Deregulation Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 4th March 2015 Lords Chamber

[Lord McKenzie of Luton]

My Lords, in moving this amendment, I will also speak to our other amendments in this group. In doing so, I, too, draw attention to my interest in the register. We consider that this is an integrated group of amendments that stand together, should we decide to test the view of the House. I trust that that is agreed.

The issue of short-term lets has generated considerable controversy since it has been proposed that there should be some relaxation of the London provisions, but it has also focused attention on what is now happening in the market and why the status quo cannot be sustained. Currently, the letting of residential accommodation for temporary sleeping accommodation in London for a period of less than 90 consecutive nights constitutes a change of use for which planning permission is required. Notwithstanding that there is the possibility of a fine of up to £20,000 for failure to secure permission, we know that short-term letting is extensively carried on without permission being available.

We have covered in earlier debates the problems that can arise and the issue is helpfully dealt with also by the briefing we have received from London Councils for this debate. It concerns the potential loss of residential accommodation to the lucrative short-let market, increased problems with noise and anti-social behaviour, loss of community identity, increased crime and fire safety risks, and significant challenges on continual enforcement. We know that other cities around the world are experiencing similar problems. There is clearly a market for this activity and business opportunities have been created, particularly via the internet, which are different, as the noble Lord said, from those of the 1970s. According to the Government’s own figures, there are currently thousands of London properties and rooms advertised as used for short-term lets, each potentially in breach of the law. That is an untenable situation.

The amendments that I am speaking to have the support of the noble Baronesses, Lady Hanham and Lady Gardner of Parks, and the noble Lord, Lord Tope, who have each added their names. Indeed, we have worked together across our party divides to come up with a package of measures that, building on the government amendments, would enable home owners who wish to let their homes on a short-term basis to do so unless there is detriment to the amenity of the locality and to do so within a system where there is proper notification to local authorities and where enforcement is enabled. Like the Government, we do not see this as providing new opportunities for large-scale commercial lettings. These amendments, too, are about providing safeguards for the local community.

Our amendments cover five issues. First, there must be provision in regulations for those letting properties on a short-term basis to have an obligation to notify the local authority. Our amendment is not prescriptive as to form and content and it need not be overly bureaucratic. The Minister rather set his face against that in introducing his contribution, but there is no reason why this could not be dealt with very straightforwardly via some web- based approach. It is not prescriptive, but it would give an opportunity for the local authority to gain an understanding of the scale of activity in its area. It would also aid local authorities in their enforcement role, which we know is a challenge at the moment, and of course could potentially be an encouragement to tax compliance.

Secondly, we consider the number of days in the calendar year that accommodation should be available for short-term letting should be 60 rather than 90, as the Minister recognised, with regulations enabling this to be reduced. We consider that to be a more reasonable constraint and protection on local amenity. But even that would allow a four-month back-to-back letting across a year end. The Minister simply asserted that 90 days was more appropriate. I am not sure that that assertion, frankly, carries more weight than one for 60 days.

The concept is that short-term letting should be allowed effectively for someone’s home. It appears that the Government are seeking to define that by liability to council tax. We think that that is inadequate. Would not a liability to council tax arise for somebody letting residential property on a commercial basis, for example, between tenancies? Limiting the relaxation to someone’s principal residence in London would better target the deregulations.

Fourthly, we welcome the provision that the Government are seeking to make for local authorities to disapply the regulation for certain properties or areas, but oppose this right being subject to the consent of the Secretary of State. Local authorities are better placed to make the judgment about the impact of short-term lettings in their boroughs. Surely, that must be the case. We agree that they should not be able to do this in an arbitrary manner and protection of the amenity of a locality is a fair yardstick. However, we believe that a desirable hurdle rather than one that is necessary is considerably fairer. Indeed, the necessary hurdle could give rise to substantial and fair challenges on the local authority.

Finally, there is the issue of enforcement. In their policy document of February this year, the Government stated that:

“To protect amenity and address concerns over nuisance, the Government proposes that the new flexibility should be able to be withdrawn from particular properties after just one successful enforcement action against a statutory nuisance”.

In his contribution, the Minister said that there was provision elsewhere for this to be effective, but I am not sure where it is. The Government were clear in their policy document that that was what they wanted to happen. Our amendment provides that regulation should make such provision but is potentially more flexible than the “one strike and you’re out” approach.

These amendments are designed not to undermine the Government’s position, but to strengthen the safe- guards, and also, in the spirit of localism, to recognise that local authorities and not the Secretary of State are best placed to determine whether the scale of short-term letting is destroying the amenity of their areas. I beg to move.

[Baroness Hanham (Con)]

My Lords, my name is also on this amendment, and I would like to draw attention to the declarations I have made in the past of being a joint president of London Councils and also a former leader and member of the Royal Borough of Kensington and Chelsea, which will be affected by this legislation.

The noble Lord has set out very clearly the amendments that we think are necessary to make this legislation tenable. London has a particular problem. I drew attention on Report to a phrase in the policy document which said that London needed to be brought into the 21st century over the renting and letting of property. I said then and I say now that I think that London is already and has been in the 21st century for a very long time. There is enormous pressure on property in London. There is probably more renting now in London than anywhere else. There is a hugely transitory population, so that we now have great areas where we know that people are not resident. The properties are not used; they are investment properties. London has a dichotomy. It is an area where people want to live but now cannot, largely because it is getting so expensive. Where there is investment, the people who have invested in property are not from this country but from abroad. Where there is a lot of very new property on land which perhaps could have been used for local people, it is now largely empty.

The temptation to let is enormous. To make sure that there is no abuse of the proposals which the noble Lord has brought forward, we have tabled these amendments. Before saying more about that, I want to mention some other things that I am concerned about. The Government—of whom I have been a great supporter —are all in favour of devolution, of passing powers to different parts of the country and to different parts of England. We have just done it with Greater Manchester. There is more devolution. London has had devolution through its ability to put forward Private Members’ Bills to deal with the issues that affect London. These Private Members’ Bills are not put forward in isolation: they have to be put forward with the agreement of all the London boroughs. That process has been deficient, at the very least, in terms of what has happened here. I saw a representative of London Councils here today in Parliament and, as far as I am aware, London Councils has been solidly against this proposal since it was first brought forward. By definition, that includes the London boroughs.

For some reason, the Government have chosen to try to override what London wants. They may not think that London figures very greatly within this category in relation to the rest of the country. One of the rationales for making the change is to enable London to do what other parts of the country do. But London is different. It has very different pressures, as I have tried to suggest.

In these amendments we are trying, first, to query whether people really do go on holiday for 90 days. I think we would all be jolly lucky if we managed to get that amount of time off. That suggests that if people want to let for 90 days they might not be quite as altruistic as they might appear to be at first sight. Is it not reasonable to suggest that people might like to go on holiday for a lesser number of days?

Secondly, the amendments are trying to ensure that somebody will at least know that the letting is likely to take place. We have not specified what that process should be other than that people should notify their local authority that they want and are likely to let their properties on a holiday-let basis. If that does not happen and something goes wrong or difficulties occur in those properties—I think that my noble friend Lady Gardner will go into this in more detail—no one will know why or how the properties have been let, or to whom they have been let, and the local authority will have no real powers of intervention. I think that that matters. I am all for deregulation but I also think that because of the whole problem of renting in London, a little more grip needs to be kept on this.

Deregulation Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 11th February 2015 Lords Chamber

[Lord McKenzie of Luton]

My Lords, in moving Amendment 53, I shall speak also to our other amendments in this group, Amendments 54, 55 and 56. I am grateful for the support of the noble Baroness, Lady Hanham, and from the noble Lord, Lord Tope, on these amendments.

Local authorities as we know are precluded from using their civil parking enforcement powers to raise revenue. It is suggested that enforcement by CCTV is particularly unfair because a motorist might be issued with a ticket as a consequence of a camera. The ticket arrives at their home some time after the event when they have no opportunity to examine the location when the alleged contravention took place. However, the Government’s consultation on local authority parking last year acknowledged the benefit of CCTV in enforcing moving traffic congestion where cars use bus lanes, do not exit box junctions, and so forth.

Our amendments go further, particularly in relation to the use of CCTV around schools. This matter was addressed forcefully in Committee by the noble Lord, Lord Tope, who pointed out the nonsense of allowing CCTV enforcement for 10 metres around a school—the zig-zag lines—but not beyond. Amendments 54 and 55 would include in the Bill exemptions from the ban, some of which the Government have already conceded should be provided. This applies to contraventions for stopping at bus stops and bus lanes, school entrance markings and red routes on the grounds of safety and the needs of bus services.

It is understood the wording of our wider use of CCTV within 100 metres of a school entrance may not always be practical, depending on the configuration of the road and other junctions. For so long as the principle is accepted, however, the wording could be tidied up at Third Reading. The arguments for preventing parking on the zig-zag lines at pedestrian crossings are similar to those made in relation to school entrances. Cars parked on the white zig-zags on either side of pedestrian crossings can obscure motorists’ view of those about to cross, especially children, the visually impaired and wheelchair users. This is particularly dangerous at zebra crossings where there are no traffic lights and motorists slow down only on seeing a pedestrian starting to cross.

Amendments 54 and 55 would extend the exemption to clearways. Currently there are junctions and other parts of clearways where parking is prohibited to protect pedestrian cyclists and motorists themselves. It is unclear why the Government have chosen to exempt red routes but not clearways, given that the same safety considerations are our concern.

Amendment 66 will ensure that the provisions of Clause 39 cannot have an effect until the equalities impact assessment and a regulatory impact assessment have been undertaken. If the Government continue to argue that the former is not necessary, perhaps they would make clear why. As for the RIA, it has apparently asserted that the measures have no impact on business. However, the LGA says that it has heard directly from private companies contracted to enforce parking, which assert that it does have an impact. Do the Government refute that assertion? I beg to move.

[Baroness Hanham]

My Lords, I have added my support to all the amendments in this group. The anomaly between the treatment of zig-zag lines at school gates and those by pedestrian crossings is ridiculous. Both involve strong safety issues, and the Government should be able to see their way to including pedestrian crossings, at the very least. They also need to review the regulations about the amount of land taken up as a result of a school entrance. That aspect does not make sense; the amount is far too little compared with what is there at present. That is a technical matter that needs rearranging. The rest of the amendments all seem good common sense. I want to get rid of CCTV, but we cannot get rid of it completely if that will cause a safety hazard.

Homelessness and Rough Sleeping

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 24th July 2013 Lords Chamber

[Baroness Hanham]

My Lords, there are two important questions there. On the first, about rough sleeping, as noble Lords know and as I have made clear in this House, the Government are intent on stopping rough sleeping. There is the No Second Night Out initiative, in London, The Passage and other initiatives by organisations such as St Mungo’s and St Basils. There is support for rough sleepers and we do not expect them to have to stay rough sleeping for very long.

Regarding the second matter raised by the noble Lord, this is a new initiative that has just been undertaken by the City of Westminster to try to encourage those who should not be here and have not got accommodation to think about going home. It is intended to be helpful; I do not think that it is meant to be intimidating but to address the reality of the situation, as there are people coming here without jobs and accommodation.

[Lord McKenzie of Luton]

My Lords, are we not at the start of seeing the horrors of what the bedroom tax will produce? We know that homelessness will be fuelled by that tax. The Government have suggested that it is possible to stave off the effects of the bedroom tax by taking in a lodger—what advice would the Minister give to a family forced to consider this course of action?

[Baroness Hanham]

My Lords, there are people who would welcome having that single-room accommodation —there are students, people in the Armed Forces who are here for a short time, and people who do not have other accommodation. Those options are there if people choose to rent out a room. It would be subject always, of course, to their tenure, lease or arrangements with the local authority, but it is perfectly possible for them to do that. The situation with regard to having a spare room is such that we have to recognise that the welfare bill is enormous, it is £210 billion, and contributions need to be made to that.

Local Audit and Accountability Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 17th July 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, we are sympathetic to the position adopted by the noble Earl, Lord Lytton, As my noble friend Lord Beecham said in Committee, the noble Earl has explained the archaic regime that exists at the moment for parish polls, the small numbers involved in calling a poll, the fact that the poll is not binding and the financial cost being recoverable for the parish. I would have thought an effort to address that would be well worth while. Indeed, the noble Earl’s amendment suggests that there should be an order-making power inserted into the Bill. Obviously, once the amendment itself has been accepted, it is presumably within the scope of the Bill; otherwise it would not be on the Marshalled List.

I do not see why it cannot be done. Maybe the wording needs to be changed. If the Government are reluctant to pick this issue up because they think that there are broader issues involved and it needs to be dealt with in some different way, perhaps we could hear that. However, if there is sympathy for the noble Earl’s proposition, and we are just looking for a parliamentary process to facilitate that, why not an order-making power?

[Baroness Hanham]

My Lords, we, too, are sympathetic to this amendment, and I am grateful to the noble Earl for having brought it to the attention of the House. We all recognise that parish polls are a way for local people to achieve something they want that is relevant and appropriate to the area over which they have authority. The noble Earl made it clear in Committee that sometimes that area extends to the European Union, which seems rather beyond the competence. We accept that there are concerns about the threshold for polls being called. I am very grateful to the noble Earl for coming to spend a bit of time with us, and we have had an opportunity to talk about it.

The way in which the noble Earl has constructed this amendment just about puts it within the scope of this Bill, but it is not wide enough for all that needs to be done. We believe that the scope can be made wider in the other place. We need to look at that carefully and will come back to it. I hope very much that we will be able to say that we will take that up and see it dealt with in the other place. If we cannot, then we are in the sort of territory that the noble Earl has talked about—a Private Member’s Bill or a hand-out Bill. I assure him that the Government are supportive of what he has said, and I give an undertaking to the House to take this away and look at how we can get it implemented in the best and quickest way. I hope that the noble Earl will be willing to withdraw his amendment.

Retail: Portas-plus Package

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 15th July 2013 Lords Chamber

[Baroness Hanham]

My Lords, I am not totally sure that they do. Business rates, as the noble Lord knows, are levied on the rate of rent paid so that, whatever happens, payments will be consistent. I am aware that there is concern about this, as I have acknowledged. However, I think that the Government feel at the moment that there is nothing to do to change that except to give small businesses the relief that I have already described.

[Lord McKenzie of Luton]

My Lords, the Question of the noble Lord, Lord Naseby, refers to “independent retailers”. Is that a distinction which is reflected in government policy, and what definition has been adopted?

[Baroness Hanham]

My Lords, I have accepted my noble friend’s interpretation. Independents, of course, are small retailers which, as the term suggests, are not part of a chain. On the other hand, small retailers may be part of a chain. It depends on the size of the business. To be clear, we are looking to ensure that small businesses can thrive in high streets. I have outlined the measures that we have taken to try to ensure that and to support them over the coming years.

Local Audit and Accountability Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 15th July 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her reply and the noble Lord, Lord Palmer, for his contribution to this short debate. I say to the noble Lord that I do not advance the proposition that all local authorities will not be hard negotiators. My point was that there could be a differentiation between the smaller authorities and the larger authorities. I am sure that the larger authorities will be well capable of looking after themselves—they prove that on a daily basis.

Localism and audit appointments within a regulatory framework are more complex issues than localism generally in the context of provision of services. Cost savings is one feature, but it seems to me, particularly in the current climate, that it is a very important feature of what we should be helping local authorities to achieve.

The Minister has in a sense reiterated what she said before. I do not honestly believe that that takes us any further forward. We have accepted that there should be a permissive, not a mandatory, regime. If that is where the Government are, I am not sure what is in this that cannot be accepted because it provides a route to set up exactly that sort of regime.

The Minister said that there was an intention to bring forward an amendment in the Commons. With respect, however, in the next breath—as I understood it—she said that that was not certain. I do not know whether the noble Baroness might be able to clarify that point for me before I conclude—it is fairly critical.

[Baroness Hanham]

My Lords, I want to make it clear that it is the Government’s intention to see that the proposed arrangement is fulfilled, so that there might be wider procurement than there is at present. In order to do that, I am unable to say today that it will follow exactly these provisions because discussions need to take place. The Local Government Association in its briefing, as I am sure the noble Lord will have seen, is happy that that should be the situation. It is content to have those discussions and to see that an appropriate amendment is put forward in the Commons.

As a politician, one should never hedge. What I am told is that there will be an amendment. I should never have put any doubt in the noble Lord’s mind about that. I hope that will help to clarify the situation and prevent the noble Lord feeling that he has to press this amendment, when I suggest that it is completely unnecessary.

[Lord McKenzie of Luton]

My Lords, again, I thank the Minister for that. Indeed, I was tempted to press this amendment but I take her assurance that an amendment will be brought forward in the Commons that will enable central procurement, but not on a mandatory basis. If that is the proposition we can take from this discussion, that is as far as I can take this amendment today and accordingly I beg leave to withdraw.

--- Later in debate ---

[Baroness Hanham]

My Lords, the current contracts are due to last until 2017, and there will then be an interim arrangement between 2015 and 2017, as I have described. After 2017, unless for some reason it is decided universally to extend the contracts again en bloc—which is completely outside what we are talking about today, and it is probably unlikely—it is for the local authorities to make their own decisions about the contracts: where they want them to be, and with whom. Following 2017, within that interim period between 2015 and 2017, local authorities will have to decide what they will do and how to manage it.

[Lord McKenzie of Luton]

Again, I am grateful to the Minister for her response and to the noble Lord, Lord Palmer, for his challenges. I will start with the noble Lord. I sought to focus on the contracts that are in existence, not the subsequent regime, in which local authorities may or may not appoint their own auditors. However, there is a bundle of contracts, to which my noble friend Lord Christopher referred, which are ongoing at the moment but which will need management. That management is more than just a passive affair, so it needs to be put in place.

I thought that the arrangement about extension was that it would ultimately be a decision for the DCLG about its 10 bundles of different contracts—you do not necessarily have to make the same decision in respect of each of them. I say to the noble Lord, Lord Palmer, that I did not say that there should be some standardised approach to value-for-money issues. I sought to ensure that there was security of the value-for-money profiles that the Audit Commission currently produces—data that are available to all authorities and others as well—so that authorities are able to make their own judgments and undertake their own exercises, whatever they may be. After the Minister’s response, this is the area I feel less confident about. We do not know from the reply whether they will be maintained, even broadly, in their current form, or whether they will be available as a valuable tool for local authorities and health bodies in the future.

It was not my intent to get the Secretary of State involved in all things. The purpose of the amendment is to require the Secretary of State to be assured that these matters are in place—not that the Secretary of State is operating them—by the time the Audit Commission closes. Once the Audit Commission goes, that will be a very clear break with the current situation. So far as the role of the FRC and supervisory bodies is concerned, I understand their role in that, but the key issue is on how transparent the result of their work will be. We do not yet have clarity on what will be the consequences of their auditing of audit work and what will happen to that. That was part of what I was inquiring about.

Perhaps the noble Baroness can first deal with that point about transparency of the FRC’s supervisory activities or the supervisory bodies: what is likely to be in the public domain as a consequence of their work? It would be helpful if we could have an answer on that. I should also like some clarity on the value-for-money profiles. Is it intended that the data will still be collected, maintained and available to relevant bodies—whether in precisely the same form as now, or not? Is it intended that these profiles be available in the future, once the Audit Commission has closed? This is an important issue, so could the Minister give some further clarity on it?

[Baroness Hanham]

My Lords, I may need to write to the noble Lord on the detail of this. However, our understanding is that clarity and transparency will remain as they are at present, so that the Financial Reporting Council will have much the same monitoring role. Anything that it does in relation to councils and local audit will have to be as transparent as is necessary. I would prefer to write to the noble Lord, particularly on this issue, and to make sure that the information is put into the Library of the House.

[Lord McKenzie of Luton]

I am grateful to the Minister for that but perhaps it is time we stretched our legs. I beg leave to test the opinion of the House.

--- Later in debate ---

[Baroness Hanham]

My Lords, as the noble Lord said, I was sympathetic about his amendment in Committee. It would ensure that if the Government were to bring forward what might amount to a hybrid instrument under the powers in Clause 2, the bodies affected would be consulted before regulations were laid. This, indeed, would need to be through regulations. We do not expect that the need to bring forward regulations would be anything less than rare.

As I said in Committee, we recognise that in these cases there would be especially compelling reasons for the Government to consult. In our previous discussion I referred the noble Lord to our forthcoming response to the DPRRC’s report. We have accepted the committee’s point and informed it that we would announce our commitment, which I am doing, and consult affected bodies at Report. We confirmed that this will not entail the need for any amendment to the Bill. I am happy to give that commitment today, and to consult relevant persons on a draft of any statutory instrument containing regulations or an order falling under Clause 40(7) of the Bill. Any such regulation would be subject to the affirmative process, so Parliament would have the opportunity to scrutinise it. In the light of that commitment, I hope that the noble Lord will feel that we have satisfied his requirements.

[Lord McKenzie of Luton]

I am grateful to the Minister for that commitment which is very clear. I would still prefer to see it in the Bill, but I will not press that point. The answer is clear and I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Hanham]

My Lords, first, I confirm that it is possible to introduce different parts of the Bill at different stages, and the order in the Bill can be switched around. I think the noble Lord asked whether Clause 4(2) could be introduced before Clause 4(1) and the answer is that it could—it is a case of whatever is convenient. The Bill introduces powers to commence different parts of the Bill at different times and to make savings on provisions relating to the Audit Commission Act 1998. Therefore, we would expect to commence this reference in line with the introduction of the local appointment, which I think we were discussing when the noble Lord, Lord Christopher, was here.

If the noble Lord wants to know our wider intention of how to manage the overall transition to the new audit framework, it may be helpful if I say a bit more about that. Our intent remains, as I said, to close the commission in spring 2015. The existing audit contracts will continue to run until 2017, but management of those will transfer to an interim body. We have discussed these over the three previous amendments. As the contracts will run until 2017, authorities will not need to make their own appointments until that stage, but they will have to have made those appointments so that there is a smooth transition between the contracts currently managed by the Audit Commission and whoever manages them subsequently, into the local authority’s own regime. We therefore expect that much of Part 3 of the Bill, which deals with local appointment, will not be commenced until closer to 2016, which then gives them a year to do that. It will be 2016 when procurement of auditors for 2017 is likely to begin.

The current intention is that the new eligibility and regulatory framework and provisions on the conduct of audit will come into effect immediately following the closure of the commission in 2015. It is our intention to make arrangements to enable us to do this under the powers in the Bill, subject to analysis of the transitional arrangements—again as we have discussed, there have to be transitional arrangements—that may arise.

[Lord McKenzie of Luton]

I missed the Minister’s first point. Would she mind repeating the beginning of that sentence?

[Baroness Hanham]

It is our intention to make arrangements to enable us to do this under the powers in the Bill. Our current intention is that the new eligibility and regulatory framework and provisions on the conduct of audit will come into effect immediately following the closure of the commission in 2015. The provisions will then relate to whatever interim arrangements for the body are in place. I hope that that is sufficient clarification for the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

I thank the Minister for her reply and the noble Lord, Lord Palmer, for his contribution. I say to the noble Lord, Lord Palmer, that my point was not about auditors and succession of auditors but on quite a narrow drafting point. One of the requirements in Clause 4 is that the audit must be undertaken,

“in accordance with this Act … by an auditor appointed by that authority”.

Obviously, until 2017, the auditors will have been appointed by the Audit Commission, and the question is how the system works under those circumstances. I accept the broad point that matters can be introduced at different stages but I am still a little mystified as to how the new framework is to operate from 2015, so long as Clause 4(1)(b) is there—unless that is simply excluded from what is introduced in 2015. Perhaps I should read the record and we might have a further discussion on this in due course if necessary.

--- Later in debate ---

[Lord McKenzie of Luton]

I thank the Minister for her reply. The noble Lord, Lord Palmer, criticised the drafting of the amendment. I should explain that its purpose was simply to put down a mechanism which could be used to address wider issues of independence. We had in mind, specifically, significant business relationships. The Bill defines independence in terms of personal relationships; it should cover as well, for example, significant business relationships, which was the purpose of the amendment.

I was comforted by the briefing note that was produced following the meeting. It states:

“Through this combination of regulations and statutory guidance the Government intends to address other important aspects of independence for an auditor panel. We intend to work with interested parties and the sector to develop the detail of these, but as an example they might cover … the necessary skills and experience of panel members … specifying that certain persons are not independent where they have … significant commercial relationships with the authority or audit firm … the process through which independent members should be appointed … considerations around political balance, where the panel includes elected members … the conduct of members and, for example, how declarations of interest are managed on an ongoing basis”.

Each of those points, or at least some of them, were touched on by us in Committee. I took comfort from that. In a sense, that was the issue or the focus that my—clearly inappropriately drafted—amendment was seeking to address.

I reiterate where we are on the issue of audit committees or auditor panels. I think that, because there is in some instances a potential conflict between wanting to fulfil the independence requirements and the broader role of the audit committee, the best solution where they cannot be aligned is the sub-committee approach. I am not quite sure who at the meeting raised that, but the briefing note again confirms that the auditor panel could simply be a sub-committee of the audit committee. As long as that auditor panel fulfils the independence requirement, honour and justice are satisfied. That seems to us to be a helpful way forward which still encourages local authorities all to have audit committees and to move to greater independence relating thereto.

[Baroness Hanham]

Although I do not think that I mentioned sub-committees, I think that I made it clear that where there are audit committees, the membership could be drawn from the independent members of that committee, with possibly a local councillor. The implication is that audit committees are meant to be there and could form the basis of the auditor panel.

[Lord McKenzie of Luton]

My Lords, I am grateful for that and beg leave to withdraw the amendment.

Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2013

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 11th July 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the Minister for a very clear explanation of these regulations, which concern changes to the charging of fees for planning applications and certain other planning events.

Our objection to the regulations is not so much about changing the scope of charging as the underlying policies that drive this necessity. These are, as we have heard, certain provisions in the Growth and Infrastructure Act 2013 and the Enterprise and Regulatory Reform Act 2013, the first in particular enabling applications for major developments for designated authorities to bypass the local planning authority and go directly to the Secretary of State. We opposed this during the passage of the primary legislation and continue to do so. It is the ultimate denial of localism, which for planning has been embedded in the system for more than half a century.

However, if applications are to be routed to the Secretary of State—in practice, the Planning Inspectorate—then it is obviously right that there should be a commensurate fee structure, otherwise the incentive would be for major applications always to be made to the Secretary of State. I understand, and I think that the Minister confirmed it, that fees applicable to England were last uprated with effect from November 2012; it is understood that the fees set out in these regulations would apply initially.

As we have heard, the regulations cover other fee issues, and I shall come on to those, but I have some questions for the Minister. What volume of applications is it anticipated will be received and be subject to this charging regime? During the passage of the primary legislation we had various estimates of “vanishingly few” LPAs being designated, although that was revised up to around 20 by the time we finished our deliberations. The criteria for designation were published in June in time for an October start to designation. While I accept that the final data for the initial designation will not be available until September 2013, the department must have some increasingly firm indications of the likely number of planning authorities to be designated. Can we know what that number is?

Where a local planning authority has been designated and major applications are made to the Secretary of State, directions can nevertheless be given to the local planning authority requiring it to undertake certain tasks in relation to the application. We consider it unfair that the authority should receive no part of the fee. Moreover, this is not the only circumstance where the regulations require the local planning authority to undertake activity for no fee. The changed arrangements whereby in future the demolition of unlisted buildings in conservation areas will have to be dealt with by local planning authorities also come without the right to a fee.

These regulations cover circumstances where the Secretary of State, via the Planning Inspectorate, is able to charge a fee for pre-application advice where the application is made to the Secretary of State. That developers should pay for such advice is entirely reasonable, although we would maintain that much of this work will in fact be done by the local planning authority, which will get no part of the fee. Notwithstanding that an application goes to the Secretary of State, will the Minister encourage local planning authorities to engage in the pre-application process, and how should they be remunerated if they do so? The regulations set down that charging should proceed by applying an hourly rate to the time spent by the planning inspector or planning officer. This hourly rate is to be set by the Secretary of State from time to time and must be set by reference to the average cost of providing the services of the individual. It is understood that this reflects the charging position for local planning authorities. Can the Minister remind us of what systems are in place to put this into effect? What is understood by “average cost”? Which overheads are built into the calculation? Is any differentiation made for the different levels of experience of the staff, other than planning inspector or planning officer, or indeed for the overheads of different regional locations? As for fees payable under the general permitted development order, the regulations require a fee of £80 where prior approval for change of use is required. Approval might be required from the local planning authority or the Secretary of State. Does the fee go to the person required to give approval and what is the basis for the £80 figure?

Our overall concern about these regulations is that they erode the opportunity for local planning authorities to generate fee income and therefore to sustain their planning capacity, and this at a time when there has been considerable change in the planning system, where local authority budgets have been squeezed to breaking point with further cuts to come, and when the blame for poor economic performance is all too often laid at the door of the planning system. I conclude by asking the Minister this: what assessment has been made of the capacity of local planning authorities to cope in the current environment?

[Baroness Hanham]

My Lords, I thank the noble Lord for his response to these regulations which, if I interpret it correctly, is: “We don’t like them but see what you’re trying to do”. I take that to be the spirit in which the noble Lord delivered his response. He asked me a couple of questions, some of which I may be able to answer directly and some of which I may not.

The first was about the increase in planning fees. As I said in my opening remarks, they were increased by 15% across the board in November 2012, so local authorities have had quite an uplift in those fees very recently.

The next question was: what volume of applications do we expect to go to the directorate? We discussed this during the Growth and Infrastructure Bill proceedings. We will know more about that when we see how many local authorities are to be designated in September. Once we see the data about which local authorities and how many are likely to be designated, it will be easier to judge that. As I said before, however, we do not expect this to be a huge number. In fact, we very much hope that there will not be a huge number, because that would mean that we were having to designate more local authorities than we wanted.

On the pre-application fee, if the developer is going to go to the inspectorate, it is very unlikely that they will want the local authority to, or indeed that the local authority would, hold any pre-application discussions. The intention is that the planning inspectorate will do any pre-application discussions and then charge a commensurate fee for them. In fact, perhaps I should rephrase that: the applicant can decide where to go, but we expect that they will probably go to the inspector if they are going to go there in the first place.

The noble Lord also asked me when information will be available about which authorities risk a designation. I think that I have answered that: September. The list will be published so they will know then. Indeed, many of them know now what the situation is because they are kept pretty well up to date with what is being put forward.

The noble Lord asked me about the £80 fee. I am now struggling a bit because I cannot remember what that was for. Would the noble Lord mind rephrasing his question?

[Lord McKenzie of Luton]

It was to do with the general permitted development order and the regulations. There are regulations that require prior approval from either the Secretary of State or the local planning authority. My question was: to whom does the £80 go? Is it the person who actually has to give that approval, be it the Secretary of State or the local planning authority?

[Baroness Hanham]

Yes, we would expect that to be more or less the local planning authority in most cases.

I hope that I have covered the questions. I am grateful to the noble Lord for the way in which he has addressed the regulations. So long as he is happy that I have more or less covered what he had to say, I beg to move that these regulations be agreed to.

Local Audit and Accountability Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 26th June 2013 Grand Committee

[Lord McKenzie of Luton]

My Lords, like my noble friend who was unable to support these amendments from the noble Earl, Lord Lytton, and the noble Lord, Lord Tope, I understand that—apart from the issue around this 50% funding—the Bill does what they are seeking to achieve. If you look particularly at paragraph 117 of the Explanatory Notes to the Bill, it says:

“These powers do not enable examinations of individual relevant authorities and are not designed to produce assessment of the performance of individual relevant authorities or comparative analyses in the form of published league tables”.

Unless that wording is defective—doubtless the Minister can help us on that—it achieves what the noble Lords want. As my noble friend says, whether it achieves what we want is another matter.

In relation to the other test in Amendment 18ZA—that is, an authority,

“who receives more than half their income from government funds”—

I can see that, for certain bodies, it is a test that is currently relatively straightforward to determine. However, if you seek to apply it to a local authority you can imagine the sort of criteria that you would have to unpick and examine. Presumably it is not part of government funds to take account of its income which comes from council tax. What happens when you come to the business rate? Is it part of its income? Do you look at the gross amount or the 50% under business retention that goes to central government and then comes back? Is that still government funding? Does it originate with the local authorities? All the issues around how tariffs, top-ups and safety nets work just from that regime itself could make that particular test in the context of local authorities extremely difficult to apply. It would be easy in some cases where either they would be clearly in or clearly out but I would be surprised if there were not a whole range where it would be extremely problematic.

