. Perhaps for the benefit of the Committee we should go through it.
Every five years, the Valuation Office Agency undertakes the revaluation of non-domestic properties and, as a result, the aggregate rateable value of all English non-domestic properties either—amazingly—increases or decreases. In setting the multiplier for the first year following the revaluation, the Government take account of the overall increase or decrease in order to ensure that overall the same amount of tax is raised from business after revaluation as from before. For example, if the aggregate rateable value were to double, the multiplier would have to halve. In that way, it simply redistributes the tax burden between businesses on the basis of their up-to-date property values.
In the new world of rates retention, the system is set up at the outset so that through the means of tariffs and top-ups there is an initial redistribution of resources. That protects the position of those authorities that are relatively resource poor. But if, as I explained, we collect no more money from businesses following the revaluation than we did before, it follows that there is no additional money in the rates retention system. If therefore some authorities are to be allowed to keep additional resources, by the same token, some will have to receive less. Therefore, because of the uneven distribution of the rates base, this would not just mean a cut in funding for those authorities that have seen their rateable value fall. So an authority could see a funding fall, even if its rateable value had risen, if that price was by less than the national average. That could not be fair. In fact the only way to ensure that all authorities see their rateable value rise and see some income benefit is to break the multiplier link and raise the overall burden on business, and the Government are not prepared to do that.
For those reasons, I cannot accept the amendments that seek to allow any part of an increase in rateable values to be retained by local authorities. I hope that that explanation, somewhere along the line, meets the basis of the amendment. If it does not, perhaps we could discuss it between now and the next stage. I am not sure at all that it covers any of the matters raised by the noble Earl, Lord Lytton. Having looked at Hansard, we may need to come back to that. While it was a very relevant aspect to commercial improvements, I am not sure that it necessarily fits in with the amendment, but it may do. I will happily say that if the amendment is to be pursued and if the noble Earl feels that the reply is not adequate or there is something more that needs to be done, we should discuss it between now and the next Sitting and then we might be able to get us both together to decide what we are trying to achieve.
Baroness Hollis of Heigham
I was intrigued by the Minister’s answer. I fully understand her point about the multiplier effect and all the rest of it, but I did not understand her bald statement that the Government were not willing to allow local authorities to retain any growth et cetera under that formula, if you were to break the link. Why can the Minister not make a distinction, which most of us would expect to operate, between an increase in the value of commercial property—the amount per square foot as affected which runs across a city, which I absolutely accept has to be recalibrated given the equalisation formula—with the additional increase that comes through the efforts of local authorities for either the growth of a particular business or new business coming in? Those are two different sets of flows of money. The Minister did not distinguish between the two. The point about encouraging local authorities in this way was precisely to put a new emphasis and new attractiveness on the second of these.
Baroness Hanham
I did have to look over my shoulder for that one and I am told that it is an improvement against physical growth, but I will write a bit further to the noble Baroness.
Lord Best
My Lords, I am grateful to the noble Lords who supported this difficult but fundamentally important amendment. I thank the noble Lord, Lord Palmer, and the noble Earl, Lord Lytton. Perhaps I might respond briefly to the noble Lord, Lord Beecham, by saying that the objections he raises—first, that some places would get a windfall and might not deserve it and, secondly, that some places will see a fall in rental values and therefore of rateable values and income—did not strike me as undermining the case here. Major infrastructure projects require people to buy into them; to accept that Crossrail will come through town, or whatever the big issue is. It helps if there is some financial return to that area for the inconvenience that can elapse, perhaps for several years, when major infrastructure projects come through. However, this amendment is not of course specifically addressing that but addressing the upgrading of a particular part of town by the efforts of the local authority. That is the principal objective.
In relation to the noble Lord’s second point, that some areas may see a fall in values—that factories may close and nothing may happen—this amendment is intended to provide local authorities with a greater incentive to prevent that and to do something about it. If the council makes the area much better for customers to come to and for offices to recruit staff to work there, and if it does some good for the area, that is surely good for the local economy and can revive and regenerate a place. However, if councils have absolutely no incentive to spend that money in times of difficult resource allocation for them, it would seem most unlikely that local authorities would put their backs into trying to drive some business improvement and growth in those places. It strikes me that this amendment still has some heart to it. The technicalities have completely escaped me along the way and I would be very grateful if I could take up the Minister’s offer to explore whether or not her response was helpful.
Lord Greaves
Perhaps I can follow with a much smaller-scale example. I ask noble Lords to imagine an old warehouse that has low-level use and is paying relatively low business rates. There is a joint proposal by the council and its owners, if it is near the centre of town, say, to work together to turn it into a modern retail facility with a much higher rateable value: the same building, on the same footprint, with no change to the shape of the building so there is no expansion. What is the difference between doing that and, for example, demolishing that building and then having a completely new retail building, which would presumably provide an extra rateable value that could come within the scheme and have 50% of it going to the local authority? There seem to be marginal cases here, either on a larger scale—such as the noble Lord, Lord Beecham, spoke about—or just individual things. I think we need an answer to that. In the case I am talking about, there is no difference in terms of the input of the local authority between the new building and the renovation of the old building.
Baroness Hanham
In response to the noble Lord, Lord Greaves—and again I think that we need to look into this—it seems to me that where you have a building which goes out of business, and consequently the rates from it may go away as well, if that building is converted for another use and there is a revaluation then the local authority can keep that growth, subject to the conditions that arise from growth. It contributes to the local authority’s income from the rateable value. I do not see that there is a problem with that in terms of what the local authority subsequently receives as a result of having maintained its proportion of that rateable growth. We can check that through, but I think that is correct.
Lord Greaves
In practice, if the property has been empty for a certain time—I am not sure of the details—they will have to pay rates on it anyway.
Baroness Hanham
In either case, I understand that the local authority would get the benefit of the rate and the growth.
The Earl of Lytton
My Lords, I am thinking about the current process of recording hereditaments, as they are known, in the local rating lists. I call to mind that as a result of the riots last year, one or more commercial premises were totally destroyed. As I understand it, there is a vacant site awaiting redevelopment that is described as a shop and premises, and it is in the list at £1. The Prime Minister had in fact said in the wake of the riots that properties with damage would be taken out of assessment altogether. Now, there is a little wrinkle here. If a site remains in the assessment, effectively as a cleared site, but is still called a shop and premises or a department store and premises, or whatever it was, at a £1 rateable value then it is still in the list. When it comes back into the list again as a refurbished property, it will be at whatever the level is of the new premises. If it was a redevelopment process—not riot damage or anything like that—in which the local authority was a key player, the question is whether it stands to be disenfranchised because the hereditament has not been taken out of the list altogether and is not therefore really a new entry in the list. It is a revaluation of an existing one.