The test at the moment, as I understand it, is that the Auditor-General can carry out examinations of bodies when more than half of their income comes from public funds and where they are appointed by or on behalf of the Crown. I am not quite sure how you translate that into the local authority context but it seems to me that the basic proposition which the noble Lords are seeking to achieve in terms of avoiding mission creep and certainly league tables is already in the Bill.

If that is right—and for that reason some of the comparative stuff to which my noble friend was referring is not available—it raises again the question we discussed earlier about the value-for-money profiles, the guardian of which is currently the Audit Commission. We discussed who was going to maintain those profiles, which I think would be part of the data that my noble friend and I would be looking for. We do not yet know where that is going to end up and how those profiles are going to be maintained, but I think that that is a slightly different issue from the one pursued by the noble Lord, Lord Tope.

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

My Lords, it is not very often that the noble Lord, Lord McKenzie, makes my case for me, and I am delighted to be in this unusual situation. Perhaps I should sit down without going any further. As always, however, the noble Lord provides a sting in the tail somewhere. On this occasion it was in his final question—to which I may not, even now, be able to give him an answer, but we will try.

Under the National Audit Act 1983 the Comptroller and Auditor-General can undertake examinations into the economy, efficiency and effectiveness or value for money with which a government department it audits has used its resources. He or she can also undertake these examinations in relation to bodies that receive more than half their income from public funds and which are appointed by or on behalf of the Crown.

Clause 34 broadens the Comptroller and Auditor-General’s powers to enable the National Audit Office to undertake examinations on groups of relevant authorities, enabling a more end-to-end view on the use of public money. The powers in Clause 34 have been designed deliberately to support the National Audit Office in undertaking its core roles. It enables examinations that support the National Audit Office either in holding the Government to account to Parliament or in providing analysis and advice that is useful to the sector. By definition, this does not mean that the NAO will be examining or reporting on individual authorities. It means that the comptroller can look at what is going on in a local authority but only in relevance to a wider group or area in relation to the money coming from Parliament.

The amendment would limit these powers to enable the Comptroller and Auditor-General to undertake examinations only on groups of relevant authorities that received more than half their funds from government. I think that that is where the noble Lord, Lord McKenzie, has stepped in and given a pretty clear explanation of why this is not going to work. The amendment is overly restrictive and would not support the National Audit Office in fulfilling its core roles. The Audit Commission currently has powers to undertake examinations in relation to all relevant authorities. Removing relevant authorities that receive less than half their resources from the Government would mean that the National Audit Office could not look across the whole spectrum and thus do its job. The amendment would also reduce the level of scrutiny of public spending that the NAO could carry out, including all the other elements mentioned by the noble Lord regarding the way that grants are paid and the money that goes into local authorities.

Amendment 18ZB would prevent the Comptroller and Auditor-General from undertaking examinations for the purpose of assessing the performance of individual authorities or the production of league tables. Clause 34(2) already provides for the first part of this. It states that a value-for-money examination must relate either to all authorities or to a particular description of relevant authority, and it is extremely unlikely that an individual authority would meet those criteria. An individual authority could be looked at but only in relation to a group and could not be identified as one authority. The Explanatory Notes set out that these powers are not designed for the National Audit Office to produce an assessment of the performance of individual authorities or comparative analyses in the form of published league tables. The Government do not wish to see a return to the comprehensive area assessment of local authorities. The NAO’s evidence to the pre-legislative scrutiny committee on the draft Bill confirmed that it is seeking neither to audit individual local authorities nor to interfere with the primary accountability of local authorities to the local electorate.

However, the clause does not prohibit comparisons of individual authorities during the course of the examination. This is because such group or overall analysis is necessary in order for the National Audit Office to make conclusions about the economy, efficiency and effectiveness with which authorities in a particular group are using resources, or to provide evaluation, commentary and advice to relevant authorities. We believe that the Clause 34 will give the National Audit Office a strengthened role in the assessment of value for money, which the Government said we wanted to achieve when we announced the intention to close the Audit Commission. I know that that intention has received a great deal of parliamentary support, including from the Communities and Local Government Select Committee, the committee which undertook scrutiny of the draft local audit Bill last autumn, and from many noble Lords during our discussions.

However, I understand—and I know that the National Audit Office does too—the concerns that have been expressed about the risks of scope drift or expansion of the programme beyond what is intended. I believe that there are safeguards in the Bill that mitigate against these risks. I emphasise that it is not the Government’s intention to replicate the Audit Commission’s programme of studies. The powers are narrower than the Audit Commission’s and there will be fewer studies. Although the examinations programme is ultimately a matter for the Comptroller and Auditor-General, Parliament undertakes a full and thorough scrutiny of the National Audit Office’s strategy and budget. The House of Commons Public Accounts Committee scrutinises the strategy and budget annually, including the balance of work between different roles, before approving the National Audit Office’s budget for the year ahead.

--- Later in debate ---

[Lord McKenzie of Luton]

Before the noble Earl withdraws his amendment, can the Minister tell us any more about the value-for-money profiles, and in particular what the plans are to maintain those? Obviously that requires the compilation of data and comparative data.

[Baroness Hanham]

We are currently considering the future management of the Audit Commission’s value for money—the question asked. I cannot say anything more today but we will come back to this before Report, I hope, and I will certainly make sure that noble Lords are kept in touch with progress, which I think is what I said last time.

Local Audit and Accountability Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 24th June 2013 Grand Committee

[Lord McKenzie of Luton]

My Lords, Amendment 14F is quite a narrow probing amendment. At the start of our deliberations today, perhaps I should just make clear that although we have some concerns about the fragmentation of the new local audit regime—an amendment to cover this will be forthcoming on Wednesday—we accept the broad technical means by which the Government seek to implement its framework, drawing on the Companies Act 2006 and the Audit Commission Act 1998. Our probing should be seen in that context.

The Companies Act 2006 sets out who may be treated as holding an appropriate qualification for the purposes of acting as a statutory auditor. A Secretary of State can include in this persons who are qualified to audit accounts under the law of a foreign country and someone who holds a professional qualification in a specified foreign country. For these purposes, an EU state is not treated as a foreign country. These provisions are specifically excluded from operating under the Bill, so can the Minister please confirm, under the local audit regime, what is the position of individuals qualified in an EU country regime, especially given the broader nature of local bodies’ audit? What is the rationale for excluding other foreign qualifications, which are included in the Companies Act? I beg to move.

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

My Lords, the Government believe that the Bill provides for sufficient suitable qualifications to be recognised for the purposes of local audit. As the noble Lord said, this amendment seeks to find out about the qualifications and, in particular, the approval of overseas qualifications from non-EU countries for the purpose of statutory audit. It also sets out the conditions that will need to be satisfied relating to the assurance of professional competence of those holding an overseas qualification.

Section 1221 provides for approval of all those in a specified country who are qualified to audit accounts or only those who hold specified qualifications in that country. In the case of the latter, the Secretary of State may specify any additional requirements to be satisfied. The section allows the Secretary of State to recognise an overseas qualification only if there is comparability and/or equivalence of treatment of United Kingdom qualifications in the country in question.

For local audit, an auditor will hold a suitable qualification if it is one recognised under Part 42 of the Companies Act 2006 or if it is another qualification recognised under the Bill. If a third-country audit qualification has been recognised for company audit through the application of Section 1221 of the Companies Act 2006, it would be deemed an appropriate qualification for local audit. I must stress that we would expect anyone employed under those circumstances to have experience of local audit as carried out in this country. I hope that will help the noble Lord and that he will feel able to withdraw the amendment.

[Lord McKenzie of Luton]

I thank the Minister. I may have missed it, but what provision allows the Secretary of State to take account of a third-country qualification? I ask because the Bill specifically omits the provisions of the Companies Act which permit that. I was trying to spot the precise bit of the Bill that allows that to happen. I think it is entirely appropriate that it does—if it does—but if the noble Baroness could give me the particular reference, that would be good. Presumably for EU nationals, the position has not changed. Whatever EU directive applies, they would be entitled to be considered, as indeed someone with a UK qualification would be in Europe.

[Baroness Hanham]

My Lords, EU auditors may be subject to an aptitude test if they practise local audit in the United Kingdom on a permanent basis. Under all these provisions, the expectation is that people would be qualified, as they are in the United Kingdom, to carry out local audit. We shall come to that further on, because it is the qualifications that will matter. We would not see any dilution of the competence of auditors, whether they come from here, the EU or non-EU countries. Have I still not answered the noble Lord’s question?

[Lord McKenzie of Luton]

Perhaps we might deal with it in correspondence. I was just trying to see the particular reference that allows back in the approval of those with third-country qualifications. I can see the provision that takes it out of the starting point, which is the Companies Act 2006. I think there may be something else coming from the Box.

[Baroness Hanham]

My Lords, it is blindingly obvious—the provisions in paragraph 8 of Schedule 5 to the Bill, which amend the Companies Act. Why did I not think of it immediately?

[Lord McKenzie of Luton]

My Lords, I think I am grateful for that follow-up. I shall read the record to see that it remains blindingly obvious. From what the noble Baroness has said, I do not disagree and am supportive of the provisions and facilities made in the Bill. It is important that there is no lessening of standards, whether a qualification is an overseas one or a UK one. For the time being, I beg leave to withdraw Amendment 14F.

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[Lord McKenzie of Luton]

My Lords, this amendment relates to Schedule 5 again, which relates to the new regulatory framework for auditors of local public bodies. It draws heavily, as we have discussed, on the framework contained in the Companies Act 2006, the provisions of which, as I have said, have our broad support. Schedule 5 applies Part 42 of the 2006 Act to local audits, as it does to statutory audits, but with some exclusions. The purpose of this amendment is to understand the exclusion of Section 1215(2) to (7) of the Companies Act.

Section 1215 takes us back to the subject of independence, and requires a statutory auditor to resign immediately on becoming prohibited from acting because of lack of independence, and this requirement is imposed similarly on local auditors. However the legal sanctions which underpin the failure to comply with this requirement for statutory auditors appear to have been omitted in the case of local audits. Doubtless the Minister will tell me that it is blindingly obvious and covered somewhere else. Could she draw my attention to a specific provision? I beg to move.

[Baroness Hanham]

My Lords, we may need to explain to Hansard that I was joking. The new audit framework sets out robust arrangements to provide confidence in the independence of the local auditor. This amendment seeks to replicate the criminal offences in Section 1215 of the Companies Act 2006 in the local audit framework, as the noble Lord explained. We have chosen not to replicate these particular criminal offences as we consider that there are other, more suitable mechanisms to do so—in short, the disciplinary powers of the recognised supervisory bodies and the ethical standards raised by the Financial Reporting Council.

The rules and practices that the recognised supervisory bodies will put in place will cover the independence of the auditor. They will also outline the disciplinary sanctions that could be applied if the independence requirements were found to have been breached. This could ultimately include the withdrawal of registration, and other sanctions could include that the firm responsible for the audit would not be able to accept new audits or particular types of audits, that a person may no longer be a responsible individual and that a specific employee may no longer be involved in audit work.

The Government have also been mindful of not introducing any new offences unless there is a compelling case to do so. Even though these offences are in the Companies Act 2006, they would be considered as new offences if applied to the provisions in the Bill.

That is the explanation. I hope that the noble Lord will be happy with it and that he will feel able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I am certainly going to withdraw the amendment. If I understand the position correctly, there will be a difference of approach between local audit and the Companies Act provisions, where private sector auditors will continue to be subject to this regime. In a sense, they will still be subject to the supervisory requirements for local auditors that the noble Baroness outlined. Is that correct?

[Baroness Hanham]

My Lords, I think it is correct. As I suggested, the Financial Reporting Council issues ethical standards for auditors, and those cover the integrity, objectivity and independence of auditors, and it applies in the audited financial statement. Therefore, I think that we are covered from that point of view. We have also been working with regulatory partners, including the Financial Reporting Council, to decide how these may need to be applied to auditors of local bodies. Therefore, I think that some discussion is still going on about the matters that the noble Lord has raised.

[Lord McKenzie of Luton]

I will not dwell on it but I thought that one of the objectives of the current exercise was to align local audit with private sector audit arrangements. This seems to be creating a divergence. However, I am not sure that there is going to be further fruitful discussion on this. I hear what the Minister has said and I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Hanham]

Too eager, perhaps. I say at the outset that we are absolutely clear that the auditors must be competent, appropriate and steeped in local government finance. We should start there, with that as the interest common to us all, to make sure that any changes are made in the most appropriate way so that we can be sure of getting the same high standards of auditing that taxpayers expect and to which they have been accustomed.

The Bill sets out a pretty robust regulatory regime. The National Audit Office will have to develop the underpinning code of audit practice and produce supporting guidance that will set out how auditors perform their role. What this means, essentially, is that the boards going for public audit will not change. In addition, the future local audit framework will require all auditors to be suitably qualified and competent to carry out local audits.

The Bill requires auditors to hold an appropriate qualification. This is either a qualification recognised under Part 42 of the Companies Act 2006, for a statutory audit, or another qualification recognised under this Bill. The Secretary of State will be able to make regulations setting out the minimum requirements that other qualifications will need to meet in order to be recognised for the purposes of local audit.

It is clearly crucial that local auditors are, as I have said, suitably qualified, that they attain an appropriate qualification and that that demonstrates that an individual understands, among other things, auditing standards, accounting standards and audit procedures. These standards and skills must be applied to audit assignments regardless of whether they are in the public or private sector.

However, while holding an appropriate audit qualification is necessary, it is not sufficient in itself for those individuals within firms assigned responsibility for signing audit reports of local bodies. What is important for local audit is that auditors have the skill and experience of local audit, which includes understanding the wider scope of public audit. As such, we believe that the amendment is unnecessary as the Bill requires all individuals to have this appropriate level of competence to carry out local audits, regardless of whether they hold a qualification under Part 42 of the Companies Act 2006 or another one recognised under the Bill. This critical requirement regarding competence is set out in paragraph 27 of Schedule 5. The amendment would apply only to the other qualifications recognised under the Bill, and not those recognised under Part 42 of the Companies Act.

It maybe helpful for me to outline briefly how the framework works for the companies sector and then explain how the framework for local audit will ensure that all local auditors understand the wider scope of public audit, thus removing the need for this amendment. Under the Companies Act, it is for the recognised supervisory body to set out the requirements for approving those individuals who will be responsible for signing audit reports for companies. The requirements established by the recognised supervisory bodies are subject to agreement and oversight by the Financial Reporting Council. Once an individual has been approved to sign an audit report of a company, it does not follow that they could sign such a report for any company. That individual would need to be competent to sign the audit report of the specialism of that particular company; they would need to have the relevant skills, experience and knowledge of the relevant subject matter of the company or industry in which they work.

We are replicating this framework for local audit. The recognised supervisory bodies for local audit will have responsibility for approving the individuals nominated by its member firms for signing the audit reports of local bodies. This will also be overseen by the Financial Reporting Council. Under rules that it will agree with the Financial Reporting Council, a recognised supervisory body will approve an individual to take a key responsibility in the audit of a local body only if that individual has an appropriate level of competence to carry out local audits. A firm that cannot demonstrate that a nominated person has recent experience of auditing a local body and understands the wider scope of local audit will not be considered competent and therefore cannot be approved by the recognised supervisory body.

To provide further assurance on this issue, I should also say that there are established standards and professional obligations with which firms must comply regardless of whether they are appointed to a company or a local public body. In particular, the international standard on quality control requires all firms to have policies and procedures that ensure that individuals have the right knowledge and experience to undertake a specific engagement. For local audit, this would mean that a firm could not put forward an individual to be responsible for a local audit if that individual did not understand the wider scope of public audit. If it did so, it would be in breach of its obligations and would risk breaching the terms of its registration with the recognised body.

The noble Lord, Lord Tope, raised the question of CIPFA and the discussions that have taken place. It may be helpful for noble Lords to know that I recently saw and had discussions with CIPFA about this, and it is being closely involved in discussions that are going ahead with the council, so its views are well taken into account. We recognise that it is probably one of the very few bodies with qualifications that continue to exist for auditors who will be required to do this work.

The register will be published when we see the draft regulations, which will be available at the next stage in the Commons. The register will be published in 2016, in time for the local appointment of auditors. We have discussed the question of how many firms will be able to do this, and I remember saying earlier that we hope and anticipate that smaller local firms will be able to get their staff qualified, if they do not have that qualification, so that they can bid for contracts. We expect that the smaller, new contracts will open up the market to smaller firms. We are anticipating that this will not just be the big four or the bigger four and three bidding—which I think got us to seven before—and that there will be increasing competition. We believe that there should be plenty of smaller companies available, once local authorities start to appoint their own auditors.

I hope that has picked up the points on the register and those made by CIPFA. I know that it is involved in what is going on to ensure that these regulations and qualifications are satisfactory.

[Lord McKenzie of Luton]

I thank the Minister for a very full reply. It is very helpful to have that on the record. I also thank the noble Lord, Lord Tope, for his support for this line of enquiry. I note that the register will not be available until 2016, but it is good that the draft regulations will be available when the Bill goes into the Commons. I think we shall have to see the outcome of that and how many local firms end up in a competitive position in the market. One of the fears is that those firms that are active in the local audit market currently do it through specialist divisions. They have the financial clout to invest in the training in these sorts of arrangements. I think we would have common cause in wanting there to be a number of firms in the market—certainly it should be expanded from the existing base. I am somewhat sceptical about whether that would be achieved. In the mean time, I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, Clause 20 covers the general duties of auditors of a health service body and sets down the areas on which the auditor must be satisfied. These include that the body has made proper arrangements for securing economy, efficiency and effectiveness in the use of its resources. Clause 20(4) precludes the auditor’s opinion on the accounts making any reference to this requirement unless he is not satisfied in that matter, so the auditor cannot positively state that he is satisfied that the body has made proper arrangements for securing economy, efficiency and effectiveness in the use of its resources. Obviously, an informed reader of the auditor’s report would be able to interpret what appears to be silence on this, but it seems an odd restriction. Perhaps someone could explain its purpose. I beg to move.

[Baroness Hanham]

My Lords, either my noble friend Lord Wallace or I will reply to the amendments. In this case it is me.

The amendment would remove the provision for auditors to report on value for money only when they are not satisfied that the authority has made arrangements for securing value for money. This would result in every audit report containing a specific conclusion on value-for-money arrangements.

I hope that it will help the Committee if I start by setting out why the Bill provides for value-for-money conclusions to be included only where the auditor is not satisfied about the arrangements. The provision relates only to the reporting of the results of the audit. The local auditor will still be required to carry out work to confirm that the arrangements for securing that value-for-money arrangements are made. The technical standards for that work will be set out by the National Audit Office in the code of audit practice that it will produce.

The report of the auditor is a detailed and technical document. The Government are of the view that for health bodies—in this clause we are referring only to health bodies—the audit report should contain those matters that are most important to the reader. We consider them to be: the opinion on the true and fair nature of the accounts; for those bodies that are directly funded from resources provided by Parliament—which includes all bodies that are now part of the health service—to confirm that the funds have been used for authorised purposes; and any cases where arrangements to secure value for money are not appropriate. This approach would provide for greater focus and attention where value-for-money arrangements are not in place.

The provision in the Bill also aims to bring consistency for all health bodies. Currently, the audit opinions of health commissioning bodies and NHS trusts contain a specific opinion on value-for-money arrangements. The audits of foundation trusts do not, so we are taking the opportunity to bring all reporting into line and to improve the clarity of auditor reporting in the health service. I stress that the work carried out by the auditors is the same, whatever the reported opinion.

I hope that that provides greater understanding of what we are doing and that the noble Lord will withdraw his amendment. If not, I look forward to what he is going to say.

[Lord McKenzie of Luton]

My Lords, I am grateful to the Minister, as ever, for her explanation. I remain somewhat bemused about why there could not be positive reporting in this area, although it is not a matter that I intend to pursue. I accept that, whatever the outcome, the nature of the work and the task in hand would be undertaken in any event.

The Minister said that the opportunity had been taken to align foundation trusts and other health bodies’ provisions, presumably, from what she said, in favour of the foundation trust formulation. Is that right?

[Baroness Hanham]

Yes, my Lords. At present the other parts of the health service are required to have value-for-money audit reports. Foundation trusts do not. The noble Lord is correct that it is being amalgamated under the foundation trust umbrella.

[Lord McKenzie of Luton]

I am grateful for that further explanation. I am bound to say that it did not give me much greater comfort. Given what has gone on with some foundation trusts—I think we will come on to them later—and how many reports there have been about the nature of their financial circumstances, they do not seem to be a good precedent on which to focus an alignment of practice. Perhaps we will pick up that issue later in our proceedings. In the mean time, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, the pre-legislative scrutiny committee reminds us that in many instances serious cases of financial or governance failure are not identified through the audit itself but are brought to the attention of the appropriate authorities by individual whistleblowers. This matter could hardly be more topical. It is vital that robust protections are available for individuals in all relevant bodies, including health bodies.

So far as whistleblowers are concerned, currently the Audit Commission is a prescribed person under the 1998 public interest disclosure provisions. Its appointed auditors are also prescribed persons. The Public Interest Disclosure Act protects from recriminations employees who make disclosures about a range of subjects. Whistleblowers can claim protection by disclosing their concerns either to an employer or, if they prefer, to another organisation authorised to receive disclosures—a prescribed person. The commission provides a confidential public interest disclosure line for employees of councils and NHS bodies where they are unable or unwilling to report internally. Once employees contact the commission, the commission alerts the relevant auditors.

The Bill makes no mention of whistleblowers, and this is an area that needs to be strengthened. We believe that, while appointed auditors should remain a prescribed person, there should also be another prescribed body which could pass on information to an auditor—for example, in cases where employees are unable to contact the auditor directly or where, as the ad hoc draft Bill committee suggested, they may not be comfortable approaching a private auditing firm that has a commercial relationship with the local body or council.

The draft Bill committee recommended that the Comptroller and Auditor-General should take on this role in the future, and that is what the amendment provides for. We may be at one with the Government on this issue and the NAO can provide a hotline for whistleblowers. If the Government are to provide this by order, what requirements will be placed on the NAO as to what it does with the information provided? The Audit Commission would currently, as I said, forward any disclosures to the relevant auditor. I beg to move.

[Baroness Hanham]

My Lords, I shall respond briefly, but I can also pick up some extra points that the noble Lord raised.

The Government, in response to the committee that undertook the scrutiny of the draft local audit Bill, have already indicated their intention to make the Comptroller and Auditor-General a prescribed person under the Public Interest Disclosure (Prescribed Persons) Order 1999. It is not necessary to include this in the Bill, as we intend to do it by making an amendment to the order following the closure of the Audit Commission.

On the powers of the NAO, at present it is the auditor that considers a disclosure in the context of the existing statutory powers and duties—for example, in relation to considering whether to make a public interest report on the matter. We do not think that it is necessary or appropriate to duplicate this by giving additional powers to the Comptroller and Auditor-General. This mirrors the current arrangements.

The noble Lord also asked why the Bill did not say anything about whistleblowing. We do not believe that it is necessary for the Bill to include provisions around that matter, because that is covered in other legislation. The Audit Commission and its auditors are included as prescribed persons in the Public Interest Disclosure (Prescribed Persons) Order 1999. Amendments will be made to that order to designate local auditors and the Comptroller and Auditor-General as prescribed people—that is, the people to whom whistleblowers can go. The Comptroller and Auditor-General will not necessarily have a duty to investigate those concerns as a disclosure in the context of the existing statutory powers and duties—for example, in considering whether to make a public interest report on the matter. We do not think that it is necessary or appropriate to duplicate this by giving extra powers to the Comptroller and Auditor-General, as I said.

I hope that it is clear that we are not in any way trying to reduce the role of whistleblowers or to put them under any sense of restriction from acting in such a way. There will be a very clear route concerning to whom whistleblowers can go, and they will be protected, as they are at the moment, from any retribution if they do that. I hope that that gives the noble Lord a satisfactory explanation.

[Lord McKenzie of Luton]

My Lords, again, I thank the Minister. I accept entirely that there is no attempt to dumb down the role of whistleblowers and that that will be fully supported. What is it that the Comptroller and Auditor-General is expected to do with information provided to it as a prescribed person which does not go to the local auditor?

[Baroness Hanham]

My Lords, exactly as happens at the moment, the Audit Commission directs whistleblowers to the relevant auditor, who is the person in power to take appropriate action. Whistleblowers will continue to be able to go directly to the auditor, as I said, and we extend that to the Comptroller and Auditor-General, who will refer it back again to the local auditor to take up.

[Lord McKenzie of Luton]

I am grateful for that and beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Hanham]

My Lords, the Bill retains the auditor’s duty to consider whether there are any issues on which he or she should make a public interest report, and auditors will use their professional judgment to decide whether to do so, as they do now. The auditor must inform the auditor panel before issuing a public interest report.

These two amendments would change the auditors’ consideration of whether to issue a public interest report. Amendment 17B would require the auditor to inform the independent auditor panel at the same time as, rather than before, issuing a public interest report. Amendment 17C would place a duty on the National Audit Office to provide advice and support to the auditor, if asked, before and during the issue of a public interest report. The noble Lord made that very clear in his opening remarks.

I understand the intent behind these amendments but do not consider them to be necessary. First, regarding the requirement on the auditor to inform the auditor panel, I should explain that we have refined this requirement in the light of the pre-legislative scrutiny committee’s recommendations. The draft Bill required the auditor to consult the auditor panel before making a public interest report, but the Bill now requires the auditor only to inform the panel before issuing a public interest report.

As we have discussed, an auditor panel has a key role in overseeing the independence of the relationship between the auditor and the relevant authority. We believe that this requirement on the auditor to inform the panel supports the panel’s role in overseeing the independent relationship between the auditor and the audited body. We would not expect the panel to try to influence the auditor in the discharge of his or her functions or on whether to issue the report. In practice, auditors will often need or wish to discuss issues with persons within the relevant authority when investigating the matters under consideration to ensure a full understanding of the situation and to gather the evidence. I therefore do not believe that it is necessary or particularly desirable to make this change.

Secondly, on the role of the National Audit Office, the Bill already places a duty on the Comptroller and Auditor-General to produce and maintain the code of audit practice and provides a power to issue guidance in support of the code. These will support auditors to undertake their full range of functions under the Bill, including the issue of public interest reports. We do not believe that placing a duty on the National Audit Office to provide guidance is the right approach. Auditors are accountable for their actions and will exercise their professional judgment when deciding how to undertake their functions. Individual auditors will base decisions on their professional judgment, supported by their firms. This is how it operates now. The Audit Commission issues guidance but does not seek to influence the auditor’s judgment. I think it would be fair to say that the Comptroller and Auditor-General would stand behind the auditor. The guidance will be there, and I am certain that under it if the auditor wished to seek further clarification, it would be perfectly possible under this legislation for them to do so from the National Audit Office or the Comptroller and Auditor-General.

Auditors will still have a statutory duty to consider whether they need to make a public interest report. That will occur at the time of informing the panel or subsequently, and they do not need to do anything more than inform it and tell it they are going to do it, although they may discuss it if necessary. Their professional judgment will decide whether a public interest report is necessary. Nothing will change in that respect, and the Bill provides for auditors to recover reasonable costs.

Finally, the noble Lord raised foundation trusts, which appoint their own auditors but have a regulator. Monitor said to the draft Bill scrutiny committee that there is a rigorous monitoring system which detects problems early and tiered support and intervention from Monitor to help resolve problems before they escalate, so the system is different. Also, auditors have qualified accounts of foundation trusts which demonstrate that they are not reluctant to give bad news or to raise issues as necessary.

I hope that the noble Lord will be satisfied with those responses and will feel able to withdraw his amendment.

[Lord McKenzie of Luton]

I thank the Minister for her reply. The point that I was trying to make was that, since foundation trusts have appointed their own auditors, the lack of public interest reporting has been equated with concerns about how independent auditors are and whether they feel that they have the strength and support to issue those reports. I take the point that some of them may well have had their accounts qualified, although I do not know on what grounds. I think that it may help to put the issue in context if we could have a note on how many foundation trusts have had their accounts qualified and in what respect.

I accept entirely that the Bill as it stands is a considerable improvement on where the draft Bill was on these issues. In a sense, the amendments that I was seeking to press are relatively minor, although I suggest that they are important. The noble Baroness made reference to the importance of the auditor panel being informed before the report is issued. I am a bit unclear as to what it is then expected that the auditor panel will do. I think that in a lot of instances there will, as the Minister said, be engagement along the way before we get to the final document. However, the difference between it being done when the report is issued and before that suggests that there is a perceived role for the auditor panel before the document is finally issued. It is another hurdle, and that is what I was seeking to avoid with this amendment.

I well understand the point about the NAO and the code of practice, and that that will be the route. However, from what has been said, whether it will replicate the sort of sounding board that the Audit Commission has and currently exercises for auditors who are contemplating developing thoughts around public interest reporting, I am not sure. I do not think that I got the sense from the Minister’s reply that that more proactive engagement was expected. If it were not, that would be a loss, but perhaps the Minister will follow up on that.

[Baroness Hanham]

My Lords, I am sorry if I did not make it clear that the NAO, while issuing the guidance, will also be behind the auditor, who will be able to discuss issues with it and receive support. The Audit Commission will, as in the past, provide the backbone to the auditor and clarify how to go ahead. That will not change, and I think that there will be strength in that.

We have not really covered this but the noble Lord’s amendment would effectively mean that the auditor about to issue a public interest report would not have discussed it with anybody outside. He would have to issue the report to the panel and the council at the same time. The ability to go to the auditor panel and say, “This is what we are about to do, this is what we think is wrong.”, would, first, probably just give the auditor panel responsible an opportunity to know that something was coming up which it would need to be aware of. Secondly, it would possibly give the auditor the ability to discuss a particular issue with someone independent of the council. I do not think that that would in any way be a retrograde step; it would give strength to the auditor.

[Lord McKenzie of Luton]

I thought that I said when moving the amendment that I recognised that in many instances there would be engagement with the auditor panel or the audit committee, or whatever the final formulation might be, but that I was keen to ensure that there was not another loop in the process at the point that the auditor concluded what he or she needed to do. There might be no engagement at all. It might be an issue that affects the relationship between the auditor panel and the authority involved. It was a case of not wanting to put in an additional loop right at the end of the process without in any way restricting or precluding the opportunity of engagement along the way, which I imagine would be the norm.

There was one other point. If the Minister covered the issue of indemnities, I was at fault and missed it. I should be interested in the Government’s view on that issue.

[Baroness Hanham]

The noble Lord is right that the new framework does not replicate the Audit Commission’s indemnity scheme, which funds legal expenses faced by auditors as a result of their exercising their functions. We believe that it is appropriate for private audit companies to bear the risks and costs for any consequences resulting from the exercise of their functions, covering by definition anybody who is employed by them. Furthermore, we do not believe that this will unduly deter auditors from exercising their functions. The Audit Commission’s indemnity has very rarely been called upon.

[Lord McKenzie of Luton]

I understand that; we have been through that before. I can see that it would not be the norm, but if there is no ability to give indemnity on some basis, what if we have a repeat of risks of the Westminster council sort, and 14 years of litigation? I accept that we are in a different era, but on technically complex issues, will that not discourage auditors from issuing that report?

[Lord Beecham]

If I might add to my noble Friend’s question, will that not deter smaller firms from engaging in the tendering process?

[Baroness Hanham]

My Lords, I am not sure that the Westminster case is very helpful now. We are a very long way down the line. As others will know, it was not a straightforward case by any stretch of the imagination. The legal action was taken to recover the surcharge, so it was not only to do with the report, but with trying to surcharge the councillors.

If the company concerned appoints an auditor, it has to stand behind them as well. That would be the expectation of indemnity in this case. I am sure it will not be unique to a company to have to do that. With regard to small auditors, the situation would remain the same. They would presumably cover themselves for the risks.

I hope the explanation is sufficient. If not, and the noble Lord has other points that I have missed, perhaps we can pick them up by correspondence.

[Lord McKenzie of Luton]

I am grateful for those further points. I do not think we are a million miles apart on this; our differences are perhaps fairly narrow. I shall reflect on our discussion. In the mean time, I beg leave to withdraw Amendment 17B.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, Clause 26 draws on Section 16 of the Audit Commission Act. This allows a local government elector for an area to make objections in respect of matters where the auditor could make a public interest report, or where the auditor could seek a declaration that an item of account is unlawful. Where objections are received, the auditor must decide whether to take action under these powers.

The purpose of the amendment is to open up some debate around the circumstances where the auditor does not need to consider an objection, circumstances which do not appear to be spelled out in the Audit Commission Act. The amendment introduces a slightly higher threshold for the auditor not to consider an objection, by adding that the auditor must have reasonable grounds for considering that exemptions apply. The Minister may say that this is implied by the current wording. We have no problem with the auditor being able to ignore frivolous or vexatious objections, or indeed an objection that has already been considered. The reason of disproportionate cost is somewhat more problematic and requires potentially more refined judgment—especially when it may involve governance issues rather than considerable sums of public money. Of course, there is a get-out clause in that these provisions cannot be used to avoid the action of an auditor who has serious concerns as to how an authority is managed. Is it envisaged that there would be guidance on this matter—part of the audit code, perhaps? Would the Minister expand on the Government’s views of the parameters of this particular provision?

[Baroness Hanham]

My Lords, the Bill retains the rights of local government electors to question the auditor, as the noble Lord, Lord McKenzie, has said. They can raise objections, if they think that there are matters that the auditor should report on in the public interest, or items that they think constitute unlawful expenditure. The auditor can decide not to investigate an objection—and noble Lords have mentioned the frivolous or unconstitutional—if he or she thinks that it meets certain criteria.

Amendment 17D replaces the basis for an auditor not to consider an objection from “thinks that” to “reasonable grounds for considering”. This means that an auditor would be required to meet a reasonableness test before being able to decide not to investigate an objection. Following consultation, the Government decided to modify the objection process. The Bill, therefore, gives an auditor the discretion not to consider an objection in certain circumstances—where the auditor thinks that the objection is frivolous or vexatious, or it repeats an objection previously considered. The auditor has further discretion to not consider an objection if the financial value is disproportionately small when compared to the cost of the auditor’s time in investigating the issue, as long as the auditor does not think that the objection might raise concerns about serious failures of leadership or management within the organisation.

These specific exclusions are new and we think that providing the auditor with discretion not to consider objections as outlined can help to avoid circumstances where an authority—and therefore the taxpayer—incurs significant additional costs for auditors’ time in investigating an objection which is vexatious, or for the other reasons I have mentioned. Auditors will continue to use their professional judgment in exercising this discretion, as they do now for all their functions. We believe that this amendment would add an additional burden and cost in that an auditor would need to meet a reasonableness test before deciding not to investigate an objection. The auditor’s independence and professional exercise of duties is sufficient to ensure that this will be undertaken properly.

I hope that the noble Lord will accept the explanation and withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I will not pursue the issue. I was with the noble Baroness until the end, when the comments about a reasonableness test being an extra burden were outlined. If it is envisaged that undertaking a reasonableness test is a significant event, then that is all the more reason to have it because, presumably, it is a meaningful process. I beg leave to withdraw.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, this amendment concerns the declaration that an item of account is unlawful. It draws on Section 17 of the Audit Commission Act 1998, which contains similar provisions, although this Bill does not give the Secretary of State power to sanction an item of account which is contrary to law—unless it is tucked away somewhere else in the Bill, in which case perhaps the Minister would let us know. However, the Audit Commission Act does give power to the court to order a person responsible for incurring or authorising unlawful expenditure to repay it in whole or in part to the body affected. It can order that the person is disqualified from serving as a member of a local authority for a specified period. These powers seem to be missing from Clause 27, and the amendment simply seeks to rectify the omission by using the wording from Section 17. The Minister will doubtless say that it is blindingly obvious that these powers are covered elsewhere. If they are, it would be helpful to know where—and, if not, why the exclusion?

[Baroness Hanham]

My Lords, there is a sort of déjà vu about this amendment. The power of surcharge, as the noble Lord said, enables auditors to recover money from individuals whose actions caused losses to their councils, and was taken out in 2000. It was first introduced in the 19th century, and it is felt to be quite unnecessary in modern local government. In its 1997 report on standards in public life, the Nolan committee concluded that surcharge was an “archaic penalty”; what was archaic in 1997 is surely even more so today. Moreover, surcharge was unfair because of the technical difficulties in calculating the relevant sums, which could be well beyond the means of the individuals involved and bore no relation to people’s ability to pay. This could result in damage to families as property and assets were disposed of to pay the surcharge.

I note that this amendment offers no protection to those who act in the belief that the expenditure that they were authorising was lawful, meaning that, as it stands, the amendment might result in councillors or officials having to make a substantial payment as a result of a decision that they make in good faith. Following the abolition of surcharge, the Standards Board regime was introduced to prevent personal misconduct by councillors in office. Unfortunately, the Standards Board regime became a vehicle for petty and malicious complaints so, in 2012, we abolished it and put in place new arrangements for the conduct of councillors. These new arrangements include tough new rules to prevent genuine, wilful corruption, with councillors having to be transparent about their pecuniary interests. The auditor can himself, or after a concern has been expressed, raise the issue of a public interest report, as we have just discussed. We have backed up these rules with a criminal penalty for the wilful disregard of pecuniary interests, giving the courts the power to impose a fine of up to £5,000 and to disqualify a guilty councillor from office.

Surcharge is archaic but, what is more, it is unnecessary. I hope, with my reassurance and a reminder of things as they stand, the noble Lord will withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I think that I had better move swiftly on. I am grateful for that explanation and a bit of a history lesson, and I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, in moving the amendment, I shall speak also to Amendment 17FA. I have now noticed that the point that it seeks to cover is, I think, dealt with in Clause 7(7). Clause 27 is concerned with advisory notices and who can issue them. Under Clause 7(7) it seems clear that, in the case of joint appointments, it can be done jointly or by either one of the joint auditors, which was the point that I sought to cover. The same point comes up with regard to who can make an application for judicial review, although I notice that, in Clause 30, the reference is to the Senior Courts Act 1981. The Audit Commission Act, unless it has been amended since, makes reference to the Supreme Court Act 1981. I ask for confirmation on those points and beg to move.

[Baroness Hanham]

My Lords, the noble Lord is correct that Clause 7 dealt with this. However, I think he has a winner coming, because the amendment has raised concerns about its exact correctness. We will ask parliamentary counsel to have a look at this before the next stage. We will probably, or may, return to it and I will advise the noble Lord, in which case, which way. It clearly needs a tweak. I hope the noble Lord will be happy that he has moved us in one direction and will be willing to withdraw the amendment, although, as I say, I think we will be looking at it again at the next stage.

[Lord McKenzie of Luton]

I am grateful to the Minister. I knew there was some reason why I moved this amendment. Can the Minister deal with the point about the reference to the Senior Courts Act and the Supreme Court Act? What is the difference there? Something has happened along the way, I guess, to make each of those separate expressions meaningful in its context. It may be that the Ministers would wish to write on that, unless there is a meaningful note from the Box

[Baroness Hanham]

My Lords, I will certainly write, but I also think we will check. That seems to be the first thing to do. The noble Lord has raised yet another interesting point on this amendment and, if I may, we will come back on both those aspects.

[Lord McKenzie of Luton]

I beg leave to withdraw.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, this is a probing amendment concerning advisory notices. It would appear that this regime has replaced the prohibition order regime contained in the Audit Commission Act 1998, but with some key differences. Advisory notices can be served if an auditor considers an authority is about to make a decision that would be unlawful or lead to unlawful expenditure. Under the advisory notice regime, the decision or course of action would be unlawful unless the authority, having reflected, considers it appropriate to proceed. This would appear to contrast with the prohibition order procedure, whereby, unless the order revokes it, the action or decision remains unlawful subject to an appeal to the High Court. Is that correct? Presumably, the risk of proceeding when faced with an advisory notice is that the order would seek a determination from the court that the expenditure involved is unlawful, so the onus has been switched from the local authority to the auditor. Can the Government explain this changed approach?

Our specific amendment was to delete the protection given to auditors from any loss of damage alleged to have been caused by the issuing of the advisory notice, which was issued in good faith. This mirrors the protection given in respect of prohibition notices and raises the question of who is to suffer the loss if there is one. Obviously, this is not without its importance given the difficult financial times that local government is in.

Can the Minister also take the opportunity to spell out for us the difference of treatment of health service bodies where the duty of the auditor is just to refer equivalent circumstances to the Secretary of State and the National Health Service Commissioning Board? What follows from this? I beg to move.

[Baroness Hanham]

My Lords, my note is rather short; it is getting briefer by the minute. The Government think it is important to retain this exemption in order to support the auditor’s ability to undertake the important function according to their professional judgment without fear of facing a damages claim, which, even were it not upheld, would be costly and time-consuming to defend.

Auditors generally report on things that have happened, their opinions on the accounts and the issue of public interest reports, and apply to the court for a declaration that there has been unlawful expenditure. The power to issue an advisory notice is forward-looking, seeking to prevent the authority taking some action that could be unlawful. It is possible, therefore, that auditors will have to act quickly and action may be based on partial evidence. The limitation of liability is to give the auditor some protection to enable them to use their professional judgment. We think it would be right to continue the protection.

With regard to the noble Lord’s questions, the Audit Commission Act includes advisory notices. No major changes have been made to the power to issue an advisory notice. It is still there. This mirrors existing provisions under which the auditor can issue an advisory notice if he thinks that the authority or an officer has undertaken or is about to undertake an unlawful action: a decision on carrying unlawful expenditure, unlawful action or entering an unlawful item of account. There are detailed requirements about the contents of the advisory notice and how it should be served. Within seven days of issuing an advisory notice—this may be something that requires quick action—the local authority is going to have to serve a statement of its reasons for putting forward the advisory notice.

The noble Lord asked me about the difference from the health service. I think I may be able to answer that question—it would seem that I will be writing to the noble Lord to clarify this point on health service bodies, except that I can tell that him that the clause contains the current requirement for local authorities. An equivalent requirement for health bodies has not existed previously and is not required because the governance arrangements for health bodies are different. Health bodies are consolidated into the accounts of the Department of Health and are covered by the requirements of Managing Public Money issued by Her Majesty’s Treasury. As such, they are accountable to Parliament for their expenditure, not to local people. The difference between the two is in the process. Under those circumstances, I may not need to say that I will write to the noble Lord on health service bodies. He will tell me whether he thinks I have answered his question and the others. I hope that I have given him a satisfactory explanation.

[Lord McKenzie of Luton]

Indeed, the Minister has given me satisfactory explanations. It appears that my copy of the Audit Commission Act is not quite up to date because it certainly has references to prohibition orders. I imagine that, somewhere along the way, that was adjusted to advisory notices.

[Baroness Hanham]

My Lords, we will check the matter the noble Lord has raised. I will write to him about that. He will tell me whether he is happy about the health services bodies, in which case, I will not need to write to him.

[Lord McKenzie of Luton]

I can exempt the Minister from writing on health service bodies. I am happy with the explanation and to receive a note on the broader drafting point. I beg leave to withdraw the amendment.

Local Audit and Accountability Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 19th June 2013 Grand Committee

[Lord McKenzie of Luton]

My Lords, this amendment touches on something that my noble friend began to address in an earlier debate. It addresses paragraph 3 of Schedule 4, and the making of regulations about a health service bodies auditor panel. These regulations would enable the Secretary of State to determine whether any of the members of the health service bodies auditor panel must be independent and, if so, what proportion must be independent, as well as the definition of independent.

A health service body means a clinical commissioning group and special trustees for a hospital. These powers are subject to the negative procedure. The amendment would require there to be consultation with representatives of health service bodies before regulations are produced. This seems to be a significant paragraph to be dealt with by the negative procedure, particularly given the prescriptive nature of the constitution of auditor panels for other relevant authorities.

The Explanatory Note to the Bill, to which I referred earlier, states:

“The intention is that these panels will be the existing audit committees of health service bodies which will meet the independence requirements of best practice for central government audit committees”.

I took the opportunity to raise this in advance with the Bill team, and I had a helpful reply, which I have not had a chance to get my mind fully around yet. Perhaps the Minister might take the opportunity to put something on the record. If I understand the position, it is accepted that the audit committees of health service bodies, as currently constituted, which they are required to have under legislation, will serve as the auditor panels. In a sense, we have achieved for health service bodies what we have been seeking to achieve for local authorities. Therefore, it should not be too great a step to complete the journey. I should be grateful if the Minister would put something on the record generally about why there is this differentiation between health service bodies and local authorities. I beg to move.

[Baroness Hanham]

My Lords, the direct answer to the noble Lord is that there are different arrangements in the various bits of legislation. As he has said, the clinical commissioning groups have governance arrangements that say that their audit committees can carry out this duty. That is how it has been set up in the health service. The composition of the clinical commissioning groups and local authorities’ arrangements are different. I want to make it clear that where local authorities have audit committees with independent members on them, it is possible for them to appoint the panel from the audit committee as long as they use the independent members. The arrangements are not and do not have to be totally different from those available as regards the health service.

I have pages of response to a question that the noble Lord has not asked. Is he reasonably happy that I have addressed the amendment? If not, I will give him the reams of pages that I have in response.

[Lord McKenzie of Luton]

Will the noble Baroness remind me of the question which I have not asked?

[Baroness Hanham]

I am tempted but I will not rise to that. If the noble Lord does not know what question he has not asked, I am not about to tell him what he might have asked.

[Lord McKenzie of Luton]

I shall ponder that response but I think that I would hang on to the basic point. It seems to me that the regulations that will flow from this provision will be, as has been said, a creation of the audit committees as the auditor panels. There will be only one body for health service bodies, which, in a sense, is the clarification that I was seeking as to what would flow from the broad powers set out in that paragraph. Obviously, there is a broader issue to which we will return about why that cannot be replicated for local authorities.

I am struggling to remember the question that I should have asked. Perhaps in the interim, I should beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I shall speak also to the other amendments in this group. The amendment would remove the requirement on the auditor panel to advise on the maintenance of an independent relationship with the local auditor. Indeed, it makes it discretionary. When I prepared for this debate, I could not for the life of me immediately recall why we tabled it. Obviously, the circumstances where a relevant authority ends up with an auditor panel and an audit committee, as we have discussed, would give rise to overlap and confusion, and possibly conflicting advice.

However, on reflection, we tabled it as a probe to establish a definition of “an independent relationship”. The Bill defines who is independent in establishing eligibility to serve on an audit panel and/or committee, but this definition does not appear to help in defining the parameters of an independent relationship between the relevant authority and its auditor. Is it proposed that guidance will be available, or is it expected that audit panels or audit committees will work that out for themselves? This issue is of particular relevance to the provision of other services by audit firms and how this is to be managed.

Amendment 14BJ would make a minor wording adjustment to advice related to liability limitation agreements. By referring to proposals for an authority to enter into such an agreement, it implies not that the proposal must have originated from the relevant authority but that it is more likely to have come from the audit firm.

Amendment 14BK would remove subsection (7), which seems superfluous. If subsection (6) requires the panel to advise on proposals for liability limitation agreements, why must there be the extra stricture for it to respond to requests for advice? It is not clear to me. I beg to move.

[Baroness Hanham]

My Lords, perhaps I may first deal with the description of “independent” which, I understand, will be a matter of consultation. There will be consultation on what “independent” means in health bodies and how it should be defined. We all need to be clear about what “independent” means, a point raised by the noble Lord, Lord Palmer, and others. This is in relation to health bodies, not local government bodies, but that consultation will be carried out. I hope that that is helpful.

On the main question about the auditor panel’s duty to advise on a proposal for an audit authority to enter into a liability limitation agreement, Amendment 14BJ would require that the panel should advise where there is a proposal for the authority to enter into such an agreement, rather than a proposal by the authority to do so. Amendment 14BK would remove the requirement that a panel must give advice on such a proposal if the authority asks for it. Amendment 14BE would require that an auditor panel “may” advise on auditor independence whereas the Bill currently states that a panel “must” advise on it.

The intention behind the amendments, to remind the noble Lord, relates to separate amendments that we had proposed to allow for a central body to appoint auditors on behalf of any relevant authority which had opted in to this structure. Where such arrangements applied, it would not be necessary for—I am sorry, something seems to have gone seriously wrong with my notes.

I will reply on the basis of the independent relationship but I am afraid that I am going to have to ask the noble Lord to come back on Report on this so that can I fulfil his right to a proper reply.

As to advising on the maintenance of the independent relationship, it is important that the panel maintains an ongoing oversight of the auditor’s relationship with the relevant local body. As in the company sector, this might include, for example, an annual assessment of the independence and objectivity of the auditor and setting policies for the provision of non-audit services.

The noble Lord asked about limited liability agreements. I ask him to raise the issue again. I shall certainly write to give him an answer. I apologise.

--- Later in debate ---

[Lord McKenzie of Luton]

I would simply urge the Minister to give some encouragement to the noble Lord, Lord True, who has raised a very important point, as he did at earlier stages in our deliberations. I hope that the Minister can help him at least a bit.

[Baroness Hanham]

My Lords, I thank my noble friend for having introduced this amendment because it opens up the relationship that exists between local authorities and health authorities, particularly in relation to what is required of scrutiny. As my noble friend has said, the primary care trusts and the clinical commissioning groups have now come into being, while the local authorities still have a health scrutiny role since that changeover. If I may, I will refer to the duties in the health scrutiny regulations as I go through what I have got to say.

Failure to comply with a duty under the health regulations will place the relevant body in breach of its statutory duty and render it at risk of a legal challenge. The regulations provide that the local authority can require attendance of a member or employee of a relevant health service provider or commissioner to answer such questions as appear to the authority to be necessary for discharging its health scrutiny functions. It is the duty of that member or employee to comply. The regulations also require a health service commissioner or provider to provide a local authority with such information about the planning, provision and operation of health services in the area of the authority as the authority reasonably requires in order to discharge its health scrutiny functions. To focus particularly on attendance, if a local authority was to require the attendance of members of a clinical commissioning group, it could do so under the health scrutiny regulations.

On employers’ actions, we would expect employers to take the appropriate steps to ensure that the relevant member or employee complied with the local authority’s requirements. It would be highly unlikely that an NHS body, as a public authority, would refuse to take action to ensure that its members or employees complied with a request from a local authority. I think that these provisions are part and parcel of the health service legislation which recently passed through Parliament. The emphasis put on this since the noble Lord’s problem arose may have changed.

Any refusal would not be in line with the duty of co-operation that applies as between the National Health Service and local authorities. Section 82 of the National Health Service Act 2006 imposes a duty of co-operation between National Health Service bodies and local authorities and requires them, in exercising their respective functions, to co-operate with one another in order to secure and advance the health and welfare of the people of England and Wales.

As regards the attendance of particular individuals, identification of the appropriate member or employee to attend may depend on the type of scrutiny review being undertaken and its aims. To take a theoretical case, where the local authority has required attendance of a particular individual—let us say the accountable officer of a clinical commissioning group—and it is not practical for that individual to attend, or if that individual is not the most suitable person to attend, we would expect the clinical commissioning group to suggest another relevant individual. In such situations, both the local authority and the commissioning group or provider, as the case may be, will be expected to co-operate with each other to agree on a suitable person for attendance and, in doing so, to act reasonably.

Therefore, in the interpretation of the health scrutiny regulations and on the basis of the duty of co-operation contained in the National Health Service Act 2006, there are existing principles that guide how the National Health Service and local authorities conduct themselves in relation to the discharge of the local authority’s health scrutiny function.

We share my noble friend’s desire to ensure that everything works as it should in the future and, although we feel that the duties and powers already in place are correct, we believe that we can take further action to ensure that the responsibilities on NHS organisations and local authorities are clear. We shall shortly be publishing updated guidance to support the health scrutiny regulations and to emphasise these responsibilities. If my noble friend would find it helpful, I know that the Department of Health would be happy to work with him on the development of this guidance.

I appreciate that this was very much an individual case to which my noble friend brought our attention, but it flows widely across the health scrutiny role. I hope that I have reassured my noble friend that there are requirements on people to come, that the health authority can require them to come and that they are truly expected to appear. I know that that was not the situation that he described but the regulations are there. If my noble friend is willing to give his experience and help to the Department of Health, I know that it will be very willing to take it up. With that, I hope that he may feel that he has enough to enable him to withdraw the amendment.

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[Baroness Hanham]

My Lords, I have misled the Committee, for which I apologise. As the noble Lord said, it is the preceding year. If the clinical commissioning group fails to appoint an auditor in the preceding year at the end of March, the Commissioning Board will have to notify the Secretary of State. This gives time for an auditor to put in place the provisions for the following year. The Secretary of State has to be notified by the commissioning board by 25 March that the clinical commissioning group has failed to appoint an auditor. The provisions are intended to ensure that a clinical commissioning group has a local auditor in place in a way that is consistent with their respective roles. I agree with the noble Lord that nine months seems a long time to get someone in place.

[Lord McKenzie of Luton]

I thank the Minister. I am going to have to read the record on that. The potential discrepancy that I was probing was the difference between using the 25 March and the financial year preceding it. As I understand it, if the financial year ends 31 December 2014, it would be the 25 March 2013 that would count. However, the difference is between the 25 March for the clinical commissioning groups and 31 December for the relevant authority’s appointment date. Why is it 31 December in the preceding year for the relevant authority and 25 March for clinical commissioning groups? I am happy to receive a follow-up letter if that is easier. I beg leave to withdraw the amendment.

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[Baroness Hanham]

My Lords, perhaps I can pick up the questions as I go along. However, it would probably be helpful if I gave the justification for the clause and then we could look at the impact.

As in the companies sector, auditors appointed under the Bill will, by agreement with the audited authority, be able to limit the extent of their liability to the body in relation to negligence or breach of duty or trust. This clause gives the Secretary of State powers to place restrictions on such agreements to ensure that they are reasonable and proportionate.

The decision to allow liability limitation agreements in the companies sector was made following extensive consultation. Such agreements aim to ensure that auditors are not held liable for consequences beyond their control and responsibility. Under the joint and several liability principle in UK law, auditors may be held liable for damages beyond that for which they are directly responsible. The Financial Reporting Council has welcomed provision for such agreements.

Clause 14 mirrors the Companies Act 2006 by providing that any such “liability limitation agreement” must comply with certain conditions. The purpose of this clause is to ensure that the agreements do not unreasonably limit the auditor’s liability and are entered into transparently. Without such a provision, there would be no limits on an auditor limiting their liability and nothing to stop them removing all liability completely. As I said, it is right that auditors are held responsible for their actions in a fair way.

Subsection (2) requires that:

“A liability limitation agreement must comply with regulations made by the Secretary of State”.

Such regulations may address the duration of an agreement or the amount to which it may limit the auditor’s liability, or require it to contain, or not contain, certain provisions. Under subsection (5), regulations may provide that any limited liability agreement not complying with regulations is void or has effect only in so far as it complies with them. In the interests of transparency, subsection (6) allows the Secretary of State to make regulations requiring the disclosure of any such agreement. Subsection (7) excludes compliant agreements from wider provisions in the Unfair Contract Terms Act 1977, which set out similar but more general provision and conditions around limitation of liability.

With regard to the amounts of money involved, perhaps I may write to the noble Lord. I think that the amounts are very small but I will provide them to the noble Lord. As the Bill proceeds, there will be further details on the various matters that have been raised. We will, as with all new legislation, be undertaking a review of monitoring to see what the situation is.

With regard to the point raised by the noble Lord, Lord Palmer, about who should pick up the liability, the Bill includes provisions that enable auditors to recover the costs of their time in exercising their functions from the body being audited. It does not replicate the Audit Commission’s indemnity scheme, which covers the costs of auditors taking or defending legal action. We believe that it is appropriate for private companies to bear the risks and costs of that. We do not believe that it would unduly deter auditors from exercising their functions. The Audit Commission has rarely indemnified its suppliers. On the noble Lord’s question as to whether the Government should pick up liability, the answer would be no. With that, I urge that the clause remains part of the Bill.

[Lord McKenzie of Luton]

My Lords, I am grateful to the Minister for that response. I think that we understand a bit better that the regulations will broadly follow the Companies Acts requirements and what flows from that. I found her response confusing in some respects. We are talking about something that is not beyond the control of the auditors. These arrangements are predicated on a breach in respect of any negligence, default, breach of duty or breach of trust occurring in the course of the audit of accounts, so it is a failure of an audit firm which triggers them. The noble Lord, Lord Palmer, raised a very important point. If there is a breach or damages and if that is not to be visited on the auditor, or what is to be visited on them is restricted, who bears the cost of the rest? I do not think we understand that from the Minister’s response.

I thought that the public policy issue about this was partly to do with making sure that another big four company did not go under. The ramifications of those four big beasts going down to three would be significant over a whole range of areas, as we learnt from the demise of Arthur Andersen because of Enron. I thought that a key point was to make it easier for smaller firms to enter the market because their risks were, in a sense, capped. There is no great evidence to suggest that that has happened in the private sector. We do not yet know whether it will happen in the public sector, but if it does not, that raises the question: why have these agreements in the first place? All they do is to protect audit firms. Why? These are sophisticated organisations. They have excellent training programmes, generally recruit very good staff and have been around the block a few times. If they mess up, should they not bear the consequences? If not, the question of the noble Lord, Lord Palmer, is absolutely right: who should? Part of the rationale may be that it would produce downward pressure on audit fees, but that is difficult to justify, particularly if the use of the commission’s indemnity was pretty restricted.

We may return to that issue, perhaps in terms of a sunset clause, if these things are to continue. I hope that the same arrangements as in the private sector, where I think they have to be annual contracts, will persist in the public sector in so far as they are used at all. I hope that guidance is given to firms when faced with such a request from their auditors as to how they should respond. We have probably taken this as far as we can this afternoon, but for us it is an outstanding issue to which, one way or another, we will wish to return.

Local Audit and Accountability Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 17th June 2013 Grand Committee

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

My Lords, I thank the noble Lord, Lord McKenzie, for introducing these two amendments which fire the opening shots on this aspect of the Bill. As he said, Amendment 1 would require the Secretary of State to make arrangements to enable the national procurement of external audit before the closure of the Audit Commission. The Bill currently requires local bodies to appoint their own auditor. The intention behind the amendment is clearly to create the potential for bodies to have their auditor appointed on their behalf by a national body, which effectively would be mandatory.

Amendment 13 would support such arrangements by allowing a body to have its accounts audited by an auditor appointed on its behalf. At present the Bill requires a body to have its accounts audited by an auditor appointed by the body itself. I hope that I have interpreted correctly the points in the amendments.

It is argued that local authorities and local bodies are best placed to put in place whatever arrangements suit them locally for their auditing. Many local authorities have already welcomed the opportunity to appoint their own auditor. For example, during pre-legislative scrutiny, the two local authorities that gave evidence to the committee both signalled that they were happy to appoint their own auditor, and the chief executive of a foundation trust said that appointing its own auditors had resulted in a 50% reduction in fees.

I am not unsympathetic to the intention behind these amendments—which I understand to be to secure the lowest audit fees for local bodies by encouraging large-scale collective procurement of audit. The Government recognise the benefits of bulk buying and the Bill already allows local bodies, if they wish, to come together to procure jointly. It does not say how many local authorities or local bodies there should be or limit them, but it allows them. It says that local bodies must be able to choose what arrangements suit them. We do not think that it is up to central government to dictate to local authorities how they should go about appointing their auditor, regardless of whether they do it singly or come together jointly. We believe that we should be careful that provision for national procurement—if that is the way it is going, and the LGA seems to hope that it is—does not limit local choice and that we do not recreate the Audit Commission in another guise. We are saying that the options must remain. Local authorities should have the option to join the national scheme if they wish to do so. If they do not so wish, they have the option to appoint their own auditors or to join up with an external authority.

It has been made clear that there is some appetite for developing this national procurement arrangement. If such arrangements for this national procurement maintained choice for local bodies—which is effectively what I have said—and allowed them to take part or appoint locally then we would be willing consider the scope for allowing it under the Bill. It would therefore be not mandatory but permissive. If we are to consider such a change, it is important that we have further details on how the proposed scheme will work and an assurance on the commitment to ensuring that such arrangements are effective.

The noble Lord, Lord McKenzie, raised the matter of the savings that have come from the current national scheme, which was created by the Audit Commission some time ago. Even though the £400 million savings may not be achievable under this, we still see very substantial savings coming from local procurement and, indeed, even from a limited central procurement.

As result of what I have said and what has been said I am happy to take this matter away for now, and not to come to any decisions or put my foot down very firmly, but we must talk more clearly to the Local Government Association and any other interested organisation to see what arrangements they may want to put in hand so that we can see if there is any room for the optional scheme in what they are proposing. I hope that we might be able to get that into place. I emphasise that we will not and cannot agree to a mandatory scheme.

The noble Lord, Lord Smith, agreed—I hope that I am right in saying this—that joint contracting works perfectly well in other fields of local government. There seems to be no reason why it should not work in this one. I understand that the way that it works may be affected by the size and number of people who join in, so we would also want to discuss how one estimates how many people would like to join such a scheme before it is implemented.

The noble Lord, Lord McKenzie, asked what safeguards there are around the provision of the non-audit work by the appointed auditor. The Financial Reporting Council’s ethical standards already require auditors to identify and address conflicts of interest associated with the acceptance of non-audit work. Auditor panels also have a role in adjusting non-auditor work under the accounting code of practice. Local authorities are required to disclose additional payments to the auditors.

The noble Lord, Lord Palmer, was interested in the independence of the auditor. We are clear that the auditors will be subject to the Financial Reporting Council’s standards. These require audit firms to have robust systems and processes in place for ensuring the objectivity and independence of audit and addressing any issues on the non-audit work. We are also putting in place robust protections around the appointment and removal of auditors, and local bodies will need to consider advice from an independent auditor panel or audit committee before making their appointment. We will not deal with that in today’s amendments but I am sure that we will discuss it later. Finally, the Bill specifies circumstances where a person may not act as a local auditor on grounds of lack of independence.

I hope that I have covered the points that have been raised. The noble Lord, Lord McKenzie, also mentioned the auditor fees. We realise that the savings may not be quite as great as they are currently but we expect them to be there. With those reassurances and the offer to have further discussions with the Local Government Association—discussions which I believe are ongoing—I hope that the noble Lord is willing to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I am most grateful to the Minister for that offer to take this away for further engagement, and for her response. It is a good place to start in our deliberations. I am also grateful to my noble friend Lord Smith for his support, and to the noble Lord, Lord Palmer. A key point for the Minister was that there must be an option for people to continue to choose locally if that is what they want. A better term in all of this might be “central procurement” rather than “national procurement”. We have another amendment coming up on Wednesday. If we had got it down in time we would have grouped it with this one. It provides a more flexible approach and will, I hope, add to the debate as well.

Just two points: the noble Baroness said that local authorities should be able to choose the arrangements which suit them locally. I just reflect that in the private sector, if companies are looking around for auditors to suit them, it can sometimes ring alarm bells, because it is not always a good sign. It is a bit like shopping for counsel’s opinion—you shop until you get the one that you want—although I do not think that that was the intention. I think that you can distinguish audit services from many other types of services because it is properly regulated nationally because it is an assurance regime—in the private sector, for shareholders; in the public sector, for the public. That distinguishes it from other services which local bodies may want to procure.

I revert to Amendment 13, because I am not sure that I made my point clearly enough on that. Clause 4(1) states:

“The accounts of a relevant authority for a financial year must be audited … in accordance with this Act, and … by an auditor appointed by that authority in accordance with this Act”.

My point was that there will be a period, will there not, where the auditor might have been appointed by the Audit Commission under the outsourcing and bulk contracts that were in place, once the new regulatory regime under the Bill is also in place? There may be transitional provisions which cover all that, but that was the point of challenging that wording. I do not know whether the noble Baroness wants to respond to that before I formally withdraw the amendment, but I give her the opportunity to do so.

[Baroness Hanham]

Certainly on the first point, in what I said about local authorities doing what suits them, I was very clear that that is the choice of whether, if it is possible, they join a central scheme, or whether they appoint their auditors jointly or on their own. I was not referring to them popping around to decide who they were going to have. That raises an issue which I did not deal with, which is the question of the number of auditors and audit firms that could take up those jobs. At Second Reading, I said that, yes, we know that the four are there. When this was being considered, there were at least another three expressing an interest and we expected there to be more. We will come to the point about CIPFA and the requirements. Probably, and hopefully, other auditors who may be more local will be able to meet them.

The noble Lord asked what happens when the Audit Commission goes and the auditors and the contract are still there. The due point will come into force later. I think that we may come to that later.

[Lord McKenzie of Luton]

I am again grateful to the noble Baroness. Perhaps she might reflect on that last point and we could deal with it by correspondence, because I am not sure that it has been dealt with.

It is right to say that the process of outsourcing by the commission has helped to diversify the market a bit but, frankly, not very much. We know the history with the big four: how dominant they can be and the resources that they can throw at opportunities which small or even quite substantial medium-sized firms cannot do. That is a debate for another day. Accordingly, I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, my noble friend Lord Christopher’s opposition to this clause standing part was delivered in a very knowledgeable and passionate way and with some understandable logic underpinning it. However, the Audit Commission would maintain that it has already been significantly changed from its prior status. Its in-house audit practice has been privatised and the commission’s routine inspection and annual inspection of local government has ceased, as has its work on comprehensive area assessment. It has already incurred significant redundancy costs, partly funded by CLG, and offices have been closed with early termination costs incurred. The NAO is already picking up the task of value-for-money studies.