This might be looking for trouble where there is none, but I want to be very careful. As I made clear both in the debate on the Queen’s Speech and at Second Reading of this Bill, there are a number of little wrinkles creeping in because of the way in which Treasury policy now appears to influence the work of the Valuation Office Agency in handling the entries in the valuation list. I want to be absolutely sure that by dint of this business of not taking things out of assessment when in fact they probably should be, we are not going to find that we have disenfranchised the authority from that gain in rateable value, which is undoubtedly the work of its own hands.
Baroness Hanham
My Lords, the noble Lord, Lord Brooke, gave me an opportunity to respond, which I am not going to take.
Localism Bill
Baroness Hanham Excerpts(13 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, I am very grateful that this matter has been raised again and that the noble Lord, Lord Best, has not been done out of his speaking part. It seems that the central issue is the maintenance of up-to-date local plans. They are absolutely essential to set out communities’ aspirations for the development of their areas. We are clear that the early review of plans will be the way forward to help manage transitions and deal with local issues arising from, ultimately, the revocation of regional strategies and the introduction of the national planning policy framework.
All of this has been about transitional arrangements. First, these need to be thought through very carefully. Secondly, my honourable friend at the other end has committed us to having transitional arrangements in policy and, where necessary, in guidance. Therefore, consideration to this is already being given. However, I am bound to say that this point has also been raised in the consultation on the NPPF, so the request of the noble Lord, Lord McKenzie, that we should come back at Third Reading may not be one on which I can deliver, because consideration may not have been given to what the full-blown transitional arrangements are going to be.
It has been said that not all local authorities have local development plans. In fact 46 per cent do not and they have had more than eight years to produce them. The worry is that if you time limit a transitional period in some way you are back exactly where we started before, that people do not pay the slightest attention. They think that they have got a long time to do it and they do not actually do it. It is absolutely essential that we put pressure on local authorities to get their local development plans completed and to get them up to date.
It may be helpful if I take this opportunity to clarify that the status of local plans will not change when the final national planning policy framework comes into force. Local plans will always be part of the statutory development plan and that is the first port of call for all decisions. As now, decision-makers are able to give weight to emerging plans in planning decisions and that weight will depend on how far these plans have progressed. Therefore, they are capable of being used to help planning decisions wherever they stand at the moment. Nor do our proposals change the situation for authorities who do not have a plan. Such authorities, because they do not have a plan, already have to have regard to all material considerations in their decisions. That will often include national policy. Areas without a local plan are lacking strategic community oversight, and the introduction of the national planning policy framework does not change this position.
As I have said, it is of course open to local councils to decide when they should update their local plans. It is in fact entirely a matter for them, but they are going to be under some pressure if they want to ensure that they have conformity with the national planning policy framework and that they are able to progress their plans in the most up-to-date way.
Transition is going to be helped by councils drawing on evidence that informed the preparation of regional strategies. We understand that that will need to go across. They will need to do that to support their local planning policies, supplemented as needed by up-to-date local evidence. If there are issues that councils regard as being an essential part of the development plan for the purpose of determining planning applications they must undertake an early review and work with local communities as they would be expected to do anyway.
With regard to the national planning policy framework, consultation ended yesterday and, as we said in our debate last week, this has now got to come under consideration. We have listened to the views of local government and we have said that we will put in place transitional arrangements that advantage plan making to reflect the fact that the national planning policy framework is all about putting local communities in control of planning. But the framework is policy, not legislation, as I discussed at some length on Thursday. Any transitional measures will be more appropriately delivered through policy or guidance rather than legislation. I suggested that we may not be able to come back with this at Third Reading, though it is a matter that I will take away. It looks very much as if we will be able to issue guidance within a timescale which we may be able to save.
The draft national planning policy framework offers councils the opportunity to seek a certificate of conformity with national policy, which will help them identify which of their existing local policies are consistent with the national planning policy framework. We actually expect that many elements of local plans will already conform with the direction of that because the policy framework in fact reflects all the guidance and planning policy statements.
I was asked a number of questions and I think that I have answered some of them on the way. The noble Lord, Lord Greaves, asked whether there will be regulations and guidance. There will be guidance through the NPPF, but we will need to find out when that will happen.
Lord Howarth of Newport
Will the Minister say a word or two more specifically about the status of the planning policy statements during this transition period and perhaps beyond? She will recall that in the debate last Thursday, the noble Lord, Lord Hart of Chilton, an experienced member of the planning bar, made the point, as did other noble Lords, including me, that the higher the level of generalisation in the national planning policy framework short document, the greater the risk of litigation. He thought that where there was litigation, the courts would take into account the planning policy statements, even if the Government have removed their formal status as policy documents, in default of other clear guidance. Therefore, de facto, the planning policy statements are going to have a status. They are still going to be a force on this scene. Would it not therefore be preferable for the Government to recognise that and embrace them in some appropriate form, given that the high level and major planning policy document will be the national planning policy framework?
Baroness Hanham
They are already going to be able to take into account the emerging NPPF as a policy statement. I should like to go back to the question of whether the PPS and PPG are going form part of it. I suspect that this is all part of the consultation about how much background is going to be needed and how those planning policy statements are going to be included. I will come back to that by Third Reading because I do not have the direct answer at present.
The noble Lords, Lord Greaves and Lord Best, asked about the timescale. I have already said that I do not think we will be putting in a firm timescale. We expect the changes to take place as soon as possible, and we hope that local councils will get a move on with them. I think I said that the transition is going to be helped by drawing on evidence that informed the preparation of the regional strategy, and part of that will be the PPS and PPG. The NPPF will supersede the PPS and PPG, but they stay in place unless and until the Government revoke them.
The noble Baroness, Lady Whitaker, and the noble Lord, Lord Avebury, asked me about Gypsies. As both of them will know, the draft PPS on that has just been issued for consultation, but local authorities are already required to provide Gypsy sites and, under the duty to co-operate, they are required to work across boundaries to ensure that they have sufficient provision for them.
Lord Avebury
Is the noble Baroness aware that, according to the research conducted by the Irish Traveller Movement in Britain, the revised plans of local authorities following their liberation from the previous regional planning process are to provide 50 per cent of the number of pitches that had been calculated as necessary under the regional planning system? Does she intend to make any comment on that? Will she answer my question about how the Government are dealing with the mismatch which I pointed out between the NPPF and the separate document on planning for Traveller sites? Will that be accommodated by the publication of one single document that will incorporate the NPPF and the Traveller sites, or will there be a revision of the document on Traveller sites that will be compatible with the revised NPPF?