The Audit Commission of today is not the same as the Audit Commission of three years ago, and we have heard from my noble friends Lord Christopher and Lord Beecham about some of the splendid and effective work that it used to do. It would be difficult to put it back together again in anything like its original form. To that extent, the Bill has been rather pre-empted. The challenge for us in considering the Bill before we sign it off is to scrutinise the proposed new framework to evaluate whether its proposals are fit for purpose, can deliver an effective regime and build on what was good about the Audit Commission, and some of our amendments seek to do this. That process of scrutiny should particularly pursue the line just outlined by my noble friend Lord Beecham to see how joined-up we can be in an era when we are at risk of fragmenting arrangements.

My noble friend Lord Christopher is right that a significant part of the commission’s work has been the commissioning and provision of local audit services. As he said, the need for further commissioning generally, other than dealing with changes in the existing contracts, will not arise until 2017. My noble friend made a very telling point: if the contracts are extended until 2020, what is the incentive for those audit firms that do not have contracts at the moment to invest in something that may not come to pass until seven years hence?

In a subsequent amendment, we explore what is involved in the ongoing management of these audit contracts. This raises the question of why the commission could not be retained at least to see these through to finalisation. Part of our task in scrutinising the Bill is to understand whether the regulation of local audit and the respective roles of the Financial Reporting Council, the professional accounting bodies and the NAO are fit for purpose. The Government may pray in aid the savings that have accrued from the closing of the Audit Commission, but the reality is that those savings have been measured against the 2009-10 baseline. As the Audit Commission has pointed out to the CLG, those savings had already been secured, and the annual costs under the future regime broadly equate to the annual costs of the commission in its current form. This is without taking account of the added ease with which it could facilitate the future central procurement of audit contracts. We are aware that the commission has submitted details to this effect to CLG, particularly in a letter dated 23 May 2013. Perhaps we can understand from the Minister how the department proposes to respond to that.

My noble friend’s Motion invites us to consider keeping the Audit Commission in its slimmed-down form, at least until the end date of the current centrally procured contracts. What work have the Government undertaken to specifically examine the option of the Audit Commission continuing until 2017, rather than designating another entity to manage those audit contracts? What assessment has been undertaken?

It is noted that there will be no central body for grant certification relating to grants and subsidies from government departments. The Government say that this will be undertaken through tripartite arrangements and other forms of certification. Will the Minister expand a little on precisely what is envisaged in that regard? Reference is made to the wind-down of certification for housing benefit, but of course housing benefit will run for some time after 2015, for no other reason than the delays in the introduction of universal credit, which will not come fully into being until 2017 or 2018. So precisely what will happen to housing benefit certification after 2015?

The problem is that we are where we are with the Audit Commission. Had we been able to have this debate two years ago, we could have prevented what has happened to that organisation. Our task now is to make sure that what is in the Bill to pick up the fragments from the Audit Commission is made fit for purpose.

[Baroness Hanham]

My Lords, the debate initiated by the noble Lord, Lord Christopher, has, in many respects, touched on future amendments that are coming up for further discussion. I appreciate that what he is trying to do is to see whether he can reverse what is being done. However, the noble Lords, Lord Beecham and Lord McKenzie, have recognised that we are very far down the line now and that it is not possible, nor do the Government want, to reinvent the Audit Commission and the existing audit regime.

The Government believe that the Audit Commission presided over a regime that was unnecessarily centrist and bureaucratic. As the noble Lord, Lord Shipley, pointed out, it indulged in mission creep during its existence. It consequently had little incentive to reduce its costs. Its overall approach encouraged relevant authorities to focus more on the views of the Audit Commission and less on those of local people. The noble Lord, Lord Beecham, pointed out that substantial savings have already been achieved by lifting the burden of top-down regulation from local bodies. The savings were achieved, too, by putting the audit operation into the private sector. We want to make these savings secure and ensure that a central government body cannot again grow to dominate local government, and so the Audit Commission will cease to exist.

I shall briefly go through some of what the clause deals with. Clause 1 repeals the Audit Commission Act 1998, under which the commission currently operates, and it introduces Schedule 1, which makes provision for such matters as the transfer of property, the preparation of final accounts and various consequential repeals and revocations. There are amendments tabled on all those matters, which I think that we will come to quite soon. The clause lays the foundations for a new localist audit regime that hands powers and responsibilities to local bodies. Other parts of the Bill make arrangements for a robust framework that maintains a high quality of audit and transfers necessary functions to other suitably qualified and well respected institutions, such as the National Audit Office and the Financial Reporting Council.

Local bodies are capable of appointing their own auditors, as charities, companies and foundation trusts already do, and, by and large, they have welcomed the opportunity to do so. Putting local bodies in charge of procuring their own auditors will create greater transparency as they will have greater control over how much they pay for their audit services. They will not have to fund the Audit Commission’s overheads and pay for its other activities and, as a result, there will be greater incentives to keep costs down.

We have made good use of the time since the Government first announced their intention to abolish the Audit Commission in August 2010. We began our reforms to the local audit and inspection framework by ending comprehensive area assessment, freeing local authorities from £25 million in compliance costs. I am not sure that anybody was very troubled by the loss of the comprehensive area assessment.In addition, the decision to outsource the Audit Commission’s in-house audit practice has saved local bodies 40% in their audit fees. We touched on this in my reply to the last amendment. We have developed the proposals in the Bill with key partners and have consulted extensively; there has been proper consultation on this matter.

Schedule 1 to the Bill makes further provisions in relation to the abolition of the Audit Commission. Part 1 sets out the arrangements and, in particular, provides for the Secretary of State to make one or more schemes to transfer the Audit Commission’s property rights and liabilities. We are working closely with partners to assess the options for where the existing audit contracts will transfer after the Audit Commission closes. We will set out details of the arrangements to transfer management of the audit contracts in the transfer scheme outlined in Schedule 1.

Paragraph 1(1) enables the Secretary of State to make one or more schemes to transfer the property rights and liabilities to a person or persons specified in the scheme. Sub-paragraph (2) sets out the items that may be transferred under such a scheme. Sub-paragraph (3) states that such a scheme or schemes may make consequential, supplementary, incidental or transitional provisions.

Paragraph 2 allows for the number of Audit Commission board members to be reduced. Upon closure of the Audit Commission, the Secretary of State must prepare a final statement of accounts for the last financial year of the commission. The Secretary of State must also prepare a final annual report for winding up. Finally, paragraph 5 provides for the Secretary of State to make payments in respect of the Audit Commission pension scheme.

The noble Lord, Lord Christopher, raised the question of the pension scheme. This has been underwritten by the Government and is in pretty good shape. It is 104% fully funded at the moment. There is a clear understanding that should some disaster overtake it in future, the Government will pick up the bill; one way or another, the pension scheme is well accounted for.

Closing down the commission is part of an overall programme of reform that will save the public over £1.2 billion over 10 years. We are able to do that because of the reduction of the commission. Retaining the commission would leave open the possibility that it could build itself back up again to the size that it reached in 2009-10. That is when the Audit Commission ceased to be operable in its current form, which was another point raised.

The noble Lords, Lord Christopher and Lord Beecham, asked what will happen with the demise of the commission leaving no single body to take responsibility for supervising and co-ordinating local audit. The local auditors who will undertake the audits within a national framework will be overseen by the Financial Reporting Council and professional accountancy bodies and accorded the code of audit practice and guidance to be developed by the National Audit Office. So they will be regulated and controlled. Also government departments are, through the accounting officer, accountable to Parliament for the money voted to their departments. Where this money is distributed to others, as it will be under the grant system, it will need to be demonstrated that appropriate accountability is in place.

The noble Lord, Lord Christopher, asked what is going to happen about the value for money studies. The National Audit Office has the ability within the Bill to increase the work that it does. The expectation is that it might undertake about six more national studies to those that it is undertaking at the moment. It will be able to choose what it does and, provided that it is working within existing legislation, it will be able to look at what is going on, either across the piece of local authorities or in individual authorities.

On the fragmentation of the new regime and the quality of audit, government departments are accountable to Parliament through the accounting officer. That is the other helpful addition to ensuring that the new regime is well set up.

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[Lord McKenzie of Luton]

Would the Minister just deal with the issue of certification? The various references in the impact assessment and other papers that we have are a bit cryptic about how that is meant to proceed. We are particularly interested in knowing how it is going to work in respect of housing benefit for so long as housing benefit is in existence.

[Baroness Hanham]

Yes, the noble Lord asked that question. At the moment, we are working with the relevant departments, particularly with the Department for Work and Pensions, to ensure that there are proper arrangements in place to consider the matter as part of the transitional arrangements. So work is being done and it has not been overlooked. Again, this is something that we can return to.

[Lord McKenzie of Luton]

I am sorry, but may I pursue one further point on the consideration of continuing with the Audit Commission in its current slimmed-down form, the question of mission creep, and so on, until the contracts come to an end? Indeed, if that were done, it would pretty much align with what is currently expected to be the final phase for housing benefit and the introduction of universal credit.

[Baroness Hanham]

My Lords, there will be the interim body of the Audit Commission as it winds down, or a separate body, to oversee the contracts so that they are not left unsupervised on their own.

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[Lord McKenzie of Luton]

My Lords, I think that we have covered this in some measure. I have a series of probing amendments to understand just a little more about the scheme and what is intended. Amendment 2 concerns the pension scheme. In the impact assessment, the commission set out that there is a Crown guarantee in respect of the scheme’s liability—we have just heard about that—which avoids the potential early crystallisation of long-term liabilities of the scheme. It is suggested that this would enable the scheme to be run on as a closed funded scheme in future. However, it suggests that this is just one of the options considered. Perhaps the Minister could outline what others are on the table.

The impact assessment explains that CLG has sought key protections and influence over the scheme to work with the trustees to minimise liabilities and/or manage them in line with the department’s method of financial planning and priorities. Will the Minister say more about this, including the extent to which the trustees of the scheme are being enjoined to minimise liabilities or manage them in line with CLG’s, not the members’, wider financial planning and priorities? I should also be grateful if the Minister could let us know how the Crown guarantee in these circumstances features, if at all, in public expenditure figures.

[Baroness Hanham]

My Lords, we touched on this briefly in the previous discussion, but I agree with the noble Lord that the Government need to ensure that there are proper arrangements for the future management of the pension scheme. That goes without saying. It is particularly important, as he notes, in the context of the Crown guarantee that my department is given. In exchange for providing the Crown guarantee, the Government negotiated a number of amendments to the scheme rules that protect the interests of the Government as guarantor. These include, for example, a requirement for the trustees to consult my department on the scheme investment strategy; to consult on the appointment and removal of trustees; and to seek consent to any increases in member benefits above existing entitlements. Departmental officials now also sit on the scheme’s investments sub-committee.

The guarantee itself is an important part of protecting the accrued rights of members of the scheme. It provides that if it were ever unable to meet payments to members, the Government would make payments to the scheme to enable it to meet those obligations. I think it was in reference to that that the noble Lord was asking where the money would come from. That would have to be built in to the department’s future liabilities, but we certainly do not see that as a possibility of the moment. It is optional, and if the scheme were ever to fall below 104% and the draw on it became greater, at that stage that might become a problem.

We expect the cost of the Government to be very limited or even nothing as a result of the fact that it is so well funded at the moment. The arrangements are included within the formal rules governing the scheme, and there is therefore no need for separate specific provisions to be made to the Bill or within a future transfer scheme. I hope that the noble Lord’s points have been covered and that he is satisfied with that response.

[Lord McKenzie of Luton]

I am grateful to the Minister for that. It has provided the sort of information that I was seeking. I understand that, as things currently stand, the scheme is fully and properly funded and therefore there is no call on the guarantee. We are seeking to understand whether the actual existence of the guarantee itself features in any way in public expenditure. I imagine that the answer is probably no if there is no current likelihood of a call on it. However, I would be grateful to understand that a little better. I see that the Box is producing a note, but perhaps the Minister could write if that does not cover it.

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[Baroness Hanham]

My Lords, perhaps I may respond to the noble Lord’s question because it will save a letter and give the Committee the answer. I more or less said it correctly but I did not use the correct words. The crime guarantee figure is included in a contingent liability in the department’s accounts.

[Lord McKenzie of Luton]

Thank you. I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, this is another brief probing amendment which is designed to ascertain what is to happen to any retained earnings of the commission when it finally ceases business—that is, if there are any in 2015. Perhaps the Minister can help with the question. Much will doubtless depend upon the position of the pension fund. If that is fully funded and not drawing on the guarantee, it looks as though there will be reserves. There certainly are at 2012.

The accounts record that the operating income of the commission is overwhelmingly derived from audit fee income from local government and health. These streams have to be kept separate, and the amendments simply require that any final surpluses are used for the benefit of these two sectors. I beg to move.

[Baroness Hanham]

My Lords, Schedule 1 allows the Government to bring forward a scheme or schemes transferring the Audit Commission’s property rights and liabilities. It is the Government’s intention to set out details of the arrangements to transfer management of these audit contracts and we are working with partner organisations and others on this matter.

Amendment 3 would require the transfer scheme or schemes to ensure the Audit Commission’s local government retained earnings existing immediately prior to its abolition. As the noble Lord said, Amendment 4 requires any retained earnings from health bodies to accrue to and therefore benefit the health sector.

Under the existing framework, the Audit Commission is funded through a top slice on audit fees. This is effectively the difference between income from audited bodies in the form of fees and the amount paid to firms to undertake the work. I understand this to be the source of the retained earnings to which the noble Lord refers. This has been steadily reducing since 2009-10, and we have stated in the impact assessment that was published alongside the Bill—I know the noble Lord has a copy—that such retained earnings at the point of abolition may be needed to cover transitional costs, including those associated with the continuing management of the existing audit contracts.

The effect of these amendments would be to divert the benefit of such retained earnings to the local government and health sectors and, while I am not unsympathetic with that in principle, it is probably not necessary to explicitly prescribe these arrangements within the transfer scheme. If we did so, those retained earnings would be unavailable for transitional costs, even if it were agreed by everyone that they should be used in that way.

One possible use of any surplus might be to benefit the local government and health sectors in the form of reduced fees. However, I agree that this is an issue the Government need to consider further and we will do so. If the noble Lord wishes to come back we might discuss it again at a later stage but, at the moment, I am happy to give him any further information as it arises, if it does, during the course of the Bill. I hope he will be willing to withdraw his amendments in the light of that response.

[Lord McKenzie of Luton]

My Lords, I am grateful for that response and beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, I shall speak also to Amendment 6. Amendment 5 requires that a transfer scheme must make effective arrangements for the managing of existing audit contracts. These are contracts that are due to expire upon the completion of the 2016-17 audits unless they are extended up to 2020, as we have discussed. It is understood that there could be up to 10 such contracts as well as a few separate contracts relating to smaller bodies. Any successor body would have to manage these contracts after the abolition of the Audit Commission, effectively for a minimum period of about two and a half years.

This is no small matter, as the annual value of these arrangements is understood to be of the order of £85 million. We look to the Minister to share her thoughts on how this is all to be done. Presumably this is not just a case of novating the contracts, because the successor body will have to have some of the commission’s existing statutory functions relating to audit. Is it not the case that, in undertaking the management of these contacts, any body will have to set standards of performance, monitor delivery and effect payment but will to be able to exercise some of the statutory powers that reside with the commission, particularly powers relating to the appointment of auditors, the setting of scale fees, making arrangements for the certification of grant claims and returns? It is understood, for example, that the key functions would encompass specifying the terms of an auditor’s appointment; considering and approving, where appropriate, requests from auditors to accept additional non-audit work at audited bodies; specifying standards of performance, including setting target dates for the issuing of opinions; scoping, consulting and specifying the delivery of national mandated work programmes—for example, quality audits or IFRS arrangements reviews at NHS bodies; reviewing requests for new certification work; and a whole list of other things as well.

What is planned for the management of these contracts? There is complexity attached to that management. Does the Minister agree that whoever does this will need to have some of the statutory powers of the commission, with the public accountability that goes with such powers? What does the future hold for the additional audit-related functions undertaken by NHS audit—functions that would include collecting information from auditors; preparing and publishing summaries of the results of audits in the annual auditing and accounts report for the Department of Health accounting officer; co-ordinating requests for information from the NAO in connection with its group auditor role; collecting information directly from auditors and monitoring delivery; agreeing auditor submission requirements with the Department of Health and the NHS Commissioning Board in connection with consolidated accounts to monitor delivery; and providing a range of guidance and advice for auditors and dealing with technical queries from auditors on technical issues to promote consistency. That is just a snapshot of some of the activities that would be required.

Have the Government considered a sector-led approach and what are the implications of this? There is obviously a little time, but the clock is ticking, particularly for the staff in the existing compliance group who have a lot of expertise; where that will reside in the future is of significance, I suggest. I look forward to hearing from the Minister and I beg to move.

[Baroness Hanham]

My Lords, I assure the noble Lord that it is the Government’s intention to ensure that the Audit Commission’s existing contracts are well managed—that is something we see as essential—and that auditors will continue to have the necessary means to undertake their role. We agree that the key function will be required to manage contracts for the remainder of their term, but they will particularly require powers to set fees, appoint auditors and certify grants. We are working to ensure that the interim management arrangements will allow functions to be exercised by the relevant body or bodies, and the provisions in the Bill already allow for that to happen.

Schedule 1 enables the Secretary of State to make a scheme or schemes to transfer the property rights and liabilities to the Audit Commission to one or more bodies. The scheme also includes provision for the transfer of employees, if appropriate, under TUPE regulations. We intend to set out details of the arrangements in transfer management of the audit contracts in such a transfer scheme in due course. We are working on this with these organisations, including those that the noble Lord has mentioned, and we are giving consideration to the transfer of current Audit Commission tasks, including the value-for-money profiles. I do not have confirmation of this but I dare say that that also includes the health service relationships as well.

So it would be premature to specify the detailed contents of the transfer scheme at the moment. However, I assure the Committee that this will provide the mechanism for ensuring good management. The noble Lord read out a whole series of things that he thinks we should take into account. If I may, I will say that those are clearly issues that we need to take into account. Once again, I should like to keep the noble Lord in touch with developments as they proceed.

We do not feel that the amendment is necessary; we have pretty good arrangements within the Bill to ensure that we have a proper transfer, and we are working that out at the moment. The amendment is probably not necessary in the light of what has been said, as we can already transfer schemes to include the robust management of existing contracts. I hope that the noble Lord will feel able not to press his amendment.

[Lord McKenzie of Luton]

I am grateful to the Minister for her reply. I am particularly grateful to her for referring to value-for-money profiles, which I forgot to speak to when I was moving my amendment. To do so briefly, these profiles bring together data about the cost performance and activity of local councils and fire authorities. Using the profiles, it is currently possible to see how an organisation is spending its resources, how the costs and performance of an organisation compare to others’, the latest planned budgets, outlier reporting and so on, so this is pretty important information. Ensuring that that is available in future and maintained and updated is, I suggest, something that ought to feature in the scheme.

The Minister said that a draft of the scheme would be available in due course. I wonder if I might tempt fate and ask for something more specific. Is there the prospect that we might see a draft of this during our consideration of the Bill?

[Baroness Hanham]

Probably not within the terms of our deliberations on this. I am not certain whether it will be available before it goes into the other House, which will be later this year. However, I will keep the noble Lord informed.

[Lord McKenzie of Luton]

I am grateful for that. I hope that in the other place they will at least have a chance to see something a little more specific about the scheme. Having said that, I beg leave to withdraw the amendment.

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[Baroness Hanham]

My Lords, the noble Lord, Lord McKenzie, went in reverse order, but I shall go straight to his Amendments 7 and 8. I am sympathetic to their purpose, which is to ensure that the relevant bodies are consulted before they are added to or taken off the list at Schedule 2. Regulations that may be made to alter the list of authorities in Schedule 2 will also be subject to the affirmative resolution, so Parliament will have an opportunity to scrutinise any alterations and the extent of our engagement with the bodies concerned.

Turning to Amendment 9, the potential for hybrid instruments, I am clear that the Delegated Powers and Regulatory Reform Committee has drawn the attention of the House to Clause 40(7) of this Bill, which provides that regulations under the clause that would normally be considered a hybrid instrument will not be so considered for the purposes of this Bill. We expect that the need to bring forward such regulations will be rare. However, if there were such cases, there will be an especially compelling reason for the Government to consult, and we will address that point when we respond to the Delegated Powers Committee, which will happen as soon as possible. The answer is in draft anyway. The point that the committee has made about consultation is well understood and taken up. We do not think that it is necessary to add further legal requirements for consultation; we believe that they are there already. With those reassurances, I hope that the noble Lord feels able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I took that reply to be yes to Amendments 7 and 8 with regard to consultation but not to put them in the Bill, and a probable yes to Amendment 9 but the Government will address that issue more formally when they respond to the Delegated Powers and Regulatory Reform Committee. Presumably they will respond favourably to the point that the committee has made. I have not before encountered an issue when something this hybrid must be deemed not to be hybrid for the purposes of regulations. Is this not to a certain extent Alice in Wonderland? I accept that there may be only a few instances when this occurs, but I take the assurance from the Minister that this will be covered in the Government’s response to the Delegated Powers Committee and that we will have a chance to see that before we get to Report. On that basis, I beg leave to withdraw.

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[Baroness Hanham]

My Lords, Amendment 10 is a minor and technical amendment. It does not affect the intended effect of the Bill. Its purpose is to correct a reference in Schedule 2 so that it refers to Paragraph 7 of Schedule 4 to the Audit Commission Act 1998 rather than to Paragraph 5. Schedule 2 lists the relevant authorities to which the provisions of the Bill apply. Paragraph 29 of the schedule ensures that the Bill covers any bodies that were subject to audit provisions contained in enactments passed before the Audit Commission Act 1998, to which the provisions of the 1998 Act were then applied.

Paragraph 29 refers to Schedule 4 to the 1998 Act, which contains transitional and savings provisions. Paragraph 7 of Schedule 4 to the 1998 Act, rather than Paragraph 5, provided for references in previous enactments to earlier forms of audit, such as district audit, to be read as references to audit under the 1998 Act. Paragraph 29 of Schedule 2 is meant to extend this savings provision so that bodies covered by it will be covered by the Bill when the 1998 Act is repealed. That would be done better by my amendment. I beg to move.

[Lord McKenzie of Luton]

My Lords, we are happy with the amendment. I would like to tell the Minister that we had spotted our technical error, but that would not be true.

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[Baroness Hanham]

My Lords, the noble Lord, Lord Palmer of Childs Hill, raises a question that I hope to answer—that it should not be, and is not, necessary. We can see whether the noble Lord agrees with that at the end of what I have to say.

We intend to require larger relevant authorities to present statements of accounts that are true and fair and for local auditors to give an opinion on whether this is achieved. This requirement is not included in the Bill, but the same outcome is achieved and mirrors the approach currently taken.

Amendments 11 and 16 would put these requirements in the Bill for all relevant authorities, but we are of the view that this is not necessary. Larger relevant authorities are currently required to present accounts that are true and fair, and their auditors are required to give an opinion on whether this is achieved. I assure the noble Lord that it is the Government’s intention to continue these requirements. These requirements are currently achieved through the interaction of primary and secondary legislation, the Audit Commission Act 1998 and the Account and Audit (England) Regulations 2011. All relevant authorities must observe proper practices in the preparation of their accounts. The regulations require chief finance officers of larger relevant bodies to certify that the statement of accounts presents a true and fair view of the authority’s financial position before these are audited. We intend to mirror this requirement in the regulations to be made under Clause 31, and Parliament retains oversight of these regulations.

This approach is less complex than specifying “true and fair” requirements in the Bill, because further amendments would be required to disapply these provisions and include modified provisions for smaller authorities, which, as the Bill makes clear, are not required to ensure that their statement of accounts are true and fair. Instead, they are required to ensure that their accounts “present fairly” or “properly present”, which are briefer and more proportionate forms of accounting. It is our view that that the current split between primary and secondary legislation works, and we intend that the interaction of the Bill and regulations under Clause 31 will continue to require larger relevant authorities to ensure that the statement of accounts present as true and fair.

The noble Lord raised the question of health authorities. The Bill does not change the scope of health authorities’ audit, or that of principal local government bodies. Auditors of clinical commissioning groups will give additional opinions on whether their expenditure has been spent in accordance with Parliament’s intentions. This is necessary because the resources available to health bodies are provided by Parliament. Expenditure by clinical commissioning groups is consolidated into the Department of Health’s accounts, and the department must be able to demonstrate to Parliament that all resources have been used in the way that Parliament intended. I hope that, with that explanation, the noble Lord may feel able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I am grateful for that response. I would like to read the record about the explanation for Clause 3. That clause deals with the general requirements for accounts of a relevant authority, not all authorities.

May I revert to that position about the difference in presentation between Clause 19 and 20? There is that very clear reference to “true and fair view” in Clause 20 in respect of health service bodies. Either that implies that there is somehow a different approach or the presentation has simply been chosen to be different in Clause 19. If it is easier to write on that matter, I am happy to accept that. It was the lack of such a reference in Clause 19, my having read Clause 20, that really prompted the inquiry.

[Baroness Hanham]

My Lords, I think that I responded to that in my comments just now. This is directly a part of the Department of Health’s accounts, so the audit is much more geared that way. However, it would be helpful if I gave the noble Lord the full response on that. I think that I have done so but, in case I have not, I will write to him.

[Lord McKenzie of Luton]

I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, this is another probing amendment. Clause 3 deals with the general requirements for accounts and sets down the definition of “adequate accounting records”. Clause 3(5)(b) enables the Secretary of State by affirmative regulations to enable any requirement in the section not to apply, or to apply with modifications to a relevant authority. The requirement to keep adequate accounting records is fairly fundamental and it is difficult to see the circumstances in which it would be inapplicable. What use is envisaged of these provisions, particularly the Secretary of State’s power in relation to accounting records and statements of account in Clause 31?

[Baroness Hanham]

My Lords, the amendment would remove a regulation-making power to lift or modify the duties imposed by Clause 3 as they apply to particular bodies. Clause 3, as the noble Lord has said, requires relevant authorities other than health service bodies to keep adequate accounting records and prepare an annual statement of accounts. These are fundamental duties, and I can see why the noble Lord might question these powers. Nevertheless, there is a need for them.

Changes in the structure of local bodies may mean that the production of a statement of accounts is unnecessary or that financial accountability would be better served by including the financial transactions of an authority in the statement of another authority. To give an example of this, last year the police authorities were replaced by police and crime commissioners. In November, accountability for police finances was better served by the commissioners producing a single statement for the full year, including the transactions of the police authority. The police authorities were therefore relieved of their duty to produce published accounts for their final months, and the police commissioners thereby took on that responsibility.

I would expect the use of the power to be confined to such situations where there is a strong case that financial accountability would be better served by a modification of the duties in the clause. The accompanying power to modify the financial year has existed in audit legislation for many years but has rarely been used. I hope that that explanation will satisfy the noble Lord and enable him to withdraw his amendment.

[Baroness Hanham]

My Lords, the police authorities are included in terms of this clause. Does that answer the noble Lord’s question? If it does not, perhaps the noble Lord will come back to me.

[Lord McKenzie of Luton]

My Lords, that was a helpful explanation from the Minister and I am happy to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, the noble Lord has raised some important questions with these amendments. My Amendment 14 overlaps a bit with them, so I might as well get it out of the way now. It concerns the rules that govern these various thresholds—the £6.5 million, the £200,000 and the £25,000. This is a boring accounting point, but there is a question about how you actually compute them. Looking at what the income of a parish council might be, for example, there might be a precept, which presumably gets counted in as gross income. However, if there are things like entrance fees, the sale of publications or the letting of premises, do you have to deal with these on a gross or net basis for working out whether the threshold is breached or met? I first focused on this in relation to the £6.5 million threshold, but there seems to be a lot of headway for authorities there so that is unlikely to be great issue. However, if those same rules operate for the lower thresholds, then they could be important.

[Baroness Hanham]

My Lords, this may take only a little time, partly because the noble Earl, Lord Lytton, and I have had an opportunity to discuss the issues that he has raised today. Actually, I may take a little more time to respond because it is quite important that this is on the record and that people can see where this is going.

I thank the noble Earl not only for the thoughtful contribution that he has made today but for the pragmatic way in which we have discussed the whole issue of having a central or non-central body to do this. The regulations that the Government propose in relation to smaller authorities need to accomplish two things. They need, first, to enable the development of a viable sector-led body to appoint auditors to smaller authorities and, secondly, to set up a proportionate accounting and audit regime for small authorities that minimises the administrative burden while ensuring accountability for the public money that they control.

In relation to the first of those points, I am grateful to the noble Earl for being pragmatic about this, and for listening to what I said earlier about systems such as this being central but not mandatory and giving opportunities for smaller authorities that wish to appoint their own auditors to do so. In reality, though, one is bound to say that for the small authorities it would be a godsend to have a body helping them with it. While we certainly will not change our view about the question of whether this is mandatory, we would expect quite a large number of the small authorities to want to join in. I am pleased to be able to offer the noble Earl the assurances that he seeks that we will bring forward regulations in relation to the sector-led body. I will write to him setting these out and then perhaps we can discuss them further if necessary. The second purpose of the smaller authorities regulations will be to set out proportionate accounting and audit requirements.

I intend to lay a statement of policy intent, which I hope is now in the Library—it should have gone in today—which will share with noble Lords further detail about the proposed audit arrangements for smaller authorities. In this document, the Government confirm their intention to retain the limited assurance form of audit. It will be specified in the code of audit practice, which will be produced following abolition of the Audit Commission by the National Audit Office. As the noble Lord said, limited assurance audit is a lighter-touch form of audit, which is conducted offsite and is proportionate to the small amounts of public money that the smaller authorities control.

The Government also intend to maintain the current accounting requirements for smaller authorities. In addition, they propose to exempt the smallest authorities—those with an annual turnover below £25,000—from the requirement to have external audit. In the command paper published with the draft Bill last year, we said that we would review how this level works, if necessary raising the threshold once the system is up and running. Therefore, it is in mind but how it is working will have to be demonstrated. The exemption will not apply in certain circumstances. For example, where a small authority is newly created or where an authority’s auditor issued a public interest report in the previous financial year, authorities exempted from external audit will be required to appoint an auditor to undertake those public interest duties.

With regard to the specific amendments, I think I will turn to Amendment 12A at the end. That is what the noble Earl did and, if I may, I will follow his line. Starting with Amendment 13A, this appears to capture the noble Earl’s concerns most fully. The amendment enables the Government, when making the regulations under Clause 5, to have regard to the size of the electorate, the authority’s income, and whether the effect of those regulations would be “onerous or disproportionate”. The Government’s view is that the regulation-making powers in Clause 5 allow us to do that without additional provision.

The Government’s purpose in taking those powers is to enable them to make regulations that will set out a proportionate accounting and audit regime for smaller authorities. The proportionality that the Government envisage will be defined in relation to the higher of the authority’s gross income and gross expenditure rather than just its income, a point raised by the noble Earl. We do not propose to take into account the size of an authority’s electorate because income and expenditure are the most relevant criteria in relation to the primary purpose of audit, which is safeguarding public money. The size of an authority’s electorate is not material and members of a large electorate may individually pay a very small precept and vice versa.

I turn to Amendment 12A. One of the purposes of Clause 3 is to specify the financial year for relevant authorities that are not health service bodies. It does that in subsection (4) with reference to 31 March, but subsection (5)(a) gives a power by regulation to change that period either for all authorities or for particular authorities. Subsection (6) allows regulations changed in the financial year to make amendments or modifications to this legislation or provisions made under it in their application to the bodies whose financial years are changed. The main purpose of that power is to allow dates to be changed to such purpose as the preparation and publication of the statement of accounts so that they are consistent with the changed period of the financial year.

I hope that this explanation will provide a useful background to understanding Amendment 12A. The amendment adds the words “including exemption” after the word “application”. I find it difficult to see what this adds to the power. If the purpose is to confirm that the financial year can be altered even for a body that is exempt from audit, I am happy to confirm that, but I have to say that the Bill as it stands allows that and the amendment would not do anything more.

Perhaps I may deal with Amendment 14 in the name of the noble Lord, Lord McKenzie, once I have finished with the amendments in the group. Amendments 14A and 14B would enable regulations to exempt or partially exempt a smaller authority from the need to have an auditor panel. The sector-led body for smaller authorities that, as we have already said, we intend to provide for in regulations that are non-mandatory, will in effect assume the functions of the auditor panel. We propose to exempt smaller authorities which have opted into the sector-led body from the requirement to have an auditor panel. By definition, the auditor scrutiny would be undertaken by the sector-led body. We will do that in regulations made under Clause 5 and we do not need to make additional provisions in the Bill.