Baroness Hanham
My Lords, I will have to write to the noble Lord on that. I do not know whether these are going to be consolidated. I do know, and have said before, that there is a requirement on local authorities to provide sites and for them to work co-operatively with other local authorities to see that they have sufficient sites for their needs. The noble Lord says there will be 50 per cent less. I will need to come back on that.
I hope that I have more or less dealt with all the questions I have been asked. I sense that I will not totally satisfy noble Lords on the transitional period. I hope there will be an acceptance that a laid-down transitional period has not proved very helpful in the past, and it may not be helpful in the future, but that we are committed to guidance of some sort.
Lord McKenzie of Luton
Before the noble Baroness sits down, I may have missed it and she may have covered it, but we could now have a situation where a local planning authority has a core strategy in place consistent with the existing regional spatial strategy, and that regional spatial strategy, for a period, is not going to be revoked because of the environmental assessment. If in the interim the NPPF is introduced with its presumption in favour of sustainable development, those two will not be identical. Which is going to prevail in the interim in those circumstances?
Baroness Hanham
My Lords, while the regional strategies are there and before they have been revoked, the plan will have to have regard to them. They will also have to have regard to the emerging NPPF in determining a planning application. Unless they conflict wildly, that should work very well. There is going to be a short period only before the regional strategies are revoked. I do not think there will be any inconsistency. Local authorities are going to want to keep only part of the regional strategies in their local development plan and they ought to be able to work in conjunction with the NPPF for the short space of time, if that is necessary.
With the explanations I have given, I hope that the noble Lord, Lord Best, will feel able to withdraw his amendment. I am afraid I said that the NPPF consultation ended yesterday; in the interests of accuracy, it ends today.
Lord Greaves
Before my noble friend the Minister sits down, would she consider the possibility that not giving any indication at all to local planning authorities of the time they have got to get themselves sorted out—I completely share her view that they need to get on with the job—might prolong the process rather than speed it up? In that context, I do not think she answered the question of what the Government are going to do to assist the Planning Inspectorate to cope with what everybody thinks is going to be a very substantial increase in its workload in the short run.
Baroness Hanham
Discussions are going on with the Planning Inspectorate at the moment to see what is required to make the examination process quicker. Under the new way of working, local authorities will be able to have single areas examined one at a time instead of the whole policy having to be dealt with. It is well understood that the Planning Inspectorate will be put under pressure and we hope and expect that that will be able to be worked around.
I have said all that I can say about a transitional period. The transitional arrangements will come about as a result of the consultation on the NPPF. The noble Lord thinks that a set period might be a good idea. However, as I said, with the experience of the previous set period, which does not seem to have put any pressure on local authorities, we would need to consider very carefully whether there is any value in having that.
Lord Best
My Lords, we have clearly come a long way since the Committee stage of the Bill and I am very grateful to Members of the House from all sides, who were extremely supportive of these measures to cover this transitional period.
The noble Lord, Lord Greaves, was right in expecting that the best we could hope for was not something in the Bill, but some firm guidance. I fully appreciate that the consultation period finishes only today. Therefore mulling over what others have said and taking it into account may take a little time. However, it would be very helpful before we get to Third Reading if the Minister were able to share her thoughts and put a bit more flesh on the bones of how these transitional arrangements may work. In particular, as the noble Lord, Lord Greaves, has said, perhaps she could give us a little more specificity—if I have got that right—and be a little more definite on the timescales that local authorities will be expected to adopt—indeed, timescales that are reasonable in the circumstances and allow sensible things to happen.
I must acknowledge a very helpful meeting with Greg Clark down the other end. I am expecting the outcome of this to be positive and helpful, even if it comes in the form of guidance and is not in the Bill. Perhaps I may reserve the right to bring this back at Third Reading if by that stage we find that very little progress—I do not think that that will happen—has been made. At this stage, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I got more supportive of the amendment the longer the debate went on. I was almost there when the noble Lord, Lord True, had finished his introduction. Let me say, first, that a world in which the noble Lord, Lord Newton, is beyond temptation is not something that I wish to contemplate.
We accept entirely the thrust of the proposition of the noble Lord, Lord True. If you have robust engagement with communities that works and delivers, why tear that up and replace it with something else? However, there is a conundrum. What will the process be by which we say that not only is the existing process sufficient but we have to withdraw from parish councils the other opportunities that are provided in the Bill in respect of the creation of neighbourhood forums? One might read the proposition in the noble Lord’s amendment to say that that has to be decided between local authorities and the Secretary of State. Of course, that would leave out the voices of the community.
I agree with what the amendment is trying to achieve, but—perhaps the noble Lord has simply truncated his presentation and has thought this through—how you decide whether what is working locally is sufficient such that you will not apply those other provisions in the Bill is a question that needs to be answered. One could not disagree with the proposition that, if you have good engagement at the moment in a variety of different circumstances across the country—particularly important is the issue of urban communities, as the noble Lord, Lord Lucas, said—that should be preserved. How you do it and how you switch off the other mechanisms is key.
Baroness Hanham
My Lords, once again we have had an interesting debate on this part of the Bill and I am grateful to those who have taken part. I am also grateful to the noble Lord, Lord McKenzie, for putting his finger on one of the conundrums. One would have to decide how you work out how a local authority is doing it better than anyone else. That is perhaps something that will have to be decided anyway in the course of the process that has been laid out.
This amendment would allow a local authority to make a neighbourhood plan or order without a referendum being held or a neighbourhood forum being established. The basis on which this decision would be made is whether the local authority has an adequate process of neighbourhood engagement—I am not quite sure that that is how my noble friend put it, but I think that that is what it means—to enable the formation of neighbourhood plans. It is, as he suggested, a permissive approach. Whether this process is adequate will be determined, as the noble Lord, Lord McKenzie, has said, by the Secretary of State—which is not a terribly localist aspiration.
The effect of the amendment would be to give a very significant degree of power to the Secretary of State. I wonder whether that is entirely what is wanted. The Secretary of State would be allowed to control the neighbourhood planning process and bypass the referendum stage, because he would have to agree whether a local council is well advanced in what it was doing. I fully appreciate, however, the noble Lord’s concerns about the delay in holding a referendum on a neighbourhood plan or the way that it can be demonstrably shown that the local planning authority and the community at large are content for the neighbourhood plan or order to come into force.
The Earl of Lytton
Before the noble Lord sits down, perhaps I may ask him if he would comment on the fact that although it is true that parish and town councils provide a disproportionate amount of the subject matter for standards committees, it is also true that because there is no other body of a sort which has recourse to a committee dealing with standards, there is no other basis to judge whether that statistic is large or small, or whether it is characteristic of dealing with community affairs. What I am trying to get at is that it is perhaps not a specific criticism of parish councils as a construct.
Baroness Hanham
My Lords, I am going to leap in because I think, with the greatest respect, that the noble Earl is out of order. On Report, we normally get the Minister to wind up after the Opposition. But I hear what he says.
The amendment has its faults, and the noble Lord, Lord Greaves, has already recognised that. But having said that, we are not unhappy about the principle of neighbourhood forums investigating opportunities to create town or parish councils for their area, and we accept that that gives greater democratic legitimacy. The noble Lord is also correct that there were a great many standards inquiries on parishes, but we also accept that they have responsibilities, duties, income and powers that would bring benefit to these neighbourhood proposals.
This is why we have already committed, in the Open Public Services White Paper, to look and see how to make it easier for neighbourhood forums and others to have a parish or town council for their area. In doing so we are looking at streamlining the community governance review process, to which the noble Lord, Lord Greaves, referred in rather uncomplimentary terms, but we need to strike the right balance so that neighbourhood forums or communities that want a parish council can get one relatively quickly. The noble Lord, Lord Greaves, was correct that this is not a speedy process at the moment, but if we speed up the process there will have to be safeguards to ensure that parish areas reflect community identity and interests.
The listening phase—which I have written down here, by which I assume consultation is meant—on the Open Public Services White Paper has just finished, and we are looking at cross-government implementation plans being announced in November. Building stronger neighbourhoods, including making it easier for people to set up parish councils, will be a priority for us in those plans.
While I do not want to pre-empt this work that has got to be done, I can reassure the noble Lord, Lord Greaves, that we will consider the issues raised in this amendment in conjunction with that. I hope that, as I said, that process will not be terribly long in coming to conclusions. I hope that with those reassurances, the noble Lord is willing to withdraw his amendment.
Lord Greaves
My Lords, I am grateful to everybody who has taken part. I have to point out to my noble friend Lord Newton of Braintree that there is a fundamental difference between a parochial church council and a civil parish. If he would like to do some historical research he will find that a not very great Liberal Government in the middle of the 1890s—perhaps in 1894, but I would not stick to that—introduced the concept of civil parishes against the hysterical opposition of Conservatives, particularly in your Lordships’ House, who thought that the idea of elected parish councils in the countryside was the nearest thing to communist revolution they could think of. But it was forced through, and it was just about the only good thing which that short-lived Liberal Government managed to do before they lost power.
Having made the party political plug, if I can comment very briefly, the point is —and I am grateful for the support from the noble Earl, Lord Lytton—I accept the nitpicking complaints about the amendment from the noble Lord, Lord Beecham. If he were to investigate the Local Government and Public Involvement in Health Act 2007 he would find out what is in this section which this amendment is referring to. In my opinion, it is all together far too long-winded and bureaucratic in terms of community governance reviews. On standards, it is often little rural parishes which cause the most bother.
However, I am extremely grateful for the Minister’s comments, which are extremely positive. I look forward with enthusiasm and anticipation to the Government’s proposals in November, which some might say is a pleasant change for me, although it is not entirely. I thank her very much for what she has said. On that basis, I beg leave to withdraw the amendment.
Baroness Hanham
“(a) it is established for the express purpose of promoting or improving the social, economic and environmental well-being of an area that consists of or includes the neighbourhood area concerned (whether or not it is also established for the express purpose of promoting the carrying on of trades, professions or other businesses in such an area),”
Baroness Hanham
My Lords, I will move Amendment 205ZA and then sit down for the other amendments to be moved or spoken to. I will respond to them subsequently. Government Amendment 205ZA makes it clear that neighbourhood forums should always have a purpose which seeks to promote the overall economic, social and environmental well-being of the neighbourhood area. We do not want to impose any further unnecessary restrictions on organisations which want to put themselves forward to create neighbourhood forums. It continues to make it clear, however, that a forum may also have an explicit purpose of promoting the development of business in a neighbourhood area should that be appropriate given the local context. I beg to move.
Amendment 205ZB (to Amendment 205ZA)
Baroness Hanham
My Lords, I thank all noble Lords who have spoken. With regard to Amendment 205ZA, I hope I have made clear that we do not want to impose further restrictions on the purpose of a neighbourhood area, but we do want to make clear that a forum may also have an explicit purpose of promoting the development of business in a neighbourhood area. This picks up that point and makes it clear that it is possible to have business areas as well as neighbourhood areas which are mostly residential. A business area can also include residents and often does. However, there are places such as business parks where there is not a resident to be seen, and therefore it is appropriate that there should be business areas in such cases.
Amendment 205ZB has generated the most emotion. I have some sympathy with my noble friend Lord Deben and what he said about adding “cultural”. We had quite a long debate at the previous stage about the definition of sustainable development. At one stage I recall myself saying that if we were not careful we would have a whole string of additions to sustainable development. The cultural and spiritual aspects were both discussed, and we were in danger of developing a wider and wider concept of the environment.
We still have to decide what we will do about the definition of sustainable development. However, I am not anxious to have extra elements added in to it. This is specifically because the national planning policy framework is very clear about the preservation of historic regions, areas and buildings. These have to be taken into account and looked at by a neighbourhood forum. It cannot simply ignore them and they will probably already have been identified in the local development plan. There are sufficient ways of making sure that culture is protected. The noble Lord, Lord Cormack, is correct that the question of theatres, opera houses and other cultural buildings was also raised. There is enough to protect all of these and make sure that they are taken into account in any question about the development of a neighbourhood plan.
Amendment 205ZC explicitly promotes the purpose of business. Amendment 205A would specify that neighbourhood forums shall be open to employees, owners of businesses premises, and, as was specifically raised by my noble friend Lord Lucas, volunteers. We do not think that this amendment is necessary as the wording in the Bill, which was amended in the Commons, is sufficiently broad to include individuals who work in businesses carried on in the neighbourhood area, who own businesses, or other organisations operating in the area or who otherwise work in the neighbourhood area. That very specifically also includes volunteers. It must be right that an organisation which is helping in an area or providing volunteers for it should have a say. We do not think that the amendment is necessary and I hope my noble friend will take that reassurance.
The word “businesses” in the context of this amendment is used in the broadest of terms. It includes commercial, industrial and professional activities, the public and third sectors as well as the agricultural and fishery sectors, but ensures that membership is open only to those with a local connection. This encompasses practically everybody, but they have to be specifically related to the neighbourhood area. By specifying these categories in the Bill, Amendment 205A would reduce the scope we have provided for in terms of the diverse range of people who can become members of a neighbourhood forum.
I hope that, with those explanations, noble Lords will feel able not to press their amendments.
Lord Brooke of Sutton Mandeville
My Lords, I am not entirely clear whether under our procedure I am allowed to say a word about my amendment to my noble friend’s amendment. However, I would be speaking after the Minister and I am not clear whether I am allowed to or not.