The exemption will not, however, apply to smaller authorities which opt out of the sector-led body. I suggest that these will need to appoint an auditor panel to advise on the appointment of an auditor, which would ensure that proper scrutiny takes place. We do not expect those auditor panels to be large. The Bill does not set a minimum size, but Treasury and CIPFA guidance on audit committees recommends that they should comprise at least three members, in which case two independent members would be required. To make it easier for the authority to find panel members, we do not intend to preclude suitably experienced individuals from serving on more than one panel. In addition, the Bill allows authorities to share auditor panels if they wish to minimise additional costs of bureaucracy.

Amendment 14C has a similar effect to Amendments 14A and 14B. Clause 12 requires the authority to inform the Secretary of State if there is a failure to appoint an auditor and enables the Secretary of State to direct the authority to appoint the auditor named in the direction or to appoint an auditor on behalf of the authority. The precise effect of the amendment would of course depend on how such regulations were drafted and, in particular, which small authorities they captured.

The Government accept that the smaller authorities’ regulations will need to apply modifications to Clause 12 in the case of smaller authorities which opt into the sector-led body. We do not of course envisage that the sector-led body would default on its obligation to appoint auditors. We will not propose to disapply these provisions for smaller authorities which opt out of the sector-led body. As with the noble Earl’s other amendments, we do not need to take a separate power to make these modifications in regulations, as they are already allowed under Clause 5.

To conclude, the Government propose to publish draft smaller authorities’ regulations in the autumn for consultation. I am sure that the National Association of Local Councils and the Society of Local Council Clerks will continue to work closely with us to help shape those regulations and to ensure that they are fit for purpose for smaller authorities. I hope that with those assurances, the noble Earl is willing to withdraw his amendment.

Before he does so, perhaps I could refer to Amendment 14, tabled by the noble Lord, Lord McKenzie, which will scoop up this part. This amendment would place a duty on the Secretary of State to issue guidance on the definition of gross income and gross expenditure for the purpose of determining whether an authority qualifies as a smaller authority in a financial year.

Gross income and gross expenditure are terms used now in the accounts and audit regulations to define the smaller bodies threshold and no further guidance is given, but I see that with a duty in future being on the relevant bodies to assess their income and expenditure against the threshold, there may be times when guidance on interpreting the terms could be useful. This guidance need not be statutory or issued by the Secretary of State. However, the Secretary of State may issue guidance on this matter if he wishes. In addition, there is provision in subsection (5) to enable the Secretary of State to make regulations to amend Clause 6. This may be used to amend the threshold or to add further conditions and could be used to require smaller authorities to have regard to any such guidance.

However, the noble Lord makes good points and I am happy to take the question of guidance back so that we can have another look at it. If I do not manage to do that by Report, I hope at least that we will have it in writing before Third Reading. I put that marker down now so that there is no argument at Third Reading about whether it is relevant. I hope that, under those circumstances, the noble Lord, Lord McKenzie, may be willing not to press his amendment.

Bailiffs

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 14th May 2013 Lords Chamber

[Baroness Hanham]

My Lords, the local authority’s responsibility is to retrieve the debt in any way it can. I think the noble Lord is referring back to the Question about what arrangements are made with the debtors who are going to collect those debts, financially. I have said pretty clearly that there will be very clear guidance on what they can and cannot do, and that cosy business arrangements are thoroughly unsatisfactory.

[Lord McKenzie of Luton]

My Lords, what assessment have the Government made of the consequences, including the use of bailiffs, of increased indebtedness to local authorities arising from the localisation of council tax benefit with the 10% funding cut?

[Baroness Hanham]

My Lords, the burden on local authorities for collecting any debt is something that they will have to work out for themselves. I do not think any assessment has been made of any additional burdens from the council tax support system, which is what the noble Lord is asking about. Again, it will be up to local authorities to make their own arrangements.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 22nd April 2013 Lords Chamber

[Baroness Hanham]

The noble Lord has jumped in ahead of me: no. Planning permission currently has no timescale of how long it should take people to do a development once they start. Indeed, I am sure that many noble Lords have torn their hair out at something that seems to be going on for a very long time indeed. Of course, the district surveyor or building regulation enforcers might begin to get worried about why progress was not being made, but I do not think that we can expect to put details of that in legislation. That also goes for the question raised by my noble friend Lady Gardner about enforcement. There will be the normal enforcement procedures of local authorities, which they are able to implement when they have concerns that something is being or has been built outside what has been approved. The problems with enforcement are much the same with any planning development as with our new, light-touch proposals.

I hope that I have covered most of the points on which I wanted to pick up. The noble Lord, Lord McKenzie, in particular, gave us a very long list of things that he was concerned about. If I have not addressed something that anyone has a burning question about and they want to ask me quickly now, then I am happy to pick it up, but I think I have covered everything that time allows me to. I am grateful to all those who have spoken. I look forward to hearing, as I think that I have, that this has moved a long way, which has helped with this aspect of the Bill.

[Lord McKenzie of Luton]

My Lords, I start by thanking the Minister for dealing extensively with the queries that were raised and all other noble Lords who have spoken in this debate. There are two strands to it. Most noble Lords believe that sufficient progress has been made by the amendment to be able not to stick with the amendment of the noble Lord, Lord True, if that is where they originally were. The noble Lord, Lord Shipley, said that it had gone far enough to be supported. The noble Lord, Lord Deben, said that it was a huge improvement, even if it was not as radical as he would have wanted, based on the Quality of Life report. The noble Lord, Lord Cormack, was thankful for the movement. The noble Earl, Lord Lytton, believed that it had gone some way. The noble Lord, Lord True, himself, believed that there had been real progress. The other strand is how much still needs to be consulted on, and some of the details still need to be fleshed out, notwithstanding what we have heard today. The noble Lord, Lord Phillips of Sudbury, the “legal eagle”, said that there should be minimum room for discretion, effectively, because this generates a lot of angst among people.

The key issue seemed to be about the period. We heard 21 days but the noble Baroness, Lady Gardner, and several other noble Lords, did not believe that was sufficient. On fees, bearing in mind the state of local government finance, the lack of support from central government, given the imposition, is a real issue. I also believe there should be further discussion and movement on the limitation of these arrangements to the immediately adjoining properties.

As I hope I said at the start, we tabled our amendment because we had not seen what the Government were then proposing and wanted something against which to benchmark what did come forward. However, on the basis of what we have heard and this debate, I beg leave to withdraw the amendment.

Homelessness: Rough Sleepers

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 27th March 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, on the basis of government figures, rough sleeping in England has risen by 23% since 2010 and some 25% in London. The Mayor of London, supported by the coalition Government, committed to end rough sleeping by 2012. Are there any conversations or interviews planned with the mayor to find out where it is all going wrong?

[Baroness Hanham]

My Lords, I am not sure about it going wrong. It is correct that more people are sleeping rough. There are a number of reasons for that, some of which are that at least half the rough sleepers in London are not UK nationals, so they have to be helped in the way in which I described. The Government already give the Mayor for London money to support No Second Night Out, which means that people are getting help immediately, so they are not sleeping out, particularly on these very cold nights.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 26th March 2013 Lords Chamber

[Baroness Hanham]

My Lords, we have discussed this extensively at all stages of the Bill and I hear the arguments that have been made again today. Since Report, I have also had the opportunity of discussing this with representatives of the National Housing Federation and that has been helpful.

I am pleased and always have been that the principle of a sunset clause to repeal the clause in April 2016 is generally supported. However, these amendments focus on the power given to the Secretary of State to extend the provision by order beyond 2016. The noble Lord, Lord McKenzie, has referred to the date of April 2016 in the Office for Budget Responsibility’s market forecasts as a sensible and justified sunset date. We do not know whether things will have improved by then and I am sure that the noble Lord does not either. One can only hope that they will have. If they have not, we would want to retain an option to extend the measure if market uncertainty remains. We have hoped that we would dig ourselves out of the economic crisis over the past couple of years but it has not been possible. One cannot say with total confidence that 2016 will see us out of the doldrums but we expect and hope that it will.

The issue at stake is not the sunset clause, which has already been agreed, but how any future extension should be constrained. I sympathise with the wish for certainty and I hope it is reasonable to expect that there will be economic stability by 2018, and that consequently there will be little need for extension of the provision. However, while I agree that 2018, as proposed by my noble friend, seems a reasonable limit for this clause, it is as arbitrary a date as any and would limit future flexibility.

To retain flexibility is prudent. With flexibility by order the matter could be taken forward. If it had to be, the Government would have to come to both Houses, because it would be an affirmative order. My noble friend asked what evidence they would have to bring: I suggest that it would have to be the best evidence that they could find, which would presumably at least refer to the amount of affordable housing that still needed negotiation. Both Houses would have to consider this in the light of any evidence that the Government had at that stage.

I am also wary of having a fixed date of 2018, or a fixed extension period, because the clause introduces a new application and appeal process. Viability alone and not policy requirements or scheme merits is the subject of the application and appeal. The on-the-ground impact will not be known until the clause has been in operation for a little while and we have seen how the viability process works. It is essential, therefore, that we maintain flexibility to understand the impact of the measure over a little time. Along with more certainty in market conditions, this would give better ground for assessing the merits of any extension during 2015 when consideration would have to begin as to whether the extension to 2016 should be made.

The clause is drafted so that the order must insert “a later date”. It does not allow for a permanent provision. This wording reflects our intention that this clause will operate only for as long as it is required. Its intent is to be temporary. A permanent provision would require new primary legislation. Finally, it could be argued that the real future of this clause is in the hands of local authorities. If local planning authorities take account of their local economic realities and negotiate viable and flexible agreements with developers, there will be little scope for challenge.

Since we debated these provisions on Report, I have arranged a meeting for interested Peers—those who have spoken—on the draft viability guidance that will accompany this clause. I am grateful that the noble Lords, Lord Tope, Lord Shipley and Lord Best, responded to that invitation and were able to give us some thoughts on the matter. It was perhaps a little unfortunate that we did not have a bigger turnout but I am sure that everybody was busy.

[Lord McKenzie of Luton]

For the record, I think I was engaged on other legislation at the time.

[Baroness Hanham]

That would have made four.

I hope these discussions have assured noble Lords that we intend this to be a strictly dated clause, but the flexibility is needed. It will allow for adjustment of affordable housing requirements only where it is justified and clearly evidenced. In this way, we expect to deliver more housing, both private and affordable, than would otherwise come forward. I think everybody in this House agrees that that is essential.

This is not intended to be a permanent measure. We are happy with the sunset clause but think that we might need a little extra time. This is the easiest way of doing it without having to bring in primary legislation. We can extend this on an affirmative order. I hope that the noble Lord will feel satisfied and will withdraw his amendment.

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[Baroness Hanham]

This last amendment is a very minor, straightforward tidying up of legislation. It follows from the new clause that we inserted on Report on the delegation of the planning powers of the Mayor of London, now Clause 28 in the Bill. That clause deletes Section 2B(8) of the Town and Country Planning Act. As a result, we will no longer need to refer to Section 2B(8) in Schedule 1 to the Bill, so the amendment removes that reference.

With the leave of the House, as this is the last opportunity I will have before the Bill is sent back to the other place—clearly, we will see it back again in some form—I place on record my appreciation of the work done in this House by all noble Lords who have taken part. I thank them for the great persistence and consistency with which they have addressed the issues. We have made significant amendments to this Bill and have put in four new clauses, so I thank all noble Lords and those who have assisted us with this Bill, including my noble friend Lord Ahmad. I beg to move.

[Lord McKenzie of Luton]

My Lords, we have no problem with this amendment. I reciprocate by thanking the noble Baroness and her team for the extreme courtesy with which they have handled this Bill and for the very extensive discussions that the noble Baroness has organised, some of which one could get to and some of which one could not. I also thank the Bill team for its helpful input.

Housing: New Housebuilding

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 20th March 2013 Lords Chamber

[Baroness Hanham]

My Lords, the announcement supporting privately developed housing will certainly assist. We are also very supportive of housing for rent and we have invested in it quite heavily over the past months and years. There is a complete recognition that housing for rent is essential. There is £10 billion of support for the delivery of new private rented housing as well as a further grant of £300 million for affordable housing. The Government are moving as far as they can to invest in the areas mentioned by the noble Baroness.

[Lord McKenzie of Luton]

My Lords, as has been said, today we have heard announcements of more generous discounts and shorter qualifying periods for the right to buy, but these are being made at the same time as the bedroom tax is about to kick in. Do the right-to-buy discounts apply in full whether or not the property is under occupied?

[Baroness Hanham]

My Lords, the regulations related to the right to buy are as they are at the present time. I do not believe that they have changed and therefore the noble Lord will know how they apply and that they are going to carry on as before.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 12th March 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I have added my name to this amendment and we are wholly supportive of it. We have heard from the noble Lord, Lord True, a devastating critique of the Government’s proposals, strongly supported by the noble Lord, Lord Tope. We have heard the practical and professional considerations from the noble Earl, Lord Lytton, about what they mean in practice. Indeed, the noble Lord, Lord Elton, described a typical garden, and that is exactly the situation in large areas of Luton that were built in the early part of the previous century and sometimes before. The noble Lord is absolutely right that neighbours can impact dramatically on the quality of life, and the Government’s proposal for permitted development rights is actually facilitating that.

In many ways this is a very modest amendment, more modest than that which my noble friend Lady Donaghy is going to move in a moment. It focuses only on development within the curtilage of a property. It operates from January 2013 and is not proposed to be retrospective to any significant degree, and it is consistent with the principles of localism, which seems to be a core matter.

The noble Lord, Lord True, and others referred to what will undoubtedly again be the Government’s defence on this: Article 4 directions. We will come on to that again when we debate the following amendment. Is it still the position that the Secretary of State’s general approach to making an Article 4 direction, as set out in paragraph 4.23 of planning policy guidance note 15—I am not sure that policy guidance note still exists or what may have replaced it—is that,

“permitted development rights should not be withdrawn without clear justification”,

such as where a real and specific threat of development is being carried out that would damage an interest of acknowledged importance? If those are the criteria by which the Secretary of State acts, that would not be a defence in many situations that have been envisaged. That reference may be slightly out of date, but it would be good to hear something more up to date from the Minister.

At the end of the day this does not prevent anybody who wishes to have an extension in the rear garden from seeking planning permission in the normal way. Perversely, if permitted development rights had been withdrawn by an Article 4 procedure, you could not get fees for that planning application. However, it is perfectly possible that people will go through the normal process, so this is not denying anyone any rights.

It is a pity that we come to this at this hour. I am not sure what the noble Lord is going to do, but it would be well worth testing the opinion of the House when it is full because I think there would be very strong support for the noble Lord. I hope that at the very least we will hear from the Minister that the Government will take away the tenor of this debate and agree to look at the issue before Third Reading.

[Baroness Hanham]

My Lords, I hear what the noble Lord has said and what my noble friend has said in moving the amendment. I appreciate very much that noble Lords wish to make sure that local authorities are able to adapt national permitted development rights to their own circumstances. Indeed, it is an important element, which we recognise, that national development rights have an effect on different areas, urban and rural. The noble Lord did not speak to Amendment 46AA, which would be the other side of the coin: opt in or opt out. Therefore, I will address only Amendment 46.

There has been some tweaking, with noble Lords saying that I will use Article 4 directions in my response. Not surprisingly, I am going to do so. As the noble Lords, Lord True and Lord Tope, will be well aware, an Article 4 direction can already be introduced to remove specific permitted development rights in a defined area. Those areas can be very small: only a few houses, a conservation area, one street or two blocks of houses. They can be tailored in a way that puts a permitted development into a defined area.

There was a suggestion that if an Article 4 direction was put forward it had to be submitted to the Secretary of State for a decision. It does not have to go to the Secretary of State for approval. The Secretary of State would intervene only where the power was being used unreasonably by the local planning authority. One would hope that that would never take place as the planning authority would have to consult local residents before implementation. It is not sensible just to wipe out the Article 4 directions. It is one of the lines that local authorities can take and we would expect them to do so where necessary.

With regard to the proposed permitted development right and its effect, we would expect neighbours to talk to neighbours about this and to have some interest in what they are going to say. Local authorities are also able to put conditions on permitted development if it is thought to be justified.

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[Baroness Hanham]

My Lords, I hear what the noble Lord says. Consultation on this matter closed in December. We have had 1,000 responses and these will be available before we get round to secondary legislation which will be in a very few months, presuming that the clause is accepted by both Houses.

[Lord McKenzie of Luton]

Has there been some analysis of the consultation thus far, and, if so, might we get at least a first cut of it before Third Reading?

[Baroness Hanham]

My Lords, I think not. I have been told that it will be available before secondary legislation.

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[Baroness Hanham]

The answer to the question about the extent is that it is limited to a single storey and within the curtilage of the building.

I have reminded the House that a consultation has taken place and that we will see the results before secondary legislation, that there is the question of Article 4 directions being used and that it is, and should be, the right of citizens to extend their houses if they wish.

[Lord McKenzie of Luton]

Before the Minister sits down, she has not dealt with the point about the criteria that guide the Secretary of State’s engagement with Article 4 directions, in particular planning policy guidance note 15—or its replacement if it has been updated—which states:

“Permitted development rights should not be withdrawn without clear justification such as where there is a real and specific threat of development being carried out that would damage an interest of acknowledged importance”.

If those are the criteria that guide the Secretary of State in these matters we would want to know about it and certainly know about it before Third Reading.

[Baroness Hanham]

My Lords, I do not have a response to that. I would need to take advice on it. If I can come back on that aspect before Third Reading I will.

[Lord McKenzie of Luton]

Will the Minister come back at Third Reading if she is not able to do so beforehand?

[Baroness Hanham]

My Lords, I am advised that there has not been an update, so I presume that that guidance would be followed. Let us bear in mind, too, that the Secretary of State does not have to approve. He will take an interest only if he wishes to. With those explanations, I hope that the noble Lord will withdraw his amendment.

Council Tax: Support Schemes

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 4th March 2013 Lords Chamber

[Lord McKenzie of Luton]

To ask Her Majesty’s Government what assessment they have made of the effects of local council tax support schemes on poverty.

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

My Lords, localising council tax support reduces the cost of council tax benefit by 10%. That contributes to our deficit reduction programme, makes councils responsible for support and creates incentives to get people into work. In designing schemes, local authorities should take into account the impact on low-income families. On 16 October, the Government announced a £100 million transitional grant to assist development of local schemes. Some 195 billing authorities have adopted schemes that are compliant with the criteria for the grant.

[Lord McKenzie of Luton]

In thanking the noble Baroness for that reply, I must say that it is somewhat complacent and out of touch. The Resolution Foundation estimates that three-quarters of the 326 local authorities responsible for council tax support schemes will be forced by government cuts to adopt schemes giving less support than the current national scheme. That will see working families losing £165 a year on average and non-working families even more. Taken together with all the other cuts about to hit low-income families, including the bedroom tax that we have just discussed, the 1% capping of benefits and other tax credits, is this not going to lead to increased personal debt, more food banks, lower collection rates for local authorities, more bailiffs knocking on the door and all the misery that that entails? Why do the Government find this acceptable?

[Baroness Hanham]

Well my Lords, a little of what the noble Lord has said is probably overblown. We are well aware that local councils are creating their council tax support schemes. In particular, at the moment, they have been offered transitional relief, as I have already said, to help them with that. Local authorities and the Department for Work and Pensions will be working together to ensure that the worst examples of what the noble Lord has put forward do not occur.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 27th February 2013 Lords Chamber

[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 4th February 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, we await the Minister’s response on these amendments. I am bound to say that I have some sympathy with the point made by the noble Lord, Lord Greaves, about the second of the amendments and the need to have specific powers in some circumstances: for example, in the case of a highways authority. Presumably, that authority cannot exercise those powers in an arbitrary way. I should have thought that it had to be subject to a test of reasonableness.

The only point I would make on Amendment 81CA is that it seems to be a clear recognition of the fact that delays on the part of a local planning authority are not always or only the fault just of the local planning authority; it relies on others to play their part. That is why we will come back to Clause 1, which we wish to delete from the Bill.

[Baroness Hanham]

My Lords, the proposed new clauses in Amendments 81CA and 81CB seek to improve the performance of statutory consultees in the planning system. I am very sympathetic to this objective but I am not sure that these proposed new clauses are the way to achieve it.

It is important to recognise that statutory consultees have an important role in the planning system. The key statutory agencies have valuable expertise on a range of specialist areas such as heritage, highways and nature conservation, and their input helps local authorities ensure that the impacts of new development are comprehensively understood in planning decisions.

Where statutory consultees are consulted on planning applications, they are required by law to reply to the local authority within 21 days. In doing so, they must provide a substantive response, enabling the local authority to proceed with the determination of the application in question. Any extension to the 21-day deadline would need to be agreed with the local authority. Therefore, boundaries are already in place.

Statutory consultees are required to report annually on their performance in meeting these targets. The five main statutory consultees achieve between 96% and 99%. Taking this into account, we do not think that a system of fines could significantly improve performance and would be difficult to devise. However, we are aware of the need to improve the way statutory consultees engage with both local authorities and developers to foster a more positive approach to facilitating development and delivering growth. I am bound to say that the reply within 21 days cannot be just a holding reply; it has to be a full response.

We have also taken action to ensure that statutory consultees are more accountable for the advice that they give and we have changed the award of costs circular so that if an inspector considers that a statutory consultee has acted unreasonably during the determination of a planning application the consultee can become liable for an award of costs. Although I support the intentions behind the amendment, I do not think it is necessary, considering the steps we are taking.

The second amendment would repeal the general power in primary legislation for the Secretary of State to give directions restricting the grant of planning permission by a local planning authority. The Planning Acts give the Secretary of State a wide range of default powers that can be used as a last resort in relation to both plan-making and decision-taking. The powers are there as a fall-back to protect the public interest. The powers set out in Section 74 of the Act are exercised through Article 25 of the Town and Country (Development Management Order) (England) 2010 and that provides that the Secretary of State may give directions restricting the grant of permission by a local authority either indefinitely or during such a period as may be specified.

Planning applications are called in only in exceptional circumstances and the ability to serve holding directions is essential to the smooth functioning of the call-in process. In the case of the power of direction exercised by the Highways Agency, this is exercised during the consultation period, where the agency considers that, were a local authority to approve a planning application, it could result in a dangerous increase in risk to users of motorways and strategic roads. I agree that the Highways Agency should be accountable for the way in which this power is used in order to ensure that it is used for the key purposes of facilitating growth, both in ensuring that proposed developments are not delayed without good reason and in ensuring that approved developments do not result in additional congestion on the strategic road network. If noble Lords agree, I will write with further details on the Department for Transport’s policy on the use of these directions and on any future plans it might have to review them.

I should like to reassure my noble friend and other noble Lords that we are also concerned that any direction is used in as open and transparent a way as possible. The Highways Agency is very keen to work with applicants in developing their schemes and welcomes pre-application discussions. It knows that early engagement with developers is vital to ensure that applications can progress without delay. The agency says that it responds to consultations within the prescribed limit in 99.9% of cases. In 2011-12, 9.4% of responses made by the agency were a holding direction. As already mentioned, the agency has published an improvement plan with actions to improve its performance, especially in reducing the time taken.

I have abbreviated slightly what I wanted to say and I hope that, having done so, my noble friend will feel able to withdraw his amendment.

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[Lord McKenzie of Luton]

My Lords, would the noble Baroness perhaps explain to us what stability this decision gives to businesses which have really been struggling? For these businesses, rental values and rateable values are sure to decline in any revaluation that took place when it should. What stability is there for those businesses that were looking forward to some relief from a reduction in business rates? Is it not traditionally the case that there is a period of transitional relief for businesses that might suffer or be subject to an increase, in order to spread and dampen it?

[Baroness Hanham]

My Lords, we believe that stability will be provided by not having a revaluation at the present time. The economic situation is such to make a sureness and security about whatever position people are in very valuable. This is what is required at the moment to ensure that businesses know where they are. We appreciate that businesses are actually going through a very tough time; we have seen that on the high streets and we know that it is happening. So for businesses to have one problem fewer would be valuable.

[Lord McKenzie of Luton]

Given that what seems to be at the heart of this is a dispute over the interpretation of the VOA figures, would the Minister be prepared to set up a meeting which noble Lords could attend together with the VOA and those who have put to us a different analysis of the VOA’s data?

[Baroness Hanham]

My Lords, I am not sure that a combative meeting, which I think that that would be, would be very valuable. Perhaps I may think about that and see whether it would be helpful; I am not certain that it would be.

The measure is designed to give businesses security, to enable them to know where they are and to help them through what is a very difficult time.

I was asked also about the capacity of the Valuation Office Agency. We believe that it does not make any difference; it is up to it. It will have to do the same estimates again in a couple of years.

We have discussed the impact of appeals on several previous occasions. I have already told noble Lords that headroom is created in the local government financial settlement to ensure that rating appeals are taken into account and that local authorities do not lose out as a result. I hope that, with those explanations, noble Lords will decide not to press their amendments.

Waste Management: Refuse Collections

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 31st January 2013 Lords Chamber

[Baroness Hanham]

My Lords, the short answer to my noble friend’s first question is no. I can amplify that a bit by saying that many of the successful bidders for the Weekly Collection Support Scheme are demonstrating that you do not need a fortnightly residual waste collection to generate high recycling rates. As I said, the scheme is set to generate 400,000 tonnes of recycling.

On Liverpool, I absolutely assure the House that the Government did not change any of the grant conditions between Liverpool City Council applying for funding, the Government awarding the money and Liverpool deciding to withdraw its bid. That was Liverpool’s option; it was not up to the Government.

[Lord McKenzie of Luton]

How does the Minister assess the relative merits of the £250 million fund to help weekly bin collections against the £480 million cut in council tax benefit support which, as the Resolution Foundation publication today shows, means that three-quarters of councils will be forced to demand increases of up to £600 per year in council tax payments from 3.2 million of the poorest households in our country? Does the Minister recall the poll tax?

[Baroness Hanham]

My Lords, the £250 million found by the Department for Communities and Local Government was found from within its own budget. We are dealing with a very important area—that is, to ensure that people who already pay for their bin collections have the opportunity of having weekly collections. The analogy which the noble Lord is trying to draw and the trap he is trying to drag me into are not relevant to this particular discussion.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 30th January 2013 Lords Chamber

[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.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 28th January 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, we have signed up to most of the amendments tabled by the noble Lord, Lord Greaves, but did not sign up to his definition of “reasonable”, simply because one of his other amendments sought to delete that term from the Bill, which we thought was a better solution. Along with the noble Lord, we consider that the clause is superfluous, or unnecessary or pernicious, to use the terms of my noble friend Lord Hanworth. Again, we see a measure which is based on assertion and anecdote rather than on hard evidence.

The Government launched a consultation document entitled Streamlining information requirements for planning applications on 3 July last year, which they closed on 11 September. When are we going to get the Government’s response to that consultation? Will it be before or after Report? Interestingly, the consultation states:

“There is no immediate vehicle for further reforms to primary planning legislation”.

That was back in July and it somewhat reinforces our contention that this Bill has been cobbled together in pretty short order. The consultation focuses on three areas: outlying planning permissions; local informational requirements; and agricultural land declarations. In respect of local information, which, effectively, is dealt with in this clause, the document cites that, although the primary powers of local authorities in this respect are broad, they are constrained, in particular by the publication of local information equivalents and the evidence and particulars regarding what is required and by national policy requirements that state that,

“local planning authorities should only request supporting information that is relevant, necessary and material to the application”.

This is what the procedure order requires, as does the related guidance. The consultation document muses that recent changes, including the NPPF, referred to by the noble Baroness, Lady Young, and the demise of regional spatial strategies, will mean that the information requirements of local authorities are likely to be out of date and should be updated every two years. However, it is clear from this document that, if it is necessary to change the current requirements—for example, with a regular updating of information lists—there are already powers to do this.

This also raises the question of why the policy position set down in the NPPF is not sufficient and why it is considered that primary legislation—available, it seems, after all—is needed. There is already a requirement to be reasonable, so what does Clause 5 add other than confusion? I agree with the noble Lord, Lord Cameron, that some planning authorities struggle and are under-resourced. However, surely the answer is to make sure not only that they have clear guidance but are supported in their endeavours. It seems to me that this clause does not help them or move them on one jot.

Specifically, from whose perspective does reasonableness have to be judged? Is that not the role of the local planning authority that has to consider the application? At the end of the day, I fear that this clause is, like too many in this Bill, all about adding another bit of pressure on local planning authorities so that they are encouraged to ask for less, to decide more quickly and to avoid risking appeals, so undermining the quality of decision-making. If the noble Lord is minded at a point in time during our deliberations to seek to have this clause deleted from the Bill, we will support him.

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

Clause 5 amends Section 62 of the Town and Country Planning Act 1990, just in case that had escaped noble Lords. The clause sets out limits to the general power, under Section 62(3) of the Act, of local authorities to request information in support of planning applications.

There has been some debate today about why the clause is necessary. The department published the consultation paper on 21 January—indeed noble Lords’ attention has been drawn to it—and I hope that provides some reassurance on this point. With regard to the other consultation paper that was concluded in September, the Government’s response was provided on 12 December, so a response has been made. The consultation paper demonstrates how the provisions in the Bill form a critically important part of a wider package of deregulatory measures brought forward with the purpose of simplifying the planning system. As well as ensuring a better alignment between the National Planning Policy Framework and the primary legislation that governs information requests by local authorities, the consultation emphasises the need to place limits on the broad power that currently exists in Section 62(3) of the Town and Country Planning Act. This is to address the impact of recent court decisions and ensure that applicants can access the planning appeals system where there is a dispute with the local authority regarding what information is necessary to validate a planning application.

The noble Baroness, Lady Young, asked about the interrelationship between the National Planning Policy Framework and this clause. While the NPPF sets out a clear expectation on local authorities through policy, it is alone insufficient to overcome the interpretation given by the courts to the current legislative framework. The clause also safeguards the position of a local authority in requesting information, where a justification exists on the basis that the matter will be a material consideration when it comes to determine the application in question. Overall, I believe this change will bring a more balanced state of affairs whereby applicants and local authorities will work together to establish the amount of information necessary to get a particular planning application validated. Alongside our wider package, the clause will deliver a better and more proportionate approach to information requests and reduce the scope for disputes that can lead to delays at the validation stage.

Amendments 52, 53 and 54 would all considerably weaken the purpose of the clause and the achievement of the objectives I have just set out. Amendment 53 would amend the objective test in Clause 5 of whether a matter will be a material consideration in the determination of the application to become a more subjective test where the primary role is with the local authority to determine whether this is the case. That would undermine our attempt to address the broad powers of local authorities that have been the source of criticism by the courts. Similarly, Amendment 52 would essentially return us to the position that currently exists and has been found problematic: a subjective test decided by the local authority. A local authority would merely have to have regard to the nature and scale of the development when making an information request.

The purpose of requiring such information requests to be reasonable is to ensure that a local authority can justify whatever information it is seeking and can respond, if pressed, as to why it considers applicants should have to go to the often considerable expense of providing it. Presumably, that is something which we all agree is sensible and appropriate. Amendment 54 would continue in a similar vein, by weakening the requirement for local authorities to justify information requests on the basis that it is reasonable to think that they will be material considerations in the determination of the application to a looser requirement that they would be likely to be. Although I can understand the intention behind the amendment, we need to ensure that local authorities are clear, consistent and certain in why they think that information is going to be relevant to the determination of the application in question. Changing the test to “likely” will weaken the effect of this important principle.

Amendment 55 seeks to respond to the criticism that there is no statutory definition of what is “reasonable” by suggesting one. The definition attempts to set out circumstances which could definitively be considered “reasonable”. These would include information requests made by a government department, government agency or statutory consultee. As I have already said, the purpose of including “reasonable” in the tests is to require a local authority to justify why it considers information is necessary for the application to be validated. The likely requirements of a statutory consultee would clearly be a relevant justification as long as they are warranted by the circumstances of an application.

However, a tick-box attitude to the local list—there are indeed local lists of what information would be required—without consideration of the relevance of any particular item for a particular application will not do. Attempting to draw up in primary legislation a definitive list of what is and is not reasonable is not likely to be helpful and could create confusion. The tests that apply are already clearly set out in the NPPF and the clause as it currently stands clearly emphasises this.

What we really want is for local authorities and applicants to think these matters through together and, where differences emerge at validation stage, to have a sensible discussion about what is reasonable in the individual circumstances of the case. The concern that has prompted this change is that the law as currently drafted allows local authorities to refuse to validate planning applications indefinitely and simply to impose information requirements unilaterally on applicants.