Lord McKenzie of Luton
I am conscious that the Minister has spoken, but can she deal with one point, which may be just a matter of drafting? The existing Bill refers to,
“furthering the social, economic and environmental well-being of individuals living, or wanting to live, in an area”.
The amendment would change that to,
“it is established for the express purpose of promoting or improving the social, economic and environmental well-being of an area”.
The reference to “individuals” has slipped out. This may be a point of drafting rather than one of substance, and I am trying to see what it is if there is one. Can the Minister give us an assurance on that?
Baroness Hanham
I think my inspiration has arrived in this note. We have used the phrase “well-being of an area” because it is already used in the Local Government Act. We want the purpose to relate to the area rather than to the well-being of individuals within the area. It is not a mistake and the word “individuals” has been taken out, but by definition individuals would make up an area. You cannot deal with one without taking account of the other.
Lord Brooke of Sutton Mandeville
My Lords, from what the Minister has just said, I understand the purpose of her amendment and the change in emphasis from the original text to which it gave reference. My noble friend Lord Deben and I have, on one or two occasions both in this House and the other place on matters of some importance, differed in a most agreeable way in the course of respective debates. I can remember defending Westminster Abbey and its Dean and Chapter against him, and I now find him defending the Department of the Environment against me. I am not suggesting for a moment that I am trying to put the tanks on his lawn with my amendment, but I will remind him of something in terms of what he has said about the 1992 division of responsibilities. It is not for me to comment on whether it was done for personnel reasons, not least because I was a totally incidental participant in that process. But I will say that one of the great virtues of the separation made in 1992 is that it removed the need for Chinese walls within the Department of the Environment. Previously the department had been involved both in making listing decisions and in listing building consents. The great advantage of the separation—I can remember it when my noble friend Lord Deben was the Secretary of State for the Environment—was that we did not have one department making all the same decisions. That was extraordinarily useful.
I understand the desire of the House to move on. I am most grateful to my noble friend Lord Cormack for his intervention. I do not know whether we can move the Minister at all between now and Third Reading, but in the mean time, I beg leave to withdraw my amendment.
Lord Greaves
My Lords, the noble Lord, Lord McKenzie, has quite rightly said that I brought this amendment forward at the Committee stage. I apologise to him because I had intended to add my name to his amendment at this stage, but in the hustle and bustle of the Bill, I failed to do so. The noble Lord has set out the position clearly and I do not have anything to add other than to support his remarks.
Baroness Hanham
My Lords, I am not going to be able to take this any further, so the response I made in Committee is the one I am going to give to the noble Lord again. Neighbourhood forums are not public bodies and therefore by definition they are outside the requirements of the Equality Act. Their purpose is to form themselves in order to make a neighbourhood plan and subsequently, when they have done that, to disband, so they will have a shortish life. By definition they are expected to be widely inclusive in terms of who is on them, and that will be checked by the local authority. The neighbourhood planning proposals cannot be approved unless they are compliant with human rights obligations. Built into this is an expectation of equality both in terms of who should be on the neighbourhood forum and in the way that plans have to be compatible with human rights obligations. It is a requirement, but it is not an absolute legislative requirement because it cannot be one. I hope that, with my explanation, the noble Lord will feel able to withdraw his amendment.
Lord Greaves
My noble friend has just said something I have not heard before, which is that the expectation is that neighbourhood forums will be short-lived. They will be set up for a particular purpose and they will then close down. I wonder if she would like to comment on that because it is something that we would like to take away and think about, particularly in light of the comments made on earlier amendments by the noble Lord, Lord True.
Baroness Hanham
My Lords, I do not think we have ever said anything different. The neighbourhood forums are to come together within a neighbourhood area and their prime purpose is to put forward the neighbourhood plan. They were never expected to be longstanding or permanent organisations and the shortest time, I think, is up to five years. That has been the situation all along and if there is anything different from that—noble Lords have been drawing their breath and sucking their teeth at that response—I will write to the noble Lord.
Lord McKenzie of Luton
My Lords, I thank the noble Baroness for those two answers, effectively. The latter one is rather illuminating. Will the noble Baroness drop me and other noble Lords a line to confirm that notwithstanding that the Equalities Act does not ab initio apply to neighbourhood forums, it cannot be brought within its scope, so that we have that added reassurance of the thrust of that equality duty? Having said that, I beg leave to withdraw the amendment.
Baroness Hanham
My Lords, I will certainly write to the noble Lord, but my response will be in Hansard and I do not anticipate that it will change.
Baroness Hanham
Baroness Hanham
Amendment 205C ensures that a neighbourhood area for which there is a parish council can be modified only with the consent of that council. We have listened to the cogent arguments put forward by the noble Lords, Lord Greaves and Lord Tope, and brought forward this amendment to meet those concerns. I am grateful to the noble Lords for raising this issue. The amendment is entirely consistent with the localist thrust of the Bill and will ensure that changes cannot be imposed on parishes in a top-down manner.
Amendment 206A is intended to make it clear that neighbourhood development plans are flexible and that the policies can apply to all or part of a neighbourhood area. That is to say that they do not need to have policies that apply across the whole neighbourhood area. That had always been our intention, but this amendment addresses concerns raised in Committee that the provisions about flexibility were not clear on this point. This flexibility is important. We want communities to be able to use neighbourhood planning in ways which reflect their aspirations and their vision for the future. We want to make clear, therefore, that there are no unnecessary, top-down restrictions: neighbourhood development plans can be as simple or as ambitious as the community wants to make them. They can include policies covering the whole area, or could have just one or two policies focused on a specific site, such as a high street or valued green space.
Amendment 210B seeks to emphasise the central importance that the Government place on effective consultation in neighbourhood planning. Therefore, rather than leaving consultation requirements to secondary legislation, this amendment would require a qualifying body to submit a consultation statement to the local planning authority prior to independent examination. Amendment 210B also makes it clear that this consultation statement should set out who has been consulted in developing the neighbourhood plan or order and a summary of the key issues raised through that consultation. It responds to concerns raised by several Peers and partner organisations in Committee that the Bill did not contain explicit consultation requirements for neighbourhood planning or the need for evidence to show that the views of others had been listened to and considered in the development of the neighbourhood planning proposals. Further detailed consultation requirements will be set out in secondary legislation. I beg to move.
Lord Lucas
My Lords, I hope that my noble friend will find a way forward in this area. It seems so consonant with what we are doing in the Bill to give those who are polluted some comeback or control over those who pollute. That seems a good principle to push forward on.