In summary, I fully understand and respect the need for us to safeguard the ability of local authorities to request information from the applicant where it is essential to the determination of a planning application. Clause 5 and the associated proposed changes to secondary legislation achieve this. No harm will be created by the requirement for such requests to be justified and, if necessary, enabling matters to proceed to appeal for a decision. Indeed, we consider that Clause 5 will encourage both applicants and local authorities to work more closely together to ensure that the likely impacts of development are fully appraised in the documentation submitted with the planning application in question.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 28th January 2013 Lords Chamber

[Lord McKenzie of Luton]

We did very well out of it in Luton, I am bound to say, but I should stress that it is not Labour Party policy to reintroduce this tax. We should get that clearly on the record.

So far as the amendment is concerned, I agree with the provision to make sure that there are mechanisms to clearly identify when there is a commencement of development. What I was not sure about, having looked at Section 56 of the Town and Country Planning Act 1990, is whether that overrides all the other things listed there as the commencement of development. For example, that section says that,

“‘material operation’ means … the digging of a trench which is to contain the foundations, or part of the foundations”.

I think that the noble Lord, Lord Best, referred to that but I am not sure whether his amendment overrides it. It would technically seem to need to do that to get the solution that the noble Lord is seeking—a solution with which I agree.

There are a range of broader points but I will forgo the opportunity now for my clause stand part debate and come back there as we go through the amendments in due course.

[Baroness Hanham]

My Lords, we are back in the situation we were in last time. I am not sure whether I am answering a Second Reading speech that went totally away from the amendment, a clause stand part or just something that everybody has made up around this amendment. While it has not been made up, I think an opportunity has been taken to have a very wide-ranging debate on the back of the amendment moved by the noble Lord, Lord Best. He will understand that I was trying to confine this debate to his amendment, although I realise now that that was absolutely hopeless and was never going to happen.

If I may start on the philosophical aspect of our whole discussion, I will pin it immediately to my thinking that everybody recognises that we desperately need to build. We need to build housing in this country for several reasons. The first, and most important, is that we have an awful lot of people without homes. As my honourable friend at the other end, Nick Boles, has pointed out, if we are not to have people in their 40s still living with their parents and still unable to buy property in the near future, we have to start building. Secondly, we are not going to jerk the economy back into life if we do not jerk the construction industry back into life. Those are two fundamental reasons why we need to make sure that the growth of housing takes place.

There are many elements to housing: housing for sale; housing that goes to right-to-buy; housing for shared ownership; affordable housing; and housing for rent. A great number of projects are all buried within Section 106. Perhaps I could remind noble Lords that Section 106 is responsible for a very great proportion of the affordable housing being built at the moment. The noble Lord, Lord Davies, said that we were getting rid of that. We are not. In this clause we are not waiving the requirement to build affordable housing. What is being said here, and what we are recognising, is that negotiations which took place some time ago when there was probably a very high market may now not be viable because of the affordable housing element, which may be a very large part of the Section 106 requirement.

We are saying to all local authorities: do what many local authorities are already doing; that is, to look at that obligation to see whether it can be reduced to make the whole project viable. If it does not become viable, developers are not going to develop—and if they do not develop, we can all wring our hands and talk about housing forever but it will not be built. If a small reduction in affordable housing brings that back into viability, it seems an exceptionally good reason to have those discussions taking place.

--- Later in debate ---

[Lord McKenzie of Luton]

I am grateful to the Minister for her detailed replies. Perhaps I may follow up on one or two points. I asked whether an equality impact assessment of this clause had been produced and, if so, whether we could see a copy of it before Report. I did not quite follow the rationale about the £300 million of additional funding for affordable housing. The Minister said that it was for new housing. If we are talking here about less housing than there otherwise would have been, it seems to me that that itself is not a logical reason not to be able to apply it to supplement Section 106 agreements, which are assumed to make a particular site incapable of being economically viable.

The Minister helpfully talked about guidance for issues around viability. I was not quite sure—perhaps I missed it—whether she said that we are likely to see a copy of that guidance before we get to Report.

I revert to the issue of the extent to which sites are stalled by affordable housing obligations. Is the noble Baroness at least able to publish a list of the 1,400 sites where the 75,000 houses are to be built, and say whether it is those plans that are causing the sites to be unviable? Local authorities may have that information but is there no central collection of it that can be shared with us? That would be particularly helpful.

Finally, perhaps I may come back on the cut-off point. As I understand it—and as I think the noble Baroness confirmed—the broader consultation on Section 106 agreements and the current five-year rule will have as its starting point agreements that were entered into prior to April 2010, on the basis that agreements entered into after that point would have recognised the current state of the market. If that logic runs for that scenario, why does it not apply equally to consideration of affordable housing? I am a bit unsure as to how those two different processes will interrelate.

[Baroness Hanham]

My Lords, I can deal with the final point first. As I have said a number of times, the clause is specifically about affordable housing. It is perfectly up to local authorities, even at the moment, voluntarily to renegotiate any aspect of Section 106 applications made before 2010. Regulations are coming out soon to make sure that that can be done anyway.

This clause relates only to affordable housing and the expectation is that this will be a pretty swift operation. Negotiating other aspects of Section 106 agreements may take quite a long time because there may be a lot of elements. However, affordable housing ought to be dealt with swiftly by the local authority or the Planning Inspectorate. We want decisions on this that generate affordable housing. That is why the issues have been separated; there is a single focus here. However, that does not discount other aspects of Section 106 being looked at voluntarily. Ultimately, there will be a statutory requirement.

[Lord McKenzie of Luton]

I understand why the Government are saying that the issues should be separated; whether I accept that logic is another matter. However, in relation to having one cut-off point of April 2010 because agreements entered into after that would have recognised the current market conditions, why does that issue not run for both scenarios—whether it relates to affordable housing or other components of Section 106 agreements? Why is it 2010 for one but an unlimited starting point for affordable housing?

[Baroness Hanham]

My Lords, I think that the answer is simply because affordable housing is such a significant element of this particular argument. I may have to write to the noble Lord about this pinch point and come back to him.

As regards the £300 million, I said that we will not make a blanket commitment to fill the gap regarding the aspiration of affordable housing, which is what we have been talking about—the idea of granting affordable housing requirements in the event of a Section 106 agreement being renegotiated. I have not ruled that out entirely but I have, more or less, said that I do not think that we could have such a provision. However, the matter is still being looked at.

--- Later in debate ---

[Baroness Hanham]

The noble Lord, Lord Best, has spoken to Amendment 55B, which seeks to allow the modified obligation on first applications to be more onerous than the original obligation. If a developer undertook a voluntary renegotiation, he would neither expect nor agree to more onerous terms. He would expect to come out with something better than he went in with. He would revert to the original, agreed obligation if the negotiation was unsuccessful. Under this application process, we want to replicate these circumstances for the first application. It provides an important incentive for developers to come forward and review their schemes. We need housebuilders to bring sites forward and I hope that this provision will ensure that they do this.

The clause also provides an important distinction between the first and subsequent applications to encourage the developer to proceed quickly. Under the first application, the affordable housing requirement must be reconsidered if it is found to be causing the scheme to be unviable. The local planning authority must modify or remove it so as to make the development viable, and the outcome must not be more onerous than the original obligation.

In relation to a second or subsequent application relating to the same planning obligation, the authority has more flexibility in amending the affordable housing requirement. Where it is justified on the basis of economic viability, the affordable housing requirement could be made more onerous than in the original obligation. The only restriction is that the amended obligation must not make the development economically unviable.

The distinction between first and second applications provides a real incentive for developers to reach a new agreement on their affordable housing requirements on the first application and to get on with building. It discourages repeat applications unless the developer is very clear that viability evidence supports their case. It also provides an important incentive for them to come forward and review their schemes. The purpose of these provisions is to ensure that development goes ahead and is not delayed because of unviable affordable housing requirements.

This amendment prevents a developer requesting the local authority to remove the affordable housing requirement, even if viability evidence justified this. It is not our intention that developers should remove all affordable housing requirements. We want affordable housing to be justified on the grounds of viability. In the clear majority of cases, we expect that evidence will demonstrate that some—probably most—affordable housing is viable

However, there will be some cases where evidence demonstrates that no affordable housing at all can be supported by the development. The developer must have the option to apply for this and the local authority must have the option to agree to this. Stalling development with unviable affordable housing requirements serves no purpose. Stalled development brings no local benefit to anybody. I hope that I can reassure the noble Lord that this clause does not encourage applications to remove all affordable housing but looks to ensure that viable applications are agreed to enable development to proceed.

Amendments 55BB and 55BD propose a review of affordable housing after two years where land value has increased. These amendments aim to put in place primary legislation incentives to ensure that developers build their schemes. They look to allow local authorities some control where obligations have not been delivered within two years. The drafting of Clause 6 does not prevent local authorities agreeing a mechanism with developers to increase obligations should markets improve. I am aware that this is the practice in many local authorities where obligations are “staircased” according to market conditions.

We will be clear in guidance on the options open to local authorities, and I urge that this be allowed to be negotiated locally, according to local circumstances. I do not agree that a fixed period for review in primary legislation would be helpful. I hope that the noble Lord will now think that the clauses are helpful.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her response. I would like to read the record on the issue between first and second applications, but I think that I have understood the point being made. I will take this opportunity to ask again for a response with respect to the equality impact assessment, which runs through all these groups. It cropped up earlier, and I do not think that we have had a response.

I accept that there is always an opportunity to negotiate an improvement in affordable housing numbers. However, it is the extent to which, under the provisions, the local authority has a right to drive that, just as the local authority has an obligation under these provisions when lack of economic viability suggests that these affordable housing numbers are too great. If that is the analysis, the local authority clearly must do something to modify that in a downward direction. However, where land values have increased, why on earth does it not have the right to reciprocal arrangements and to obtain increased affordable housing? I accept that one can always make these arrangements through negotiations and agreement. However, we are looking for something more positive to balance the other side of the coin. Otherwise, in the words of the noble Lord, Lord Best, this is a one-way bet for developers. Having said all that, does the Minister have any more news on the impact assessment?

[Baroness Hanham]

I enjoy Committee; there is always this bobbing up and down. It seems inconceivable that developers would want to renegotiate affordable housing at the first chance, on the basis that it might end up going up. They must produce a viability assessment to prove that it has gone down. If the assessment does not prove that, they go back to the original number. If they then rethink and decide to have another go with the second application, at that stage, if the local authority assesses that things have improved a lot it can require an increase in the amount of affordable housing. From a developer’s point of view, it is therefore a bit of a gamble to come back a second time. We suspect that it is better to stick to the original commitment and to get on with it. Regarding the equality impact assessment, I apologise. It will be available on Report, and I will see that the noble Lord gets a copy as soon as possible.

[Lord McKenzie of Luton]

I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

I wish to raise a number of points and to refer to the matter that the noble Lord has raised. I thought that the current rule outside these new provisions for affordable housing is that if a Section 106 agreement is not implemented within five years, there is a right of appeal to the Secretary of State. I am not sure whether the same criteria would have to apply to the Secretary of State in making a determination of that appeal, but I thought that it was that process which has been the subject of the parallel consultation. For example, it had a cut-off point of April 2010. That may be wrong and no doubt the Minister or her officials in the Box will tell me if that is the case. However, I thought that that was the issue.

I want to come back on the issue of the local plan and development policies. No one is suggesting that we need to revisit the local plan, but simply to ensure that any change to the affordable housing requirement as a result of these provisions is still consistent with the plan. That does not mean revisiting it.

Perhaps I may also come back on the issue of whether affordable housing is the sole reason for a development not being economically viable. Are we saying that if two reasons of broadly the same magnitude make a development not viable, nevertheless it is right and just that it is the affordable housing that is changed as a result? That does not seem to be particularly logical or fair. If the affordable housing component is the sole reason why a development is not viable, one can see how the logic flows for what the clause provides. However, when it is not the sole reason, why is it that only the affordable housing has to take the hit?

[Baroness Hanham]

My Lords, I have tried to say several times during the course of our debate that this clause relates only to affordable housing. It relates to the developer saying that what is holding things up and why he is not developing is that the affordable housing aspect, for whatever reason, is making it unviable. Any other aspect of Section 106 can be negotiated with the local authority. A developer does not have to do it. It is absolutely only the affordable housing element.

[Lord McKenzie of Luton]

Perhaps I may press the point. I understand that the clause is focused only on affordable housing and changes and modifications to it, but if the reality is that the assessment of viability shows that affordable housing and other things are making the project not viable, you will nevertheless look to the affordable housing component as that which has to take the hit and bear the adjustment. I accept that everything else can be negotiated under the current provisions, but if it is not solely the affordable housing component, why is it that, to the exclusion of everything else in this clause, the affordable housing component is focused on to bear the consequences of the modification?

[Baroness Hanham]

It is because that is what this clause is all about. It concerns situations where it is believed that affordable housing is causing the block. Every other aspect of Section 106 can be negotiated voluntarily. Under Section 106 in its totality consideration can be given to other aspects, but it is only where affordable housing is the only aspect that is said to be causing the lack of viability that this clause will impinge.

--- Later in debate ---

[Lord McKenzie of Luton]

I think that that was a gem for which I am grateful to the Minister. I think she said that if the affordable housing component is the sole reason for it not being viable, that is when the clause operates. I think that that is a different position from that which I thought we debated earlier. Perhaps we should read the record because no doubt we shall come back to the issue on Report.

[Baroness Hanham]

My Lords, unless I have been deluding myself, I thought that that was what I had been saying the whole way through our debate this evening. We will check Hansard and make it clear that that is the situation. I will write to the noble Lord if I have said anything recently which does not bear out what I said before.

[Lord McKenzie of Luton]

I am most grateful to the Minister and, in the circumstances, I beg leave to withdraw the amendment.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 28th January 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her brief reply, matching the length of the moving of the amendments. The noble Lord, Lord Greaves, raised an important point about this being a wider issue than just Section 106. I look forward to seeing what the guidance includes. If it is not formally ready, I hope to have the opportunity for some detailed discussion before we get to Report. I am grateful to the Minister for that.

From what the Minister has just said, I understand that the parallel consultation on Section 106 has been completed but the Government’s response has not yet been issued, and that should be with us shortly. If that is the case, I hope that that will be with us before Report. I look forward to sharing with my noble friend Lord Beecham the response on the points that he raised. Perhaps the Minister can just confirm that issue about the availability of the pre-April 2010 consultation. Subject to that, I beg leave to withdraw the amendment.

[Baroness Hanham]

My Lords, I think I indicated that I hope to be able to share at least some of the ideas behind the response. I do not know whether I will be able to share the whole response, but I have offered the discussions and it will be much clearer by the time we get to them.

[Lord McKenzie of Luton]

I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Hanham]

My Lords, I think I can reassure the noble Lord that that is precisely what we are looking for. We recognise that there are philanthropic landowners who will give land; we know that there are housing associations and RSLs that will work for a specific scheme, and that is precisely what we want to ensure continues to happen.

It is important that small-scale developments in villages can be carried out. That is what the clause does. It ensures that nothing stands in the way of rural exception sites being developed, and the Section 106 agreement that will be negotiated to enable that to happen should make sure that the housing is for local people. That will be the only area where Section 106 would have relevance on this matter. It will be a straightforward process of land being released and a developer being available for affordable housing, social housing or, indeed, private housing. There will be no constraints on that taking place.

[Lord McKenzie of Luton]

My Lords, I place on record our thanks to the Minister for fulfilling a commitment made in the other place.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, we have Amendment 55EB in this group. Before I speak briefly to that, I will say that I am happy to support all the other amendments in the group. I heard what the noble Lord, Lord Cameron, said about Amendment 55EA, but it refers to a developer paying a contribution proportionate to the increase in value; it does not mean that there is no upside for the developer.

Amendment 55EB seeks to amend the relevant period from three years to two. This is another point I will pursue. The relevant period in these circumstances is the period within which, if the Secretary of State route is taken, the planning obligation has to be completed. However, if the development is only partly started, I do not think that that applies. Proposed new subsection (12) states that the modifications are,

“the modifications necessary to ensure that, if the development has been commenced before the end of the relevant period”—

in other words, within three years—

“the requirement or requirements apply only in relation to the part of the development that is not commenced before the end of that period, and … such other modifications as the Secretary of State considers necessary or expedient to ensure the effectiveness of the requirement or requirements at the end of that period”.

Does that not mean that if you start a development, you have to complete it within three years, but if you start part of it, you neither have to complete the bit you have started or the other portion, otherwise you will revert to the original Section 106 requirement?

Perhaps I am misreading the provisions. I certainly understand that the intent is that a development must be completed within three years. We say three years is too long; we would like to set the time limit at two years. The issue is how proposed new subsection (12) will work when there is only partial commencement of a project. For me it is less clear. Perhaps the noble Baroness will write to me on that if she cannot deal with it this evening.

[Baroness Hanham]

My Lords, I thank noble Lords who tabled the amendments in this group. They seek to introduce some constraints to the appeals process. Before I turn to each issue, I will reiterate some of the main principles of our thinking. The appeal is meant to be impartial and evidence-based. It will be a targeted review of viability, and it will be dealt with quickly. It will result in a viable, affordable housing requirement that will be valid for three years—I will come back to that—at which point the original requirement will be reinstated. In other words, if a project has not been started within three years, the appellant will lose all the benefits they gained from the appeal.

Amendment 55D covers the 28-day period for a planning appeal decision. Currently a default 28-day determination period applies to authorities determining the applications made under new Section 106BA. The appeals are made to the authorities, which already have a huge amount of information relating to the original application. It should be noted that the 28-day period can be extended if that is agreed in writing between both parties—the authority and the applicant. The procedures for planning appeals are set out in secondary legislation. We will consult on a streamlined process for new Section 106BB appeals. That consultation has not gone out. Again, I will be happy to discuss it when we have our meeting.

Placing the same default 28-day period to determine appeals is not practical. The Planning Inspectorate does not have the knowledge that the local authority had when it first dealt with the application. The local authority has already negotiated the existing planning obligations and should be very familiar with the evidence on which the agreement is based. Also, the Planning Inspectorate’s procedures do not replicate those of a local authority. The inspectorate will need to consider what form of appeal may be required, whether it be written representations, a hearing or public inquiry. I am sure the noble Lord will understand that it is not possible to undertake a full inquiry, however speedily done, within 28 days. That is pushing it too hard. However, I hope I can offer reassurance that we fully intend this to be a quick process. We shall be placing challenging time limits on the Planning Inspectorate to turn around decisions on these appeals as quickly as possible.

Amendment 55E, introduced by the noble Lord, Lord Best, requires the Planning Inspectorate to give “material weight” to the decision and evidence of the local authority when considering an appeal; that is, the local authority’s case must be considered at the same time. As a point of principle, planning inspectors must be seen to make their own decisions impartially. In this case, they must take an impartial assessment of all the evidence submitted; they cannot just look favourably on some. It would therefore be wrong to provide an advantage to the evidence of one party—the local authority—by requiring in law that it is given particular weight. What if the quality of the evidence submitted by the local authority was very poor?

An inspector is not required in any appeal casework to give material or indeed any other defined weight to particular evidence. Rather, it is for the inspector to decide what weight should be given to any evidence, which could include the local planning authority’s decisions, according to the cases put, and then to justify that assessment. I hope the noble Lord agrees that we should not be trying to prejudice the Planning Inspectorate’s decisions but should let it take an impartial view.

Amendment 55F would require the development to commence within six months of an appeal decision. Amendment 55EB would make it valid for two years, rather than three, and Amendment 55EA seeks to ensure that the appeal decision should include a requirement that the local authority receives a contribution if market values rise. The noble Lord, Lord Burnett, has added his weight against this.

I believe that the clause already provides incentives for the developer to get on and build. Where the Planning Inspectorate issues an appeal decision in these cases, the revised affordable housing requirement is only valid for three years. Any part of the development which has not been commenced in that time will be subject to the original affordable housing requirement. One way or another, the original affordable housing requirement has to be dealt with within that timescale. We must give developers a reasonable amount of time to get on site. Following an appeal decision, the developer may need more time to begin development for legitimate reasons, such as compliance with pre-commencement conditions or securing vacant possession of the property. For more complex schemes, a limited time period to get on site would mean that the whole reassessment of viability could be wasted. We must balance our desire to get stalled sites moving with a realistic understanding of the development process. I am particularly concerned that we do not inadvertently constrain complex projects, such as regeneration schemes, by limiting the revised agreement inappropriately.

I would like to respond to the amendment requiring the Planning Inspectorate to include a provision for market uplift. On a question of principle, Section 106 is intended to be a mechanism by which development is made acceptable in planning terms. The amendment appears to introduce a wider purpose for Section 106, related to profit rather than mitigating the impact of development. I would be extremely concerned that this could set a precedent for the use of Section 106.

The intent of this amendment is to give local authorities some return if markets improve. This provides an incentive for developers to start building. However, the legislation does not prevent local authorities making their own judgments as to whether there should be some incentive within the revised agreement to start development, such as an improved affordable housing provision, if market conditions rise. The only constraint on the local authority is that the outcome should not be more onerous than the original obligation. In the event of an appeal, local authority proposals for such flexibilities could be submitted to the Planning Inspectorate as evidence. We will be clear in guidance that such evidence is appropriate. Again, I see this as a matter for local discretion, depending on site circumstances. We will be ensuring that guidance on this matter is included in our statutory viability guidance which, as I have said, we hope will be available before Report.

I hope that noble Lords will be reassured by those comments. The noble Lord, Lord McKenzie, asked whether, if a development is partly commenced at the end of the three years, the original obligation applies to that part of the development which is not commenced. So if the developer has built only part of the development and there is an obligation to develop affordable housing, and they have had a reduction, that lasts for only three years. If the developer has not got that part in hand, he will have to go back to the original amount agreed before the negotiation.

[Lord McKenzie of Luton]

Perhaps I may pursue that point. I understand generally the points around the three years, but if it is partly commenced and partly not commenced, in relation to the part that is commenced there is no requirement to complete that part within the three years in order to retain the benefit of the modified Section 106 agreement. That was the point I was pursuing. I understand clearly that if you do the whole lot, you have to do it within three years.

Perhaps it is the convoluted language used in proposed subsection (12), and we may pick it up subsequently, but that is what is not clear to me, particularly in view of what the noble Baroness has just said.

[Baroness Hanham]

I may need to write to the noble Lord on this. The whole development has got to start within three years. The noble Lord is looking as bewildered as I feel.

[Lord McKenzie of Luton]

I will not dwell on this because we have other things to discuss. As I understand it, the relevant period is three years—we would like to see a period of two years, but it is to be three years—in which the developer has to complete under the provisions of proposed subsection (11). I am trying to tie that up with what the noble Baroness has just said about starting to commence the development when it is only partly commenced. That is what is confusing me.

[Baroness Hanham]

My Lords, I do not want to cause any more confusion because it is too late for that. However, I may be able to respond. It is always a relief to know that I am right. The completion is not legally defined. It does not have to be finished within three years, but it must start within three years. I hope that that clarifies the position.

[Lord McKenzie of Luton]

I understand what the noble Baroness has said, but perhaps we will return to the issue.

Local Government: Finance Settlement

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 23rd January 2013 Lords Chamber

[Baroness Hanham]

My Lords, I know that the right reverend Prelate is very involved in the discussions that are taking place about settlements and the various levels of deprivation. I believe he held a conference last week that addressed this important subject.

However, the methodology that has been used and is set out in the formula funding document, which has been out to consultation several times, takes account of deprivation and the high cost of providing services in areas that have high deprivation, where local authorities have a low ability to raise funding. Such authorities will receive more funding than authorities with a low cost of providing services and a high ability to raise funding locally.

[Lord McKenzie of Luton]

My Lords, under the local government settlement for the two years ending this March, the Audit Commission reported that in the 20 most deprived areas of the country revenue spending had fallen by 14% and in the 20 least deprived by 4.4%. In the most recent settlement, the 20 most deprived authorities will have their spending power cut by an average of 8% and the least deprived by 0.7%. Can the Minister tell me what definition of fairness justifies this distribution?

[Baroness Hanham]

My Lords, the distribution has been carried out, as it always is, against a formula which makes sure that there is fairness of distribution across the piece. As the noble Lord has just suggested, the highest loss of spending power is 8% and the lowest is much less than that. The department has taken a great deal of care to try to ensure that funds are well distributed across the country. Noble Lords will know that what we are dealing with here is, again, one of the difficulties of having a deficit left by the previous Government.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 22nd January 2013 Lords Chamber

[Baroness Hanham]

My Lords, you can also approach this matter from the standpoint that the planning authority has not performed correctly over the previous two years and has been on notice of that. If you delay the designation for 18 months, you further delay the possibility of improvement taking place. I hesitate to suggest that we should agree to the delay proposed in the amendment as I think that designated local authorities will begin to improve their performance.

The noble Lord, Lord Best, and other noble Lords asked about peer help. We have already made it clear that we accept very much that the Local Government Association has a role to play in helping designated local authorities to improve, and to do so even within the period of designation. As we will discuss later, that period will be reviewed annually, so local authorities can get out of this situation in a very short time. This clause—

[Lord McKenzie of Luton]

If the Government are very happy to see local planning authorities supported through the LGA or whatever, why do that only once designation has taken place? Would it not be better to make sure that that support is available to help them to improve before they are designated so that they avoid this process, which, on anyone’s score, will be costly, convoluted and administratively complex?

[Baroness Hanham]

My Lords, this is a matter of view between us. Our view is that things will become clearer over the coming months and local authorities will know whether they are bordering on designation. They will know that help will be available if they are designated and that they will be encouraged to improve. That will be the tension. The designation can cease following an annual review. I do not think that that will be too much of a tension if we decide not to accept the amendment and the promoters agree with that.

I have an enormous number of points here in front of me on questions that have been quite general. I could make a Second Reading response if the Committee would like that, but we are trying to deal with the performance of local authorities and planning authorities. We also note that some local authorities will receive only a small number of applications, and that is one reason for looking at the figures over two years. We accept that there are differences between one local authority and another.

My noble friend Lord Deben, who is my real friend, also suggested that this power was anti-localism. It is not. It does not take away a local planning authority’s ability to continue to deal with planning applications, but it provides that if an authority is designated, a developer has the right to decide whether it wants the local authority to carry on dealing with the application or take it to the Secretary of State. Developers already have the right to go to the Secretary of State if an application is not completed within 13 weeks. That will of course be one means whereby local authorities can be designated if they are not performing within a statutory area.

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[Baroness Hanham]

My Lords, the expectation is that the Planning Inspectorate will perform against the statutory criteria.

The noble Lord, Lord Campbell-Savours, asked whether there would be democratic involvement as applications go forward. Local residents will have their normal ability to comment and all the normal planning processes can take place. All that will happen is that the decision will not be made by the local authority at that stage but by the Planning Inspectorate, which may very well have had to pick up the application if the local authority was not performing within the 13 weeks. There is nothing to be gained by delaying the designation. Our intention is to ensure that if a local authority is designated, it is in and out of that designation as soon as possible, given the help, support and encouragement that will be available from the Local Government Association and other planning means.

[Lord McKenzie of Luton]

Perhaps I may focus on one other point. Clearly, the criteria are going to be driven by the speed at which applications are dealt with. That is very clear from the consultation document. If, in the Government’s eyes, there is a delay in dealing with an application, why do they attribute blame only to the local planning authority? The cause could be due to the developer or other consultees in the community engagement. Why is blame attributed solely to the local planning authority? That is basically the conclusion to be drawn from what the Government are proposing.

[Baroness Hanham]

That will not be entirely the case. 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.

[Lord McKenzie of Luton]

There is a very important point—it may be a new point. I understand that, where performance agreements are entered into, they will be taken into account. However, is the Minister saying that there will be an additional process whereby a local authority can make representations about the prospect of it being designated because of circumstances that have occurred locally?

[Baroness Hanham]

My Lords, before they are designated, local authorities will have the opportunity to explain, first, their figures and, secondly, if necessary, the length of time that an application has taken due to specific reasons. That will be the case with either a formal or an informal planning application, but they will have to note that that is what it is so that they can use that as an explanation.

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[Baroness Hanham]

Before the noble Lord withdraws his amendment, I hope I made it clear that if a local authority is going to be designated, it will be able to put forward the sort of points that he and the noble Lord, Lord Greaves, have suggested as a reason for why their applications have been slower than others. I hope that is clear.

[Lord McKenzie of Luton]

That is very helpful, but can we just be clear on the consequence? Notwithstanding that it might be close to the end of the year and that 30% of the applications will not be received within the designated time, can an authority come and say, “Because of these applications, these circumstances, these issues with a developer or these issues with the community”, so that designation may not then take place, even if the criteria have been breached? I am not sure whether the criteria are met or breached in these circumstances. However, that would be a way to avoid designation, and of doing so notwithstanding there being no formal and informal agreements. Obviously, those cannot now be dealt with in retrospect. Is that what the Minister is saying? That is actually very helpful; for me, it is a new point.

[Baroness Hanham]

I am saying that an authority could put that forward and have it taken into account. Whether it would actually stop the designation would depend on a whole number of other factors, but it is a fact that it would be able to make those representations.

[Lord McKenzie of Luton]

I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

Indeed. My point was going to be that if this is a way of wrecking the clause, I am all in favour of that, but let us do it at clause stand part and do it properly. If it is structured as a means of incentivising people to get on with their local plan, I would have more sympathy.

I side with the noble Lord, Lord Greaves, on the national parks. The number of applications seems relevant because you might have two applications to deal with in a year, which several of these authorities did. If you determine each within 14 weeks of application, you would be designated. I think that would be the consequence of the fairly strict rule.

The noble Lord, Lord Deben, said that it is important that we are happy about this because it is objective. We say yes to an objective approach, but that does not mean a blanket approach where exactly the same criteria apply to all because if that 30% criterion applies, when you have authorities with a very small number of applications, it could work in a perverse way.

[Baroness Hanham]

On this amendment I shall satisfy my noble friend Lord Deben and practically nobody else because I cannot accept it. I do not suppose many noble Lords will be surprised at that because, as the noble Lord, Lord McKenzie of Luton, said quite properly and rightly, if this amendment were agreed to, that would be the end of Clause 1 because there would be virtually nobody left to be designated. If that is the purpose, I understand that, but if it is not, that is what the effect would be.

Amendment 6 would prevent the submission of applications directly to the Secretary of State in any area where the planning authority had not adopted a local plan within the past 20 years. I can advise noble Lords that the city of York is the only one that falls into that category. I am not sure that we want to allow that.

Quite apart from preventing the effective operation of Clause 1, these amendments are not entirely logical. Where applications are submitted directly to the Secretary of State, the planning inspectors dealing with them will have to have regard to flood risk and any designations that affect the site, and to the national policy that enshrines those important protections where local plans are not up to date. They are required to do so by law, just as the local planning authority is. Similarly, there is no logic in saying that local authorities should be exempted from designation just because they have responsibility for protected areas. Applicants for planning permission and local communities should be served by an effective planning service in these areas, just as much as anywhere else.

I note the arguments that noble Lords made about the specific circumstances of national parks. I heard very clearly what my noble friend Lord Deben said about this. We want the process of assessing performance to be fair, which is why the consultation proposes looking at this over a two-year period to ensure that judgments are based on sufficient data. We will, of course, be looking carefully at what the consultation responses say about this, but I do not think a case could be made to exclude national parks from possible designation just because they are national parks and because they may not deal with an enormous number of applications. The noble Lord, Lord Greaves, read out the list that I have had passed to me, and it is clear that some have more than others. The same argument can be made for all the other areas that noble Lords want to exclude. I guess most, or a great part, of London is in conservation areas, and I am not sure that we necessarily think that it would be a good idea to exclude them all.

I do not believe that these amendments are necessary. Their effect would be such that I would not be able to accept them because they would make Clause 1 redundant.

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[Baroness Hanham]

My Lords, I am happy to clarify the question of the noble Lord, Lord Greaves, immediately: it does not apply to every single application. This clause applies to major applications. Minor applications would not be included in any consideration for designation. Major developments, as the noble Lord, Lord McKenzie, has said, are already in secondary legislation. They are precisely as he read them out, and they would be the criteria by which we would seek to move ahead; that is the basis on which we are defining “major development”.

This is another point of consultation. The noble Lord is suggesting that “major” should be in the Bill. I would rather see all the replies to the consultation and come back on that, but the noble Lord has raised an important point.

[Lord McKenzie of Luton]

I am grateful to the noble Baroness for that response. We look forward to further discussion on that on Report.