Baroness Hanham
My Lords, I must say at the outset that it was only because I became a Minister that I stopped being on the planning committee of my borough, the Royal Borough of Kensington and Chelsea, where we dealt with an enormous number of subterranean developments. My patience ran out when we had one that went down three floors. When I asked why it had to go so far down, they said that the person who owned the house wanted a high diving board.
I am not at all unsympathetic to this particular discussion. After my noble friends Lord Jenkin and Lady Gardner came to see me originally with some representatives from Kensington and Chelsea, and Westminster, I thought carefully about what we would do here. The fact is that this Bill will not solve the problems. There are too many elements to this to help by legislation. There is legislation all over the place that governs this. I was concerned to see what could be done within the legislation that is there at the moment and whether codes of practice, guidance and all the elements could be brought together and given to local authorities to help them. For that reason, I asked my noble friend Lord Jenkin and the people who came to see me to agree to be a small working party to discuss with officials the ideas that they had for amending this, with the officials bringing together what can already be done. Could we, through some discussion and feeling our way, find a solution that did not require primary legislation, or has this been going on for so long that it is well beyond that? We want something quick that guides local authorities in what they can and cannot do.
The local authorities that have to deal with this are becoming quite adroit, but the effect on people who live roundabout is absolutely atrocious. I know of one person who complained that a basement extension was being dug up on either side of his house and opposite it, too. Once basements are developed you cannot see them and they are all gone, but it is during this development process, which can take anything up to two years, when the trouble starts.
I hope that my noble friend Lord Jenkin will not bring back an amendment at Third Reading. We have an awful lot already and the Bill managers are becoming slightly anxious. I feel that we can resolve the problem more quickly than this. There are already endless Acts covering this. I am concerned that those Acts are not properly understood or implemented by local authorities. There are building and environmental regulations. Construction method statements are required. There are party wall implications, construction design and management regulations, the control of pollution Acts and the Party Wall etc. Act. As a result of the meeting that we had prior to this being brought up this time, we are already working with the Basement Information Centre to see about guidance on the construction of basements and how those could be developed to cover the issues we have raised. Defra is looking to prove an updated version of the British Standard so as to give it statutory force under the Control of Pollution Act. The Royal Institution of Chartered Surveyors publishes guidance on the Party Wall etc. Act, as the noble Earl, Lord Lytton, said. I would accept, immediately with gratitude, his help with this. We already have a meeting tomorrow if the noble Lord is free, and we will take it into account.
The party wall issue is clearly another very major area, and the noble Earl, Lord Lytton, has pointed out the difficulties with bringing this into more legislation when there may be ways of making it clearer and more acceptable by guidance. We and the department are going to review the guidance on the Party Wall etc. Act so that it reflects matters better. The Health and Safety Executive is developing guidance for builders, and all the issues which the noble Lord, Lord McKenzie, has raised will come under health and safety; they must do. We do not underestimate the disturbance and distress that poorly executed work on subterranean developments can cause.
I want the small group that we have now, working with our officials, to go through what has been picked up on now, what the legislation is, what guidance is needed and where local authorities need to be given a better helping hand with a code of conduct, and to see whether we can do this without having to go to primary legislation again. I think we can probably do this, and I would like to be given the opportunity to try. I cannot complete this between now and Third Reading, so I am going to have to rely on the noble Lord, Lord Jenkin, perhaps not moving this at Third Reading, but with my commitment to try to see this through. I fully and totally understand the concerns around this. I am not surprised that it has provoked discussion to get it into the Bill. By the time we have had a consultation on legislation, if it is possible to have that, we are going to be way off down the line.
I will personally take a lead in this to see what can be done, what guidance can be provided and what extra clout can be given, one way or another, either through the Party Wall etc. Act or by strengthening the guidance. I would like an opportunity to be able to do that, but having said that I am very grateful to the noble Lords who have spoken. I gather that the noble Lord, Lord Berkeley, had to leave to chair another meeting, but his amendment was very much along the lines of the others moved in this debate.
I hope noble Lords will feel able to withdraw their amendments. I hope to see all those noble Lords reasonably frequently for the next weeks while we try to sort this out. I look forward to seeing the noble Earl, Lord Lytton, as part of that.
Baroness Gardner of Parkes
My Lords, I have listened with interest to the Minister’s reply, and I am sure we would all like to go along with whatever she says because she has clearly thought about it seriously. However, I do not think that it in any way answers the problems that people have.
The noble Lord, Lord Jenkin, talked about unnecessary inconvenience, but that is not the big issue. Every bit of building work is always an extreme inconvenience for everyone else around it. In the street where my house is in London I have gone through eight years of all the office blocks being demolished and replaced with giant blocks of flats. It meant that the whole street was congested and you could not move. It was extremely inconvenient, but I do not expect compensation for that. We have to encourage development and any necessary construction. I am not so concerned about compensation for disturbance, but I am concerned about people who find themselves left with a hole in the ground beside them when the people who have dug it have gone bankrupt. It should be simple to set up some sort of insurance, and I would like to speak to the noble Earl, Lord Lytton, whose views I greatly respect, because he said there might be complications with this. I thought that insurance was a pretty common feature in building. Most builders have insurance. We should discuss that at some further time.
Baroness Hanham
Lord True
My Lords, I wish to respond to the noble Lord, Lord Best, as he referred to me. It follows from my arguments on my own amendment that I think there are many cases where a referendum is not necessary. Indeed, my amendment suggested that local authorities should be able to proceed without the need for referendums. Therefore, I was interested to hear about the discussions that the noble Lord mentioned. As he knows, I am not axiomatically against all referendums. There is a place for a referendum in some circumstances to empower those who are disempowered or, indeed, to resolve a genuine heated dispute in a community.
However, for the reasons the noble Lord implied, I could not support Amendment 207 because it would give too much potential power to an individual councillor. This may not be the case only as regards councillors from a minority party. In my authority five out of 18 wards are split wards with minority representation. Frankly, there are wards where everybody is nominally of the same party but they cannot stand each other, although that does not apply in my authority, of course. Therefore, there is scope for a lot of potential mischief. The threat of provoking a referendum, which would cost money unless someone does something for someone else behind closed doors, is probably better avoided. In other respects I have a lot of sympathy with the amendment. In the context of the discussions, I encourage the noble Lord to follow the direction in which he has begun to move.
Baroness Hanham
My Lords, we have returned somewhat to the discussion that we had on Amendment 205 at the beginning of the evening. I am happy that noble Lords still remember what was said on that amendment. At the outset I confirm what I said when responding to Amendment 205. Where there is agreement on the neighbourhood plan between the neighbourhood forum and the local council under the local development plan, a referendum does not have to take place. As long as they are all in agreement and are all working to the same end, the local authority can accept that the neighbourhood plan conforms with the local development plan and therefore does not require a referendum.
Lord McKenzie of Luton
My Lords, I had some reservations when I first read this amendment, but then was reassured when the noble Lord, Lord Lucas, went through the planning obligations provisions and the test that had to be met. He then worried me a bit when he went on to describe it as an auction among landowners in the parish potentially seeking out the highest bidder. I would need to read the record and I would be interested in what the Minister has to say about that. Does that not have the potential to be outwith the strict application of planning obligations and the rules that go with that? I do not assert that it is, but certainly the way in which it was expressed gave me some cause for concern that that might be the path that one was heading down. I would be happy to read the record and be reassured otherwise.
Baroness Hanham
My Lords, Amendment 210A would give new rights for qualifying bodies—neighbourhood forums and parish councils—to negotiate with landowners on infrastructure contributions and to promote proposals for parishing at the same time as they are preparing a neighbourhood plan. We discussed the issue of parishing earlier on.
The first part of Amendment 210A would allow a qualifying body—the neighbourhood forum or the parish—to negotiate with landowners for contributions to be paid to the community. The expectation is that the landowners would subsequently agree the contributions with the local authority through formal agreements—for example, Section 106 agreements. There is nothing to stop local communities talking to landowners about how their land may be used in a way which benefits the landowner and community, but the responsibility for confirming what conditions or agreements are necessary to make the proposed development acceptable must remain with the local planning authority. In determining a planning application, the authority will have regard to the provisions of the development plan, including any neighbourhood plans in force.
The amendment would cause significant confusion about when such contributions would be paid by the landowner, how they would meet the strict legal tests for planning obligations and how any of the community’s negotiations could be secured by legal agreements between the landowner and the local authority. I want to make it clear that whatever negotiations and agreements take place, what land is allocated in a plan should never be simply a case of which landowner is prepared to share the biggest proportion of land value uplift with the community. That was the point that the noble Lord, Lord McKenzie, was making. I accept the broad approach of the noble Lord, Lord Lucas, to this. However, I must reassert that it is the local planning authorities which must determine what obligations are necessary to mitigate development impacts, and that will include financial ones.
The second part of Amendment 210A seeks to empower qualifying bodies to promote referendums or proposals on parishing alongside referendums on neighbourhood planning. In my recent letter to the noble Lord, Lord Lucas, which he has quoted extensively and which I have placed in the House Library, I repeated our commitment in the public services White Paper to consider how to make it easier for local people, including neighbourhood forums, to take advantage of existing legislation which allows for the establishment of parish or community councils. Nothing would legally prevent the joint holding of referendums into a neighbourhood plan and into proposals for creating a new parish council.
With these reassurances—on the commitment from landowners and on parishing—I hope that the noble Lord will be happy to withdraw the amendment.
Lord Lucas
My Lords, I am very grateful for that explanation. Yes, I am getting a clearer idea of where these things will go and the role that the local councils will have to play in moderating these things. As the local councils have to hold the contracts, they clearly have to have a role in deciding what is reasonable. I hope that they will take an activist role in that. I beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, this is another interesting series of amendments tabled by the noble Lord. I cannot but agree with the proposition that doing what we can to build and empower strong local communities must be right. I am not sure that the prescription which the noble Lord offers is right in its totality, particularly on road traffic regulations. In my experience, if one wants to engage a community one has a consultation on pedestrianisation, a one-way system or residents’ parking and sees what the response is. If a council sought to impose something like that without proper consultation, we would certainly see the spirit of the community engendered by those events. However, if we gave each neighbourhood particular powers, for example over pedestrianisation, we would face a clear issue of the view taken by adjoining neighbourhoods. We would almost need to reinvent the duty to co-operate at neighbourhood forum level if we went down this path. The basic proposition to use the opportunities that the Bill presents to enliven, empower and engage communities in an urban setting is absolutely right, but I am not sure whether the prescription of the noble Lord is the best way to achieve it.
Baroness Hanham
My Lords, Amendment 210AA would allow neighbourhood development orders to restrict permitted development rights in a neighbourhood area in order to preserve local amenities. Neighbourhood planning has been designed as a new addition to the existing planning system. It is permissive in nature. Therefore, it adds to existing permitted development rights rather than removing rights that already exist. Neighbourhood planning is at the forefront of delivering the Government's reforms and it should not be used to stop or restrict development. Rather, it gives people a real opportunity to shape and influence the places where they live. We need to ensure that the ambitions of people for their neighbourhood are consistent with the needs and ambitions of the residents of the wider area. I listened carefully to the noble Lord, Lord Lucas, when he spoke about cities and the effect on neighbourhood planning there. I have a lot of sympathy with the fact that local communities often do not come together, but part of the neighbourhood planning ought to ensure that groups are coming together to discuss all the issues around planning.
My concern with Amendment 210AB is that it would extend the powers available to communities to control the development and planning of their local areas by amending the Road Traffic Regulation Act 1984. It would expand the local authority’s ability to make traffic regulation orders and by-laws to preserve or improve a local area’s amenities. This is not strictly related to the neighbourhood planning provisions being introduced by the Bill, but does relate to the Government’s wider commitment to extend the powers of local authorities and communities to shape their local areas.
First, I reassure the noble Lord, Lord Lucas, that I support the principle that local authorities and communities should have a greater say in safeguarding local amenities. Similarly, the planning of a neighbourhood should be a holistic process that looks beyond just land-use planning matters to the wider community well-being of an area. A community may use the opportunity of preparing a neighbourhood plan to discuss its priorities for transport in the area. However, there are two key issues with the amendment. First, because neighbourhood plans form part of the statutory development plan for a local area, they can relate only to the development and use of land. Secondly, traffic regulations and by-laws should be a measure of last resort in achieving the goals of sustainable transport that the noble Lord seeks. By-laws create criminal offences intended to prevent specific nuisances. If used inappropriately, they can have a significant adverse effect on the local environment and economy. They should be employed only when all other measures have failed. Therefore, this amendment is unnecessary.
Again, I do not want to undermine the noble Lord’s principle of making sure that local neighbourhoods have the opportunity to discuss the things that affect them. If ever there was anything that affected them, it is traffic, parking and so on. However, this cannot be dealt with under localism in this part of the Bill, which covers neighbourhood planning. As a wider objective, I do not think that anybody would have any disagreement with the idea that local neighbourhoods should be at the forefront of thinking about the wider things that matter to them. It is just not appropriate here. I hope that with those explanations, the noble Lord will withdraw his amendment.