I think that it is right, as I have indicated, that the Secretary of State does not have to delegate to the Planning Inspectorate, but could delegate to others. Is that correct? Are there any proposals to do that at all? Whom might those others encompass?

[Baroness Hanham]

My Lords, I think that it would be the Planning Inspectorate, but nods and winks from over there suggest that I should write to the noble Lord as to whether there is another area to which it could go.

[Baroness Hanham]

I do not. I will do my best.

[Lord McKenzie of Luton]

My Lords, again, I am grateful to the Minister and beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, we have Amendments 11 and 17 in this group. Amendment 11 refers to circumstances where a connected application is made to the Secretary of State. It would clarify that the Secretary of State will be responsible for ensuring that all statutory requirements which a local planning authority or hazardous substance authority have to meet will be met by the Secretary of State. Perhaps the Minister can confirm that.

Amendment 17 is very much along the same lines as that pursued by the noble Lord, Lord Greaves. It would bring some clarity to the boundaries of what counts as a connected application. The Bill clearly includes listed building consent and conservation area consent, but otherwise means,

“an application of a description prescribed by the Secretary of State”.

This prescription will presumably be via some parliamentary process. Our amendment would require a consultation to be held. However, the particular purpose of the amendment, like the probing amendment of the noble Lord, Lord Greaves, is to get more on the record concerning the Government’s approach to this. It is understood that this may be driven, at least in part, by the Penfold review, but that was looking at non-planning consent, so I am unsure how that would fit; indeed, some of the other recommendations of the Penfold review are being carried forward in the Bill. Can the Minister say whether anything is in contemplation under Clause 1(3)(a)(ii)?

We support Amendments 10 and 12 in the name of the noble Lord, Lord Greaves, which would make it mandatory to refer a non-connected application to a relevant planning authority or hazardous substance authority. If it were not mandatory, I am not sure where it would go.

[Baroness Hanham]

My Lords, I need to start by explaining why we have made provision for connected applications in subsections (3) and (4) of new Section 62A to be inserted in the Town and Country Planning Act 1990 under Clause 1. In the few cases where a planning application is submitted directly to the Secretary of State—that is, at the behest of the developer—it is important that if there are any other consents that need to be obtained under the planning Acts, and which are directly connected to the scheme concerned, it makes sense to have the ability for them to be considered by the Secretary of State at the same time. That would be a normal planning process. This is not a hidden provision that would allow an expansion in the use of Clause 1 by the back door but a common-sense measure to minimise bureaucracy and to streamline the process.

We have not sought to specify every single consent that could conceivably fall into this category but have instead cited the principal ones and given the Secretary of State the ability to prescribe any additional consents that may need to be dealt with in a similar way, which might include, for example, hazardous waste, advertisement consent or tree preservation order consent. There probably are some others but those would be the main ones.

This is a common approach in legislation, which avoids the Act becoming unnecessarily detailed and complicated. In practice, it will relate just to a small number of applications and consents that are required only occasionally, and which are, additionally, limited to consents required under the planning Acts and not under any other legislation. Nor is there any need, as Amendment 11 seeks to do, to say in the Bill that in dealing with such applications the Secretary of State should comply with relevant statutory requirements. We will ensure through the secondary legislation that all statutory requirements apply, whoever the decision-maker is.

Amendment 17 seeks to make decisions about the submission or transfer of connected applications subject to published criteria. Once again, I do not think that placing such a requirement in the Bill is at all necessary. It usually will be a matter of common sense as to whether a particular consent is “connected” or not. Therefore, we do not need to add to the mountain of planning guidance that already exists. Indeed, as noble Lords will know, the Government are undertaking a radical streamlining of the planning guidance under the noble Lord, Lord Taylor. He probably would not welcome our adding any more to his work.

I can deal quite briefly with Amendment 12, which, as the noble Lord, Lord Greaves, has said, concerns the language—we have discussed this on many occasions as regards many amendments—and whether it should say “may” rather than “must”. However, this is consistent with the Town and Country Planning Act 1990, which is the legislation that this clause would amend. This is a matter of drafting convention that we should respect. The noble Lord, Lord Greaves, asked me where the advice would come from and whether an application is connected. We would expect that that would be covered in any pre-application discussions either at the time the application was moved to the Planning Inspectorate or initially.

I would like to reassure noble Lords that there is absolutely no question of the Secretary of State holding on to a “connected application”, should it be found to be unrelated—unconnected—to the planning application that he is considering. There would be no reason for him to do so and it clearly would not be at all sensible. I hope with those explanations that the noble Lord is willing to withdraw the amendment.

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[Baroness Hanham]

My Lords, I understand and agree with the intention behind Amendments 13 and 14. We have no argument with the suggestion that the fee for any connected application should be transferred to the local planning authority or the hazardous substances authority if it is found that the application is not, in fact, connected and the authority is the most appropriate body to determine the application. I hope that that covers those points. That is not, however, something that we want to provide for in the Bill, because such matters are most appropriately dealt with, alongside other fees issues, in the appropriate secondary legislation. It will be in secondary legislation and I should like to reassure noble Lords that that is what we intend.

Turning to the other amendments in this group, it is our intention that the Planning Inspectorate will deal with as many aspects of an application made directly to the Secretary of State as possible. In these circumstances, as the consultation document makes very clear, we intend to ask a designated planning authority to carry out only some basic administrative tasks. These include entering the application on the local authority’s planning register, undertaking neighbour notification and posting site notices. Therefore, subsection (6) of this clause has probably generated more excitement than is merited because none of these situations is very cost-intensive. While the provision indeed gives the Secretary of State a direction-making power in relation to designated authorities, it is intended to be used in a manner strictly limited to those aspects of handling an application for which it makes absolute sense for the job to be done locally. While I agree with the sentiment behind Amendment 20, I am not convinced that it is necessary to put such a requirement in the Bill.

I am also confident that there is no need to add “designated” before “authority” in subsection (6)(b), which Amendments 21 and 22 seek to do. The subsection can apply only to applications made directly to the Secretary of State, which would be possible only where an authority has been designated under this clause. It follows that the additional words are unnecessary.

In relation to Amendments 23 and 24, the local authority planning service is funded not only by fees from planning applications, which the noble Lord, Lord McKenzie, alluded to, but from the local government grant, which authorities will continue to receive to help cover these basic administrative costs. There will be no diminution there. The cost of the work will be minimal but the potential need to meet these costs should be seen as part of the disincentive to performing poorly.

[Lord McKenzie of Luton]

I am sorry to interrupt the noble Baroness. She referred to the grant made available to local authorities and said that there will be no diminution in it. Are we talking about a separate grant or one that is paid as part of the business rate retention scheme and revenue support grant? How does that come through, particularly given the assertion that it has not reduced?

[Baroness Hanham]

My Lords, I think that I am talking about just the main local grant that comes with the formula grant. I may need to write to the noble Lord on that aspect. With that reservation—it needs to be part of the compendium that will come after this session—I hope that noble Lords will withdraw or not move their amendments.

[Lord Greaves]

My Lords, there used to be something called the planning performance grant, but my understanding is that it had been abolished. I do not know if any answer on that will be forthcoming, but it would be helpful.

Local authorities will have this extra cost because their income from planning applications, particularly major applications, will decrease or be taken away. The authority will therefore have no choice but to attempt to downsize its planning department. However, downsizing a small department and saving money is not always easy because the authority may have staff in whole numbers and it may not be possible to split them up into part-time staff. The authority may have to choose, if it has four development control staff, to get rid of a whole person. That may be more of a reduction than is reasonable for the continued efficient operation of the department. Who knows? All circumstances may be different but it is ambitious for the Government to suggest that costs will be minimal.

In addition, confining the department to performing basic administrative tasks simply may not be possible in reality because, with the best will in the world, the Planning Inspectorate will as much as possible want to tap into local information and knowledge, which will reside within the local planning department; there is no doubt about that. Is the idea that the department will perform only a few administrative tasks and that staff will not receive telephone calls, e-mails or whatever asking for more information? When you are dealing with a major planning application, all the time you are seeking lots of information from lots of sources, and some of it will be ambiguous and you will want to know its planning history. You will therefore go to the local planning officers to get that information. That will inevitably take up their time and some of the resources of the local authority. The idea that the local authority planning officers simply bang up a few notices on site or put them in the local paper is utterly unrealistic. They are going to get involved because it will be in the interests of the Planning Inspectorate that they do so; and that will be the way to get a good, quick and efficient decision. The inspectorate should not have to seek information from scratch when it is there within the local planning department. That will happen all the time and it will cost money. We may continue to talk about this and—

[Lord McKenzie of Luton]

Before the noble Lord withdraws the amendment, perhaps I may follow his point about the extent of the engagement of the local planning authority, which is important. He has opened up some real questions. As I understand it, the planning authority will still be able to—it may be expected to—make representations to PINS or the Secretary of State about a particular application. The authority would presumably want some public engagement to be able to formulate its views. Are those activities that the local authority will have to carry out in addition?

The consultation document makes reference to Section 106 negotiations, which it seems to suggest will not be dealt with by the Secretary of State or the planning inspector and will go back to local authorities. There was also the suggestion that such negotiations are carried out at the end of the process. I am not hugely familiar with some of the detailed processes of Section 106 negotiations but I wonder whether they always happen at the end or along the way as part of the application. There seems to be other potential activity that the local planning authority will, of necessity, be involved in.

[Baroness Hanham]

My Lords, the question of whether the Section 106 procedure is carried out by the local authority or the Planning Inspectorate will depend on where the negotiations take place, because they sometimes take place during the process of the application. I need to obtain a firm response on whether, in some cases, that will be done by the local authority, subsequent to the planning decision. It is my recollection—this is not from the officials—that the Section 106 procedure is usually, at the end of the day, part of the conditions of the permission. It would therefore make sense that it had to be negotiated during the course of the application. If that is not correct, I will let noble Lords know before the next stage. However, that is probably as near as I can get at the moment.

[Lord McKenzie of Luton]

That would be helpful. The noble Baroness has prompted another thought: will the discharge of conditions for planning consent be left with the local planning authority, not dealt with by the inspectorate?

[Baroness Hanham]

Local residents will of course have the same right to put their representations directly to the Planning Inspectorate as they would to a local authority.

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[Baroness Hanham]

I have been trying to make it clear all the way through this afternoon and evening that, when the application is taken to the inspectorate, the same consultation processes will have to take place as would have taken place if the local authority had conducted the application itself. The consultation document makes it clear that there will be no dilution in the ability of communities to become aware of applications through notifications or discussions, or in their ability to comment on them in very much the same way.

I appreciate what my noble friend Lord Deben says about people being consulted. I draw his attention to the Localism Act, in which there is a requirement for planning developers to undertake pre-application planning discussions. One would expect that to happen in the first instance. The size of the applications being discussed by my noble friend would be beyond the purpose of the clause; they would be major infrastructure applications. However, some applications that will not go quite so far will still be big enough to arouse local feeling. We intend that all the current statutory requirements on local authorities should be transferred to the inspectorate. There will be the same standards of publicity and consultation, and the same opportunities and periods to make representations; and all the relevant documents will have to be available at the offices of the relevant planning authority and on the Planning Inspectorate’s website, so one will be able either to look them up on the internet or check them out locally.

[Lord McKenzie of Luton]

Will the Minister confirm that the current standard arrangements for consultation involve the presumption that applications are examined principally by means of written representations, with the option of a short hearing to allow the key parties briefly to put their point of view? Is that a characterisation of how the system works at the moment?

[Baroness Hanham]

Every local authority has its own methods, which must fall within the statutory consultation process. It would not be out of order for a planning inspector to hold a direct hearing to hear from local people; I do not see why he should not be able to do that. That would happen now anyway if the local authority thought that it was required. The process would be exactly the same as that available now. We do not think that this requires anything other than secondary legislation. It will be in secondary legislation. I am prepared to keep that under review for a little while to make sure that that is correct.

In answer to the noble Earl, Lord Lytton, planning inspectors will need to take into account all material considerations, which will include any local or neighbourhood plans. I am sure that any statutory obligation to undertake consultation with parish councils will remain. With those reassurances, I hope that the noble Lord will withdraw his amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

In relation to the consultation, the response was frankly a bit thin. This is an issue that we need to consider further. I will revert briefly to the point about material considerations, the Planning Inspectorate and the NPPF. I accept that it may be an entirely irrelevant point, or at least a technical one. Will there be any difference in the weight given to material consideration issues or to issues in the NPPF that balance a range of things between the perspective of a planning inspector and that of a local planning authority? This is quite apart from any difference in process. We might align them as much as we can, but is there something inherent in the process that could give a different result? I do not assert that there is, but I would be interested in a response on that point.

[Baroness Hanham]

I will give the noble Lord a response, but I may have to change it. My instinct is to say that the Planning Inspectorate already deals with innumerable applications from different local authorities. I do not see why the processes that it will follow when taking an application initially will be any different from those that it follows when it considers an appeal. That seems to be the sensible answer. If there is another answer that does not come under the heading of “sensible”, I will let the noble Lord know.

Growth and Infrastructure Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 22nd January 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, Amendment 19 is a probing amendment, which I hope will not detain us for long. So far as the planning guarantee is concerned, the consultation document proposes that a 26-week limit will apply to the Planning Inspectorate where it is determining applications. That is fine because, clearly, given the lack of a right to appeal, a limit of no more than a year is not appropriate.

However, paragraph 64 of the consultation document proposes that the performance standard for the inspectorate would initially be to determine 80% of cases within 13 weeks, or 16 weeks where proposals are subject to an environmental impact assessment. On what basis has this target been set? For how long is it envisaged that the initial phase will endure? What will the Government do if it emerges that the inspectorate is not meeting its targets—a point that the noble Lord, Lord Greaves, also touched on earlier? I beg to move.

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

My Lords, I want to make absolutely clear the level of service that an applicant can expect from the Secretary of State in those very few cases where the applicant applies directly to him, and to explain why this amendment is unnecessary. As I have said several times today, the ability to apply directly to the Secretary of State would be limited to a very small number of situations where there is clear evidence that a local planning authority is not delivering an effective service. For example, in relation to the speed with which applications are dealt with, we have proposed in our consultation that the measure should apply only to authorities that have decided 30% or fewer of their major applications within the statutory period.

We will ensure through amendments to the secondary legislation that exactly the same statutory period for determining applications applies to the Secretary of State. We have proposed in our consultation to set a performance standard for the Planning Inspectorate of dealing with 80% of those applications within the statutory period unless an extended time has been agreed in writing with the applicant. That compares to the current average performance among planning authorities of deciding 57% of applications for major developments within 13 weeks.

The inspectorate will publish quarterly data on its performance so that it is clear what is being achieved. We are clear in our commitment to offering applicants the choice of a genuinely better service in those few cases where this clause has to be used in the future. The secondary legislation and performance standards set for the Planning Inspectorate are the appropriate places to set this out. I do not think that there is any need to add a specific provision in the Bill.

The noble Lord also asked about what would happen if the Planning Inspectorate did not achieve that. The fact that the inspectorate will have to make its own reports if it does not do 80% probably will be quite a serious obstacle for it to overcome if it is not achieving that.

[Lord McKenzie of Luton]

I am grateful to the Minister for her response. I may have missed it, but I do not think she said on what basis that 80% target has been met. If she did, will she kindly repeat it? If not, will she cover that point?

[Baroness Hanham]

May I write to the noble Lord on that? I am not sure about the 80% but I will write to him.

[Lord McKenzie of Luton]

That is fine. I am grateful for that and beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Hanham]

My Lords, I am grateful to the noble Lord for tabling this stand part debate as it gives me an opportunity to read into the record what I should like to say in reply. That is fair because it lays out for both of us the starting or finishing points— I am not sure which it is.

We have debated the merits of this clause at length. While some have argued that it breaches fundamental principles of local decision-making and somehow marks a retreat from localism, I reassure noble Lords that that is simply not the case. On the contrary, as I have sought to make very clear, this clause is necessary and appropriate, and it will be used only in exceptional circumstances.

This Government believe that planning plays a key role in facilitating investment and growth, which is why we announced an inflation-related increase in fees last year and have put locally produced plans at the heart of the system for identifying and addressing development needs. Most planning authorities are rising to the challenge of delivering an effective and positive service in what are, we acknowledge, difficult times. However, it would be wrong not to act in those few cases where planning was not being delivered effectively. Equally, though, this is a measure of last resort, and we will ensure that it is deployed in a way that is fair and proportionate.

Decisions that are unnecessarily slow, or which result in development being refused without good reason, can have a real impact by delaying or discouraging investment. That is bad for the economy and bad for communities, and we should not stand by and delay taking action in those very few cases where this is a significant problem. This clause represents an appropriate response to such situations.

Far from being an unprecedented move to centralise power, Clause 1 will ensure that action can be taken in the rare cases where planning services are failing, just as previous Administrations have sought to ensure in relation to schools, hospitals and other services that are vital for the well-being of the community. Nor should we forget that applicants for planning permission can already go to the Secretary of State for a decision where the local planning authority fails to decide within the statutory period. What we are proposing in Clause 1 merely extends that principle by saying that in those very few cases where authorities have a track record of genuinely poor performance, applicants should be able to exercise that choice from day one rather than wait for the statutory period to elapse.

I have already made it clear that, where it is obvious that more time than the statutory period is genuinely needed to decide an application, and agreements between developer and local authority are in place to extend the determination period, these applications will be excluded from the performance figures provided that there is an agreed timetable for reaching a decision, as we should not let these cases drag on unnecessarily. This will ensure that there is no risk of quality being sacrificed for speed and that there is a transparent process and timetable when applications need more time than usual. This does not by any means require a full-blown planning performance agreement in all such cases, but there should at least be a record of what has been agreed on the way forward.

We consider that sector-led support will play a key role in identifying and addressing any weaknesses in designated authorities. We will work with the Local Government Association and the Planning Advisory Service, which the Government fund, to ensure that struggling authorities get the support they need in order to improve. This is something which should, in future, also help to avoid the need for any designations altogether.

Our aim in introducing this clause is simple. It is to give applicants the choice of a better service where this is genuinely justified, while encouraging sound and timely decisions on the part of all planning authorities. As I hope the consultation shows, we have thought carefully about an approach that does this while minimising any risk of the sort of perverse outcomes that have characterised some previous performance measures.

So let us be clear. Based on the criteria that we have suggested in our consultation paper, this measure would affect only those authorities that show a wholly unacceptable level of performance—on speed, for example, those authorities that do not meet the statutory target on 30%, or fewer, of their major applications.

In addition, we are not removing powers from local authorities. We are saying that, where applicants are unhappy with the level of performance, they will now at least have an alternative. They will have the choice of applying directly to the Secretary of State.

We all understand why the Government cannot support the proposal to switch off this clause after two years—that it would be provide insufficient time for it to work and it would also remove the continuing incentive for planning authorities to deliver a good level of performance. I therefore must reject the proposal for, effectively, a sunset clause and hope the noble Lord will understand that and withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her reply, though I am bound to say that it did not come as a surprise. There are a range of points in relation to the clause-stand-part proposal that I do not accept, but given the hour and given that we have many more Committee days and some more on Report, I am sure we will return to each of these points. I beg leave to withdraw the amendment.

Housing: New Homes

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 8th January 2013 Lords Chamber

[Baroness Hanham]

My Lords, the Government have a number of projects that have just come into being to support the bringing back into use of empty homes. Yes, they are a waste and it is essential that long-term empty homes—because some are not empty for long-term reasons—are brought back into use. The Government have this year already committed £160 million. That will bring 10,700 empty homes back into use. There is £100 million for affordable housing, including £70 million of funding for 95 projects, which will bring more than 5,600 properties back into use across the country. My noble friend commented on the south-east but, as I explained, that is across the country.

[Lord McKenzie of Luton]

My Lords, a recent study by BNP Paribas looked at the extent to which local authorities were changing their housing targets from the regional spatial strategy levels. It found that local authorities in the south-east and the south-west were making the biggest cuts. For the south-east, this amounted to around an 18% reduction. Does the Minister think that that position is satisfactory?

[Baroness Hanham]

My Lords, I go back to what I said to begin: it is now for local authorities to decide on their housing need against the overall housing position. The noble Lord talks again about the south-east, but the south-east has many local authorities, which are making decisions on housing as we speak.

National Planning Policy Statement

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 5th December 2012 Lords Chamber

[Baroness Hanham]

My Lords, my honourable friend the Minister for Planning was drawing attention to the fact that this country is going to require an enormous amount of new building of houses if it is to meet anything like the demand that exists. I think that he would be the first to say that he does not know whether that will require 2% or 3% more land, but he was saying that more land will be needed to build the houses that we require.

[Lord McKenzie of Luton]

My Lords, a couple of weeks ago the Telegraph newspaper claimed that it had established that more than 9,000 acres of land—an area the size of the city of Gloucester—is to be removed from the green belt by local authorities following the coalition’s planning reforms, and that at least 40% of councils with green belt land in their areas have already redrawn or planned to alter the boundaries of the protected areas in an attempt to meet demand for housing and development. Is that correct, and does it have the Government’s support?

[Baroness Hanham]

My Lords, we have made it clear all along and all through the discussions on the National Planning Policy Framework that we support the retention of the green belt, which lies between and separates out major conurbations so that there is not one continuous string of developments. It will be up to local authorities to decide whether they need and have support to develop into any of their green belt, but by and large the Government’s policy is to retain the green belt, as it is a very important aspect.

Planning

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 5th November 2012 Lords Chamber

[Baroness Hanham]

My Lords, as I expected, this has been an interesting and challenging debate at short notice, and I am very grateful to everybody who has been able to take part. We have covered a fair amount of ground today on all planning aspects.

I would like to start with the extremely thoughtful speech from the noble Lord, Lord Judd, on the conflict, if there is one, between country openness and the town. I reassure the noble Lord that we are as interested and concerned about open spaces and those parts of the countryside where planning permission should not be granted as those places where it should be granted. The NPPF contains policies on agriculture, farms, open spaces, areas of outstanding natural beauty, the green belt and national parks. It is all there and the expectation is that those policies will continue. I recognise exactly what the noble Lord is saying. We cannot grant planning consent all over the place. We must have areas where people are free to learn about agriculture, if nothing else, and to grow our food. After all, that is what we will need in the future. The noble Lord made a very adroit speech.

This is as good a moment as any to pick up on the fact that the noble Lord mentioned the green belt. As I have tried to say, policies on the green belt are in place. We have made it abundantly clear that councils are in control of the green belt and always have been. It is up to them to determine the boundaries of it. That has not changed. However, the expectation is that the amount of green belt will not change. The previous Government said that they had increased the green belt although there was a fair amount of eating into it from time to time. However, now and in the past other areas of green belt have been established. We have to ensure that there is green belt round the major city areas so that there is space between cities to provide the openness that we have described. The green belt is still a major policy of the Government.

I always expect the noble Lord, Lord Beecham, to be challenging, but there we are. This Government are not viscerally opposed to planning, nor are we opposed to affordable housing. A number of noble Lords have tried to indicate that we are against affordable housing. That is manifestly not the situation. We have made it clear from the outset that we recognise the need for affordable housing. The policies we have put forward are all about trying to ensure that more affordable housing is available. We will continue to put forward such policies. It is absolutely right that we need growth as much as anything else to ensure that people have houses in which to live and in the right areas.

The noble Lord, Lord Davies of Stamford, who I see is back in his place, referred to an article in Private Eye. I do not know what that article was about and, frankly, I do not care very much. At present, there are more than 1,400 stalled sites with 75,000 units of affordable housing across the country. We have talked about renegotiating Section 106 and making sure that land, which the noble Lord, Lord Best, referred to as land retained in land banks, is freed up. We cannot go on having great chunks of land on which housing could be built being retained. I see that the noble Lord, Lord Davies, wishes to intervene but I hope that he will let me finish as I have a very short time in which to speak. I accept that not all the housing which is approved is affordable housing. A great deal of housing is for shared ownership or ordinary private housing. However, there are 1,400 stalled sites and 75,000 units of affordable housing across the country. We need to unlock that as soon as we can.

[Lord McKenzie of Luton]

Could the Minister confirm that the 1,400 sites are all stalled for economic reasons because of affordable housing? Or is it for other reasons as well?

[Baroness Hanham]

There are 1,400 sites with 75,000 units on them. It does not necessarily say that they are stalled for any reason. They need to be unlocked to get that housing out but there may be other things that are also tied up with it as well. However, that is the number of units that we know could be built.

To move as quickly as I can through this, there have been a number of comments about the extension of permitted development rights for homeowners. Rather than go into a whole diatribe about that, I can confirm that a formal consultation on it is about to come out. I know that there is a variety of views on this and we will receive those views under the consultation. The purpose is to enable people who want to extend a little bit and just want to make residential improvements. We know that there are almost 200,000 applications for residential improvements for things such as conservatories or small extensions which actually do not upset anybody very much. As one would expect, they would be expected to discuss the applications with their neighbours. As always, there are protected areas. Those protected areas are within the general permitted development order and include conservation areas, national parks, areas of outstanding natural beauty and sites of special scientific interest.

I will come back to the noble Lord, Lord True, in a minute; he was asking about exceptions to this. I know that I have the answer to that within my hundreds of notes here and perhaps I can dig it out before we get to the end.

The noble Lord, Lord Beecham, raised a number of questions. He made the point that the proposals would result in poorer design and use-of-space standards for buildings. The National Planning Policy Framework makes it clear that good design is absolutely essential and that is part and parcel of any discussion that people will be having on planning approvals.

The noble Lord, Lord Beecham, along with a number of other noble Lords, including the noble Lord, Lord Shipley, made the point that the Local Government Association has, perfectly reasonably, pointed out that a lot of authorities are working extremely well and efficiently. Sometimes when they are not getting planning approvals in a certain length of time there is a perfectly good reason for it. Our proposals to extend some of the areas under the growth Bill will affect only those authorities where it is perceived that they really are not trying. No one would deny that there are certain councils which are very slow, not because they are negotiating or for other reasons. They are just very slow. We hope that the proposals in the growth Bill will encourage them to quicken up and provide a bit of an edge to move forward.

The noble Lord, Lord Shipley, was very kind to start with about the Bill though it veered off a little bit. I am beginning to know the noble Lord, Lord Shipley, very well: he fights a sturdy battle. He also made the perfectly reasonable point that the lack of housing development was not entirely due to lack of permissions. A lot of it is due to the economy and the fact that money is not available and not being lent in the same way. However, it is important that those permissions are there because there will come a time when it will be necessary to move them on. While it is an issue, it is not the total issue.

As regards Section 106, the noble Lord, Lord Shipley, also talked about overriding original agreements. As he and others rightly said, councils are free to reconsider the Section 106 agreements on a voluntary basis at any time. As with all things, we would rather that councils did this and did not have to be encouraged to do so. However, we found that 80% of councils would be willing to negotiate, but we want to ensure that this good practice is as widely spread as possible. Again, there is no undermining of what local authorities can do, but there is an expectation that the best should be followed by the least good, and that the least good should be encouraged by legislation to get on with it—if I can put it that way.

The noble Lord also commented on the process whereby some applications should be sent directly to the Planning Inspectorate. Once again, we are back to the limited number of authorities that do not act within a reasonable time, are slow with planning decisions and turn down some applications for no good reason. These delays are bad for communities and the economy. This measure will deal with the places where planning is not effective and local councils do not deal swiftly and effectively with applications. The powers are a last resort. We hope that they will not have to be used and that we can get enough encouragement through what I was going to say was the threat of legislation—although it will be there—to enable councils to get on and deal swiftly with planning applications.

As regards the points made by the noble Lord, Lord McKenzie, on town and village greens, I agree that we made a promise some time ago that we would put such provisions into legislation. There has been misuse of the main proposition regarding town and village greens, and bits of land were suddenly becoming part of mischievous objections—as I think they were called—to applications regarding town and village greens. Again, that issue will be dealt with, and it is important that we should do so.

The noble Lord, Lord Best, said correctly that, as with all planning for economic growth and development, leadership is required from local authorities. I know that many take that position and lead in the right way. However, some need a little encouragement to do so.

I thank the noble Lord, Lord Jenkin, for his kind support on most things to do with planning, but I have answered his points about getting on with it. However, the important matter he mentioned, as did the noble Lord, Lord Beecham, was the collaboration with local enterprise partnerships. The provisions on collaboration in the Localism Bill were pretty wide. They concerned next door councils being consulted on any applications that were cross-border, but of course there was the expectation that the public services will respond quickly to any of the requests put to them.

Local enterprise partnerships are the new scene. They are finding their way gradually and becoming quite a force in the way in which the land is dealt with. I totally agree that they need to be kept fully involved in what is going on and encouraged to take the necessary stance to ensure that the planning in their area is as well co-ordinated as it can be.

The noble Lord, Lord True, asked me why we have dropped the commitment to guard against garden grabbing. I am interpreting this as a sort of roundabout way of saying that he was objecting to extensions. The noble Lord knows, as I do, that we have already ruled out in the previous policy change the ability of local councils to class gardens as brownfield sites. They are not; they are now considered to be greenfield sites and therefore they are subject to planning permission and people cannot just build a mega building in their back gardens. I want to make it clear that garden grabbing is not allowed now and I am not sure whether I accept his point about extensions being garden grabbing although I think it is a neat way of raising the problem.

The noble Lords, Lord True, Lord Best and Lord Jenkin, were all concerned about the change of use between commercial and residential property without the need for planning permission. They specifically asked whether there were going to be exemptions to that. We have made it clear that there are areas where that form of development would be inappropriate and that local councils will be able to opt out. The national policy strongly supports business needs, and local councils should meet the need for offices and other business uses in full. They are not compromised by limited site availability but if there are proposals to change from commercial to residential then, as the noble Lord, Lord Jenkin, said, that will affect such places as the City of London. I can give more information on how that can be done and how they can opt out in due course.

I apologise to the noble Lord, Lord Berkeley, for smiling a little about the bats. I was not taking that for granted at all and I know that there are serious points to be made about natural habitat. I think his main point was the delay to major infrastructures. I can confirm that the national infrastructure planning system is starting to work and the national network, NPS, which he raised, is in the process of developing a high-level transport strategy. It may not quite be the firm answer that he wanted but it is as near as I am able to get.

The noble Lord, Lord Flight, referred to overzealous heritage controls. There are some areas with grade I listed buildings and others where local authorities will have to hang on to what goes on inside properties but that is not so for all properties. The noble Lord, Lord Judd, spoke about the green belt and I hope I have dealt with that.

We shall reflect on what has been said and if any questions have not been answered I will do so in writing to all Members. If I do not write it is because I do not think that the questions are there. If the questions are there I shall make sure that there is a response. I wish to thank everyone for taking part in the debate which I have found extremely useful.

Housing: Park Homes

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 23rd October 2012 Grand Committee

[Lord McKenzie of Luton]

If the noble Baroness will forgive me, the question was that if there were scope, what would the Government be happy to support further in terms of primary legislation?

[Baroness Hanham]

My Lords, at the moment the Government support everything that was in the consultation. There are areas where we are waiting to see what happens as a result of the Bill’s implementation and further consultation; the fit and proper person test is probably one, but it is very much on the radar because it was brought up very significantly in the Select Committee report.

The noble baroness, Lady Scott, asked about the human rights aspect. We cannot take away altogether the site owner’s contractual right to approve, but we have in fact reversed the burden of proof. Refusal can be made only on certain grounds and only with agreement of a residential property tribunal.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 22nd October 2012 Lords Chamber

[Baroness Hanham]

The document makes it quite clear that councils have a responsibility, if nothing else, under the Equality Act to ensure that they treat everyone fairly. I think that would take account of what the noble Baroness has said.

[Lord McKenzie of Luton]

My Lords, I thank my noble friends Lady Hollis and Lady Lister for their support for the amendment. My noble friend Lady Hollis ranged over those draft schemes which, to her knowledge, are in a different place on a whole range of different components. She made the point about how local schemes undermine the import of national benefits, particularly DLA. My noble friend Lady Lister questioned whether there was any serious attempt on behalf of the Government to ensure that vulnerable people are protected.

The Minister said that she would reissue the guidance, such as it exists, which is to be welcomed. However, it does not go very far. Is not the lesson to be learnt from this that when you saw how schemes were being developed, what consultations had taken place and what was emerging from that, there was clearly insufficient protection for vulnerable people in many schemes? I think the Minister recognised that. That is still on the basis that councils, in the Minister's terms, should be well aware of their equalities duties, homelessness duties and child poverty duties. They are already in a position where they should be aware of that framework, yet they are still, as we know, being forced, due to a lack of funding, to come forward with schemes that simply do not protect vulnerable people sufficiently and the Minister herself has recognised that. That is why the transition grant had to be brought in, in a sense, to try to bend what individual councils were doing into some sort of national criteria.