Lord Lucas
My Lords, I am grateful to my noble friend for that explanation. It is clear that I am not going to get anywhere. However, I shall come back to this when we get our next opportunity, because I have been converted by the Government's enthusiasm for localism. I just want to see it in Battersea as well as Hampshire. I shall support my noble friend Lord True, should he choose to reappear in one form or another at Third Reading, and remain silent. I beg leave to withdraw the amendment.
Baroness Hanham
“(3) The power to make regulations under this paragraph must be exercised to secure that—
(a) prescribed requirements as to consultation with and participation by the public must be complied with before a proposal for a neighbourhood development order may be submitted to a local planning authority, and(b) a statement containing the following information in relation to that consultation and participation must accompany the proposal submitted to the authority—(i) details of those consulted,(ii) a summary of the main issues raised, and(iii) any other information of a prescribed description.”
Baroness Hanham
“(ca) the making of the order contributes to the achievement of sustainable development,”
Localism Bill
Baroness Hanham Excerpts(13 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Hanham
“21A(1) Section 333 (regulations and orders) is amended as follows.
(2) In subsection (3) (regulations to be subject to annulment) after “except regulations under section 88” insert “or paragraph 15(5) or 16 of Schedule 4B”.
(3) After that subsection insert—
“(3A) No regulations may be made under paragraph 15(5) or 16 of Schedule 4B unless a draft of the instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament.””
Baroness Hanham
“(2) For the purposes of the operation of this section in relation to any particular application for planning permission, a “pre-existing enforcement notice” is an enforcement notice issued before the application was received by the local planning authority.”
Baroness Hanham
Baroness Hanham
“225AA Appeal against notice under section 225A
(1) A person on whom a removal notice has been served in accordance with section 225A(3) or (5)(b) may appeal to a magistrates’ court on any of the following grounds—
(a) that the display structure concerned is not used for the display of advertisements in contravention of regulations under section 220;(b) that there has been some informality, defect or error in, or in connection with, the notice;(c) that the period between the date of the notice and the time specified in the notice is not reasonably sufficient for the removal of the display structure;(d) that the notice should have been served on another person.(2) For the purposes of subsection (3), a person is a “permitted appellant” in relation to a removal notice if—
(a) the removal notice has been fixed or exhibited in accordance with section 225A(5)(a);(b) the person is an owner or occupier of the land on which the display structure concerned is situated; and(c) no copy of the removal notice has been served on the person in accordance with section 225A(5)(b).(3) A person who is a permitted appellant in relation to a removal notice may appeal to a magistrates’ court on any of the following grounds—
(a) that the display structure concerned is not used for the display of advertisements in contravention of regulations under section 220;(b) that there has been some informality, defect or error in, or in connection with, the notice;(c) that the period between the date of the notice and the time specified in the notice is not reasonably sufficient for the removal of the display structure. (4) So far as an appeal under this section is based on the ground mentioned in subsection (1)(b) or (3)(b), the court must dismiss the appeal if it is satisfied that the informality, defect or error was not a material one.
(5) If an appeal under subsection (1) is based on the ground mentioned in subsection (1)(d), the appellant must serve a copy of the notice of appeal on each person who the appellant considers is a person on whom the removal notice should have been served in accordance with section 225A(3) or (5)(b).
(6) If—
(a) a removal notice is served on a person in accordance with section 225A(3) or (5)(b), and(b) the local planning authority bring proceedings against the person for the recovery under section 225A(7) of any expenses,it is not open to the person to raise in the proceedings any question which the person could have raised in an appeal under subsection (1).(7) In this section “removal notice” and “display structure” have the same meaning as in section 225A.”
Lord Lucas
I hope we see annual reports. This is such an exciting, interesting and unexplored area that we are going into that we really need to know what is going on rather earlier than three years. However, I would measure things in a much happier vein than the list of grizzles in proposed subsection (2) in this amendment. It is going to make a great change and advance to people’s lives—and I would like to see that documented—as much as create possible pitfalls.
Baroness Hanham
My Lords, at this time of night I am going to resist the temptation thrown at me by the Labour Lord opposite to discuss further the sustainable development in the NPPF—great sighs of relief opposite. I will therefore confine myself to the proposal that there should be a report on progress.
We agree that there should be a transparent system for monitoring and reporting. As with decentralising decision-making over housing and planning matters to councils and local communities, we expect them to report progress on all aspects of planning and to make this available to local communities to whom they are accountable. The Planning and Compulsory Purchase Act 2004 already places a duty on councils to undertake a survey of matters affecting the development of their area, including—I promise I will not go back to sustainable development again—its physical, economic, social and environmental characteristics.
The council is already required to produce an annual monitoring report of local planning activity. Our proposals in the Bill and local planning regulations, on which we have recently consulted, will streamline the process for preparing these reports, reducing the burden on councils and strengthening public accountability. Local planning regulations will also require councils to report progress in relation to neighbourhood development plans and demonstrate how they have worked with others under the duty to co-operate.
My department will support councils in this process by continuing to produce official statistics that can contribute to the evidence base used by councils to develop their plans. With these reassurances, I hope the noble Lord will withdraw the amendment.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Baroness for that response but it did not deal with the central point. I accept that there are a range of reporting requirements for local authorities over a range of aspects, but the purpose of this amendment was to say that we have a new system here. A great deal of uncertainty surrounds it. It is right that both Houses of Parliament should be able to take stock of how it has worked out overall. If I understood him, the noble Lord, Lord Lucas, was in favour of more frequent reporting than three years. Three years does not seem an unreasonable timeframe. It would be a pity if we could not take the whole of Part 5 and have some report back on how it has all worked out as a package at a macro level. This is not the time of night to pursue this in greater depth, but I ask the Government to reconsider this issue. In the mean time, I beg leave to withdraw the amendment.
Baroness Hanham
Baroness Hanham
“(ba) an order or regulations under Schedule 24,”
Baroness Hanham
“(aa) an order under section (Designation of Welsh public authorities),”
Baroness Hanham
Baroness Hanham
“Part 2AOther authorities
Reference | Extent of repeal |
|---|---|
Transport Act 1968 (c. 73) | In section 10(1)(xxviii), the words “so far as not required for the purposes of their business”. |
Local Government Act 2003 (c. 26) | In section 93(7)(b), the “and” at the end.” |
Baroness Hanham
“Section 33(4), (6) and (7). | |
Section 34(5) and (6). | |
Section 38(4), (6) and (7). | |
Section 40(4), (6) and (7).” |
Baroness Hanham
Baroness Hanham
“(za) Part 2,”
Baroness Hanham
(6) Any amendment or repeal made by this Act in the Transport Act 1968, and the repeal of section 121(1) of the Local Government, Planning and Land Act 1980, extend to England and Wales only.”
Baroness Hanham
“( ) section (Arrangements for provision of services and discharge of functions),”
Baroness Hanham