One would have thought that that experience would validate the need for some ongoing guidance because that grant will disappear after a year and the import of it will dissipate over time. It is a great pity that the Minister and the Government do not feel able to do more on this front. It is a very critical time for local council tax support schemes. We know that funding is very tight and we should be doing absolutely everything that we can to protect the most vulnerable. This is an opportunity for the Government to be part of that. I regret that they are choosing not to do that. Having said that and given where we are, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

I support the amendments of both of my noble friends. They speak for themselves very powerfully and there is nothing I can add that would help them on their way.

[Baroness Hanham]

Rather than rising to speak, the noble Lord was nodding his head, so I was not sure whether he was going to intervene. We shall have to come to an agreement for the next two groups of amendments.

Amendment 2, moved by the noble Baroness, Lady Sherlock, and Amendment 3, spoken to by the noble Baroness, Lady Donaghy, are concerned with the interaction between the local schemes and work incentives. I share the concern that work incentives should be supported. That is why earlier this year the Government published guidance to which the noble Baroness, Lady Sherlock, referred, setting out the key features that local authorities should consider including in their schemes to support work incentives. All noble Lords have acknowledged that the transition grant scheme will provide a financial incentive for local authorities to implement those schemes that support work, ensuring that there are no cliff-edges—that is the 25%—as claimants enter work and increase their earnings, and that support is tapered away steadily as their earnings increase. Amendment 2 is intended to control the rate at which council tax support and other benefits are withdrawn to help preserve those work incentives.

In Committee we set out our intentions for the default scheme that will come into force if a local authority fails to adopt a local scheme. We clarified in particular how we intended to take universal credit income into account in that scheme. Officials from my department have continued to work closely with officials from the Department for Work and Pensions to refine the proposals we set out earlier this year so as to ensure that the default scheme avoids unintended interactions with universal credit and supports the strong work incentives that universal credit was intended to deliver. Indeed, my officials have discussed this with the noble Baroness, Lady Sherlock.

The approach set out in the default scheme to treating universal credit income clearly supports work incentives, and I will expand on two key features. First, universal credit will be tapered away by 65% before it is taken into account as income under council tax support schemes. This means that the 20% taper under the default scheme will apply only to residual income once universal credit has been tapered away, and helps to control the overall withdrawal rate. For people below the income tax and national insurance thresholds, the combined marginal deduction rate would be 72%, which for many households would be a significant improvement on the current system. Secondly, the default scheme reflects the fact that universal credit will allow people to earn more income before it starts to be withdrawn. The default scheme allows for council tax support to be withdrawn earlier, minimising the extent to which the means tests interact. Local authorities will not be required to treat universal credit cases in the way provided for in the default scheme, but there are very good reasons why they should want to use this framework as a starting point.

Amendment 3 is intended to require local authorities to have regard to work incentives in designing their local schemes. As I explained when this amendment was first tabled in Committee, I agree with the noble Baroness that work should be supported. As I have said, the Government have published guidance that will help authorities to do that. We are very happy to revise and reintroduce this guidance in order to set out clearly the approach that the department is taking to provide for the treatment of universal credit in the default scheme and to emphasise the benefits of this approach to local authorities, which I think is more or less what the noble Baroness, Lady Sherlock, is asking for. I am also content to use the refreshed guidance to set out the implications for work incentives of increasing the taper rate to help local authorities in their considerations. More particularly, officials will continue to discuss the content of the guidance with the two noble Baronesses as it is developed, and I am very grateful to them for their constructive contributions. I hope that, with their help, we will be able to produce guidance that they can accept. While I cannot accept the amendments, I hope that my assurances go some way to addressing their concerns.

--- Later in debate ---

[Baroness Thornton]

My Lords, I take the opportunity offered by these government amendments to Schedule 1 to raise the issue that I have been pursuing throughout the course of this legislation, which I discussed with the Minister last Thursday, and to seek clarification at this last stage of the Bill. I declared all my interests at the previous stages of the Bill and they remain the same.

I shall not rehearse the arguments that we have already heard in this House. I am grateful to the Minister for her time at the meeting on Thursday. I also thank Sporta, SEUK, my noble friend Lord McKenzie and the noble Lord, Lord Best, for coming along to the meeting and lending their support and great expertise. I was also able to inform the Minister that the noble Lords, Lord Shipley, Lord Tope, Lord Adebowale, Lord Mawson, Lord True and Lord Smith, sent their apologies. I thank the Minister and her team for the letter which she sent to me and copied to all those concerned.

I am sure that noble Lords and others are very pleased that, at last, the Government seem to recognise a problem which the political parties, the Cross-Benchers and all the organisations concerned with community-based charities and mutuals have articulated for months. Sporta, in particular, has been active in doing most of the leg-work research and in meeting officials during the summer. However, it is a matter of regret that the Government have decided not to take action on the concerns of a wide range of local community organisations with charitable status during the course of the Bill.

In her letter to me the Minister referred to, “the persuasive arguments that you and your advisers have used”. However, she also said that the department would need to see evidence of the problem. I think the fact that all the leaders and ex-leaders of councils in this Chamber and all the organisations concerned at community level are clear that there is a problem should be persuasive. However, all is not lost. The Minister also informed us that a way of addressing the issue is provided by the amendments that were brought forward on Report specifically with enterprise zones in mind. The Minister’s letter gives a broad assurance that, “the same powers could be used in respect of other reliefs such as charitable relief”. The Minister will not be surprised to learn that what I am seeking today is confirmation of that and that the powers can apply to the central funding of all mandatory reliefs given by all local authorities to charitable organisations, should we be able to persuade the Government of the rightness of this decision in the next year.

I would also welcome confirmation from the Government that they will open their doors to the evidence which the many charitable bodies associated with this cause will work hard to gather over the next period and that they will assist the main representatives of these bodies to understand how and when to present this evidence to the department. Indeed, can a specific mechanism be offered to do this? I would also like to take this opportunity to encourage local authorities to co-operate in supplying evidence of the effect of the legislation on their decisions as regards the formation or expanded use—or otherwise—of local charitable organisations. Indeed, I intend to raise this issue with the Local Government Association. This is especially necessary if, as is feared, such decisions are taken with negative effect at an early stage in the consideration of options.

In the year of the Olympics, the Paralympics and the big society, we are concerned about the impact that these changes might have on sport and exercise for the disabled, the less able, the old, working mothers—everybody, actually. I know of no one in the sport and leisure field who has welcomed these proposals. Indeed, Social Enterprise UK has written to the Cabinet Office about the policy clash produced by these proposals and advised the Minister on why the Bill could have a damaging effect.

We suspect that the impact of these proposals will be damaging for the future of theatres and museums outside London; in other words, there will be fewer of them at local level. Social Enterprise UK believes that, as time moves on, this policy could have a chilling effect on new proposals in the Localism Act for the right to bid and the right to challenge community facilities by local charities, so a great deal is at stake. I thank the Minister for her help with this and for the meeting and the letter. I hope that she will feel able to reassure me that arguments will be heard at an early stage and that adjustments will be considered before too much damage is done.

[Lord McKenzie of Luton]

My Lords, so far as the government amendments are concerned, I understand them to be consequential and to correct other parts of the Bill. I am grateful for the short briefing note that the Bill team gave us. I have no problems with these amendments.

As for the contribution by my noble friend Lady Thornton, I, too, thank the Minister for her engagement and the engagement of the team, and particularly for facilitating the meeting last week. I hope the Government will be able to put on the record the assurance that was given at that meeting, particularly as it concerns the prospects of dealing with the matter through secondary legislation, once the Government become convinced, as I hope they will be, that we do not need to amend primary legislation.

[Baroness Hanham]

My Lords, the noble Baroness referred to mandatory and discretionary rate relief under particular circumstances. She kindly did not put an amendment forward, but she has done very well in getting her speech recorded in Hansard so that there is no escaping what she has been talking about. I gave her two clear messages when we met. One was that while we accept that there is concern about the effect of the percentage amount of relief available to charitable organisations, we are not totally satisfied that it will have the effect that she thinks. If the organisations that were there provide good evidence and the Government decide that it is of serious significance, there are measures within the Bill that would enable us to make the changes that she seeks. I am very happy to see her again if that should be necessary.

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[Baroness Hanham]

No. Local authorities have their different transitional schemes. A transitional scheme has come in. It will provide local authorities which wish to take it up with extra resources to help them ease into the new system. They must know themselves if they decide that they need it. In many cases, it will not be necessary but, if they need to, they will take that advice.

Local authorities now know what they are going to get from the transitional relief; that has already been published. They will know whether they need to change their scheme according to what they have received from transitional relief and on the basis of what they are proposing if they are going to amend it.

I do not believe that they need extra time. January 31 is, after all, a full four weeks. Most local authorities can undertake a quick consultation on this. I imagine it will be very limited indeed. Most local authorities which are principal authorities are very quick and adept at having consultations with other councils. I must resist the amendment on the basis that it is completely unnecessary.

[Lord McKenzie of Luton]

My Lords, I respond on behalf of my noble friend as this is the last time that we will be speaking on the Bill. With great respect to the Minister, she has not fundamentally dealt with the point that my noble friend was probing. We accept that it would be up to local authorities to make a judgment as to whether or not they needed to consult. However, given where they are and the processes that councils have to go through to come up with a revised scheme—and sometimes the agonising decisions as to whether they can put in the additional funding to close the gap because the transitional money is not going to cover it all in many circumstances—I wonder whether there is time to do that. It would be perverse indeed if, in attempting to take advantage of these provisions, the system simply did not allow them to do that in time to hit the 31 January deadline. That is the point that we were pressing, and it has not been fully addressed. However, we are where we are on it.

I close by saying a brief thank you to some people, certainly to the Minister and the Front Bench for engaging on this Bill and to all noble Lords who have participated. Around the Chamber, we have seen a lot of expertise and wisdom, some of it very long-standing, brought to bear. I certainly thank my team, both Back Bench and Front Bench. I conclude by thanking the Bill team. I know that we see a bit of what the Bill team does. A lot goes on behind the scenes and I am grateful for what it has done on this piece of legislation.

[Baroness Hanham]

Having seen the noble Lord rise, I apologise for the number of times that I have tried to out-step him throughout the Bill. I am grateful for the noble Lord’s good humour. I am grateful to all Members of the Opposition for the way in which they have put their amendments. I am particularly grateful to those of my political colleagues who have, in most cases, supported me. I have enjoyed taking the Bill through the House. I also thank, of course, my Front Bench and also the Bill team who has been completely outstanding.

Fire Services: Funding

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 18th October 2012 Lords Chamber

[Baroness Hanham]

To answer the right reverend Prelate’s initial comments, of course we all recognise the very valuable service that the fire authorities carry out. I indicated earlier that I thought that the reduction in the number of fires is due to the expertise of the fire service, and it is to be greatly welcomed. I acknowledge that there are really bad exceptions to that and that the fire service then carries out a heroic and very valuable role. Local authorities, including fire and rescue authorities, were asked to respond to a consultation on how the baseline distribution should be set in 2013-14. I cannot pre-empt the future settlement position and, as I said earlier, there is not a settled view among firefighters on whether it should be based on a flat-rate cut or on other methods.

[Lord McKenzie of Luton]

The Minister will be aware, because we have debated it extensively, that we are about to embark on a new business rate retention scheme as well as a poll tax mark 2. Is not the reality of the business rate scheme that it will further entrench the inequalities and inadequacies in funding and could do so for up to seven years if the Government have their way on how the system will work?

[Baroness Hanham]

Yes, my Lords, the business rate retention scheme will have some effect on the fire and rescue authorities and their direct levers for growth. We have therefore proposed that single-purpose fire and rescue authorities should keep 2% of the local share of business rates.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 16th October 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I am grateful to all noble Lords who have spoken in the debate on the amendment. I am particularly grateful to my noble friend Lord Smith for his interjection on some of the data.

As for procedure at Third Reading, I was not suggesting that we would necessarily consider bringing back this amendment at Third Reading. I was referring to some of our other amendments—on issues such as tapers and vulnerable people, for example—which are affected by a greater understanding of the transitional funding that has just been announced. From the briefing session that we had on Monday we very much took it that there would be some flexibility because of the timing of the announcement. If the noble Baroness is saying that that is not the position then we will have to take account of that as we proceed later today.

[Baroness Hanham]

It may help the noble Lord if I repeat what my noble friend Lord Strathclyde said. As the noble Lord knows, it is my noble friend and the Whips who guide business in this House, as well as the Companion. The Companion states:

“The principal purposes of amendments on third reading are: to clarify any remaining uncertainties; to improve the drafting; and to enable the government to fulfil undertakings given at earlier stages of the bill”.

Those are the three purposes for coming back with amendments.

[Lord McKenzie of Luton]

Well, my Lords, it seems that clarifying remaining uncertainties could keep us going for a month of Sundays, given what is outstanding on the Bill and the tardiness with which some of its provisions have been made available.

The noble Baroness talked about the 8.5% maximum that would be required for people to access the scheme. She referred to it meeting the cost. What we do not know is the extent to which it will cover the costs for councils which move from the existing scheme on which they have consulted to the new arrangements. We do not yet even know how it is to be allocated and apportioned. We may know that later in the week; we may not.

The noble Baroness said that it is easy to fulfil the criteria of the new scheme. It may be easy to identify what those criteria are, but how you move from where you are on the scheme on which you have consulted to that position is a completely different matter. There will be a whole variety of arrangements on which people have consulted. I doubt whether the Government have done any analysis on how practical or easy it will be or how costly it will be for people to move from where they are to where the Government want them to be. In any event, even if that were accomplished, that does not deal with the issue of what will happen in year two. I do not see the connection between knowing that this is available in year one and having a better idea of how councils can smooth it in for subsequent years if the plug is to be pulled on the transitional funding.

The noble Lord, Lord True, went on about the deficit and of course the deficit has to be addressed. Our point is: why does this have to be a component of it? Does every line in the government accounts have to cough up some sort of proportion? Why this one? Surely it is right that the Government have to evaluate the consequences of each cut that they are trying to make—and not only each cut. What the Government have singularly failed to do is to look at the cumulative effect of cuts on people. My noble friend Lady Hollis made the point about housing benefit and council tax benefits. We know that those two things often go together and that some people will get dramatic reductions in housing benefit because of underoccupancy provisions: an average of £14 a week. My noble friend Lord Smith referred to the importance of £3 a week for people in some of the poorer areas for which he has responsibility. How are those judgments made? The reality is that they are not, which is why we are justified in bringing forward an amendment on this basis.

The noble Lord, Lord Tope, said that this really was not something for the Bill but if we want to constrain the Government and cause them not to create the upset that they are going to cause by this legislation, what other mechanism do we have? He referred to the amendment of the noble Lord, Lord Best, which we will come on to in due course. We believe that this amendment is a better way of dealing with the situation. The noble Lord, Lord Tope, may disagree but, at the end of the day, the root problem that we are trying to deal with here is the so-called localising of council tax benefit and the massive cut that goes with that process. So long as the colleagues of the noble Lord, Lord Tope, support that approach, they cannot challenge us on where we end up on these issues.

When we heard from my noble friend Lord Smith, your Lordships heard then the voice of somebody who has to deal with these issues on a day-to-day basis and in challenging circumstances. It is not only about the council tax costs that people are suffering and the increases that this will bring but about housing benefit, about what is happening on food prices and about inflation generally. As my noble friend put it, there is also the growth of payday loans and worse forms of lending. That is the authentic voice of someone who is dealing with the chaos that these measures are creating. As he put it, there are no more cuts that can be made in the system and the Government should recognise their responsibility for that. My noble friend Lady Hollis spoke with her usual passion and the great analytical approach that she has to things. Again, that is the authentic voice of someone who is dealing with housing on the ground and knows local government through and through.

We do not have a meeting of minds on this. We see this as a very important issue—

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 16th October 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, as regards Amendment 106, we have a deal of sympathy with the point raised by the noble Lord. My noble friend Lord Beecham thought that the referendum date was May, which in a sense just reinforces the point made by the noble Lord. I am aware that when we discussed it in Committee, the Minister said that the Government were not keen on in-year adjustments, which one can see as a general principle. However, it seems to me that a major point is being raised.

We are less comforted by Amendment 105. It depends on what is encompassed within the concept of procedure for preparing a CT scheme. One of the things that presumably needs to be addressed is the cut-off point between the existing council tax benefit arrangements and the new arrangements, particularly when people, if they are able, are making backdated claims. At the moment, someone can make a claim and it can be backdated. If you make a claim after 1 April and seek to get it backdated, you need something in place to settle those cut-off points. I do not know whether that is a procedure but you can certainly see the Secretary of State having some interest in those sorts of arrangements.

Certainly, Amendment 106 seems to make quite a powerful point. I might add that if the discovery of this £100 million and the transitional fund had happened a couple of months later than it has, that would be good cause for needing this flexibility as well.

[Baroness Hanham]

My Lords, Amendment 105 would remove the ability of the Government to make regulations about the process by which a council tax reduction scheme is prepared, such as requiring certain documents to be prepared, and the manner in which those documents are published. I should make clear that the Government’s intention was set out in the statement of intent published on Thursday 17 May. In that policy statement we stated our intention not to make regulations at this stage about the procedure for making a scheme, which still holds.

The rationale for not regulating is on the basis that local authorities already routinely consult on a range of issues, and additional prescription should not be required. In other words, they ought to know when they should need to consult.

I am pleased to note that at least 305 councils—or 94% of them—have already commenced their consultations on the schemes, during which vulnerable people will continue to receive protection. However, as with all aspects of policy, we will keep this under review. As the need to consult on schemes for local council tax support is a new requirement, it may become apparent that it is desirable to prescribe certain elements of the process in future years. Retaining this power ensures that, if necessary, we are able to take steps for future years to ensure that the consultation process is fair for the taxpayer.

The effect of Amendment 106 would be to remove the deadline of 31 January for making and revising schemes, and to remove the Secretary of State’s power to change that deadline by order. It is important to maintain the 31 January deadline to ensure that local schemes can be in place in time for April 2013 and that people continue to receive protection from the scheme. Allowing changes after this date would create uncertainty for the people who are benefiting from the scheme as they would face having their awards changed part way through the year. It would also create uncertainty for taxpayers generally, as reductions are reflected in the tax base on which council tax is levied; I do not think that this would be helpful.

When we discussed this amendment in Committee, my noble friend Lord Jenkin asked about the relationship between the setting of the scheme and council tax referendums. Indeed, this point has just been made again tonight. If I may, I will briefly repeat what I said in Committee:

“Local authorities will need to take account of the potential impact on council tax when designing their schemes. They will already know their provisional funding allocations, and the Government expect to have published the proposed referendum principles at the same time as the provisional local government finance settlement”,

and that information will be available. I confirm that any referendum that took place would have to take place in May, after the setting of the council tax should have taken place. In Committee, I went on to say:

“The need to consider the affordability of the proposed scheme and its impact on council tax is no different to taking decisions about the level of funding for other services and their potential impacts on council tax”.—[Official Report, 19/7/12; col. GC 171.]

Any authority that considers that it might breach the referendum principles must prepare a shadow budget setting out how it would carry on its services under a lower rate of council tax.

It is correct to say that it will not be possible for local authorities to go back and change their scheme if a referendum is triggered and a council tax increase vetoed, but it is absolutely right that we do not create unnecessary uncertainty for people in financial need about the amounts of support that they can claim. I hope that with that explanation the noble Lord might be willing to withdraw his amendment.

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[Baroness Hanham]

My Lords, I have written to the noble Lord, Lord Beecham, who raised the question of when an empty home was an empty home, and whether it was based on whether it had furniture in it. The situation is that the six weeks will matter regardless of whether it has furniture in it. It will end up in the same situation and local authorities can make their decisions on the basis that the home is empty.

[Lord McKenzie of Luton]

My Lords, I am grateful to the noble Baroness for sending us a letter on this in advance of our discussions today. We are happy with the proposition included in the amendment. I think that we had an amendment in Committee that may have prompted the thought but, on reflection, perhaps it was not precisely on point. This amendment is precisely on point and intended to stop-up a loophole. We support it.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 10th October 2012 Lords Chamber

[Baroness Hanham]

My Lords, the amendments in this group concern the funding of business rate relief in enterprise zones. Enterprise zones will contribute to the growth of the local and national economy through a range of measures and financial incentives. One of those incentives is a discount on business rates. The discount will apply for five years and be available up to the state aid de minimis level for businesses that move into an enterprise zone before April 2015. The Government have committed fully to fund these business rate discounts and the amendments in this group will ensure that, through regulations, we are able to deliver on that commitment.

Amendment 25 will give the Secretary of State powers to provide for the deduction of a particular amount from the central share, including by reference to amounts of rate relief awarded. This will allow billing authorities to deduct the cost of discounts in enterprise zones from their central share payments to the Secretary of State, thereby compensating them for the cost of those discounts. As this will reduce the revenue received by the Government, Amendment 25 also provides that the regulations will require the consent of the Treasury. Amendment 36 will then allow us to ensure that the compensation for the cost of the enterprise zone discounts is shared as appropriate between the billing authority and the major precepting authorities. It does this by allowing us, in regulations, to require the billing authority to make payments to major precepting authorities so that, where appropriate, those precepting authorities are also compensated for their share of the cost of the discount.

The remaining amendments in this group are consequential on these amendments and, with this explanation, I hope noble Lords will be prepared to accept them.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her explanation of this group of amendments. I will just say at the start that we are of course faced on Report with quite a lot of government amendments—I think more than 50 to date—and not all of those flow directly from our Committee deliberations. We have absolutely no problem with the Bill being in the best shape it can be by the time it leaves your Lordships’ House but, following our discussions today and the further reflection we can have before Third Reading, we reserve the right to pick up further issues if we have missed them in the deliberations to date. I have no problem with the particular thrust of these amendments but would just like clarification on one point. The noble Baroness referred to the off-sets in relation to enterprise zones, which is clearly sensible, and the off-sets in relation to discretionary rate relief. Do these provisions potentially cover off-set in any other circumstance?

[Baroness Hanham]

My Lords, these provisions are entirely to do with enterprise zones.

[Lord McKenzie of Luton]

I do not want to start Committee proceedings but do they not also cover, as the noble Baroness has said, discretionary rate relief?

[Baroness Hanham]

My Lords, these amendments deal with everything to do with the rate discount and how it is handled in enterprise zones. The discretionary relief comes into that as well.

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[Baroness Hanham]

My Lords, following on from what my noble friend Lord Tope said, the noble Lord, Lord McKenzie, has a happy style of producing a long list of questions that he peels off at a fast rate. It is not always possible to answer all of them at the same time. I readily agree with my noble friend Lord Tope that if we miss anything, we will write directly afterwards.

Like others, I am grateful to the noble Lord for explaining his amendment. It is probably worth saying that as a former leader of a London local authority, I understand the complications of late publication of the draft local government finance report and the implications it has for the budget process. However, as has been said, there is late and there is late and, while this may be slightly later than some, it is not that far out of kilter with the other announcements. I recognise that delay in the publication of the draft local government finance report would make it more difficult for local government regardless of whether the rate retention scheme did or did not exist. The existing formula grant and the new arrangements for rates retention both rely on our being able to determine how much funding local authorities are entitled to. Indeed, I think that the noble Lord said that. In the old world, the one we are passing at the moment, that means how much formula grant authorities are to receive, and in the new world, how much revenue support grant they will get and how much funding through the rates retention scheme. Under either system, the answer to the question depends on changes to formula, and potentially on decisions that might be made in the Autumn Statement, so authorities face the same delays and the same problems.

I do not pretend for a moment that any of this is ideal, but delaying the implementation of the rates retention scheme, which potentially could be the outcome of Amendment 4, although I know that the noble Lord has said that he does not want to hold anything up, would not provide authorities with any greater certainty about the funding they would receive. Whichever way we do this, either in the old way or in the new way, they still need the information. Also, it will not assist them greatly as they plan their budgets for 2013-14. So while I understand the concerns of local government and of noble Lords, we would be kidding ourselves if we thought that there would be any difference if we were still in the situation of the formula grant. As I have said, the noble Lord has put a string of questions, some of which will be answered when other amendments are moved; they will pick up on some of the issues. Perhaps I may come back to those later.

While we are not able to confirm funding levels for individual local authorities until the start of the consultation on the provisional local government finance settlement, the Government have actually provided a lot of detail and supportive information. It has been pouring out all summer. Discussions have taken place with local government representatives, including the Local Government Association, and we will publish very shortly an additional exemplification on overall funding to enable individual local authorities to develop their modelling for the budget processes. In mid November we will also start a consultation on the data that the Government propose to use when calculating the settlement. This is an integral part of the settlement process that will throw light on some of the points raised by the noble Lord. We will also be publishing in draft all the key regulations that authorities will need to take into account later this month or early next month, and indeed I think that the noble Lord has probably seen those that have been done already.

The noble Lord, Lord Smith of Leigh, returned to the attack on council tax support. Perhaps I may duck that for the moment because it is going to be very relevant to the next part of the Bill. We will be able to discuss the issues at length when we reach that point.

The noble Lord, Lord McKenzie, also asked about a timetable for responding to the consultation. The Government’s response to the consultation exercise will form part of the local government finance report. It will set out how we will set up the rates retention scheme and the detail of elements, including the tariffs and top-ups. While what we are talking about will be later than is ideal, the system stacking up behind it is that local government will have practically all the information it is going to need, just not the dots and crosses, by the time the settlement is announced. As I say, I do not take any exception to the fact that it has been drawn to our attention that the settlement will be late. It will be.

[Lord McKenzie of Luton]

My Lords, I thank my noble friend Lord Smith for his support for this amendment. He and the noble Lord, Lord Tope, and, indeed, the Minister are the voice of practical experience on local councils and are therefore particularly valuable. My noble friend Lord Smith referred to the fact that just this week we had further input into the system with the council tax freeze grant. It is interesting that the Secretary of State can find the money for a council tax freeze grant at the same time as lopping the best part of half a billion pounds off council tax support, but these are issues that I am sure we will come on to. The noble Lord, Lord Tope, said that it is the most difficult so far. I think we have to watch this space under the new system.

I accept that the noble Baroness has given us some further information on timing, but I would appreciate it if she would pick up the point made by the noble Lord, Lord Tope, about reviewing all the issues that we have raised so that we can have as complete an answer as possible before Third Reading, which is our last opportunity to deal with this.

The noble Baroness said that it would be as bad if we were staying with the current system and were not changing the system. The crucial difference is that what is happening under the new system is, if the Government have their way, going to be set in stone for the best part of seven years. I genuinely suggest that that is a different perspective and a particular challenge for all local authorities. Having said that, and on the assurance that we will be getting further information before Third Reading, I beg leave to withdraw the amendment.

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[Baroness Hanham]

My Lords, I particularly thank my noble friend Lord Tope for his final comments. We do not believe that a set review, with a timetable in the Bill, is the right way to go about this. We all accept that there will be huge volatility in the system from now on, but I have to say that there would have been huge volatility whatever happened, because the whole economic situation is such that it is unavoidable that local government could escape any changes at all. Indeed, I well recall under Labour Governments and indeed under my own Government being outraged and upset as money swam away from us to other parts of the country. Therefore, the idea of local government money being different in different areas and changing from time to time is not new.

We do not think that the proposal to set the time for a review is sensible. As my noble friend Lord True said, this is something that will affect each local authority. They will have access, as they always have had, to the Government to make representations either individually or on behalf of themselves and others to discuss their needs and resources under the retention scheme. If they are significantly out of kilter, then of course the Government will listen to that, but I do not think that an independent review of the whole system is really going to achieve that. We will see how this goes and listen as and when any local authority wants to talk to us about it.

In addition, if we constantly—and even three years is pretty constant in terms of the changes being made—review the funding arrangements within the rates retention system, looking at tariffs, top-ups, levies and baseline funding, we will completely undermine one of the principles of the scheme, which is that local authorities should invest and benefit from growth. The noble Lord, Lord Smith, said that the scheme will differ across the country and that some places will find it easier than others but, generally speaking, I do not think that a review in three years’ time is going to help us with that. For this growth to work at all, we have to understand that the rewards from investment need time to take effect and a longer-term view will be necessary for the investments to be worth while. By resetting the system too often, you simply move away from that situation.

The Government are satisfied that they are setting out the scheme until 2020—that is, with a reset after seven years. That will enable local authorities to understand what they are able to keep and the proceeds that they are going to be able to initiate to stir up and improve local businesses and to get the economy flowing in their area. I hope the House will understand that we do not think it is right to set a formal time limit for reviewing the system, but clearly with a new system of any sort the Government are not simply going to say, “Well, there you are. Thanks, that’s it. We have no more interest in this”. That is clearly not the situation, and certainly we will always be open to having discussions as the scheme develops. With that, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I thank all noble Lords who have spoken in this short debate. I am sorry but not surprised at the response from the coalition Benches. In particular, in responding the noble Baroness went back to the mantra of saying that the scheme has to run until 2020 to ensure that there is an appropriate incentive, yet at the same time she said that the Government are going to keep it under review. The purpose of setting down the need for an independent review after a fixed period is, in a sense, to force the Government of the day, whoever they are, to take stock of where things are at that point. Otherwise, should this Government continue after 2015, there is a risk that nothing will happen until 2020. I thought that the position taken by the noble Lords, Lord True and Lord Tope, was, “Yes, give me a review but just not now or just not by this mechanism”. If not by this mechanism, what will force the review? Of course, there will be ongoing discussions and representations—that is an automatic part of government business. However, that is not the same as saying, “We have a new system here”. We are placing great reliance on calculations done for tariffs and top-ups right at the start of the system and those will be locked in place for a minimum of seven years and potentially longer. That does not seem sensible to me.

That does not address the issues that the noble Earl, Lord Lytton, made about the volatility of what is happening in the valuation of property and the domestic rating system generally. Although we had some very valuable input from the noble Earl in Committee about what is happening in that system where it is administered by central government, the risks are increasingly with local government. To allow that to continue without some formal check for seven years, or maybe longer, does not seem right to me.

I am grateful for the support of the noble Lord, Lord Williamson, on this. As he said, other amendments go further, and this is a very moderate amendment. He made the important point that growing a local economy does not necessarily always equate with growing the business base rate, particularly as high-tech matters come into play.

As ever, the noble Lord, Lord Smith, put his finger on the issue. This is a huge gamble in the new system. We need to ensure that it is fair and flexible, and not only at the start of the system—and we would challenge that it is. However, even if it is, we need to ensure that fairness is maintained throughout the period before it can be readjusted by way of a reset.

The noble Lord, Lord Palmer, said that it was building uncertainty on uncertainty. I do not accept that. The right of the Secretary of State to change things on a yearly basis is embedded in the Bill. We know that the current one is not likely to do that and would not do it before 2020. This amendment simply requires the process to review the system along the way. We will not have a meeting of minds on this so I would like to test the opinion of the House.

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[Baroness Hanham]

My Lords, I thank both noble Lords for their contributions. I appreciate that the use of the central share is of concern and interest, particularly once we get through the next couple of years. Amendment 7 would ensure that the central share money would always be distributed on the basis of need. We have said that the central share money will always be returned to local government. The basis of the central share going to the Government is that it will then be used for local government. The question of need and special grants will be covered by the central share. That is basically what the central share will do. I cannot at the moment give the absolutely unqualified assurance that both noble Lords, Lord Shipley and Lord McKenzie, asked for on resource need equalisation. I am pretty sure that that is correct, but I will come back to them if there is any change to that.

I also confirm that the amount of revenue support grant in the system will reflect future spending reviews, so the Government’s view of the funding will be available to local government in advance. I hope that with that rather short explanation the noble Lord will withdraw his amendment.

[Lord McKenzie of Luton]

I am bound to say that I do not feel that we have made any progress on this issue as a result of that response. I am grateful for the support of the noble Lord, Lord Shipley, on the issue. It seems to me to be a core point about how this will work that the Government have some idea of what they are going to do with the central share. Yes, we understand that it will be returned on some basis to local government in England but, as I pointed out when I moved the amendment, that might just be diverting whatever resources go through the schools grant. At the moment there are some £30-odd billion, as I understand it, that could be switched for use in the central share.

With great respect, I do not find it satisfactory that we are still left substantially in the dark even about the principles to be applied, beyond any use for revenue support grant. We know that system, we know what it does, but we know that it will be discretionary not mandatory in future. That is in the Bill. I find that profoundly unsatisfactory. If the Minister said that she could say more at Third Reading, that might help me with my next move. If not, I am inclined to get this in the Bill, but I should like to hear from her first.

[Baroness Hanham]

My Lords, I have given an explanation of what the central share is. I understand that the noble Lord wants absolute specifics of what the central share will encompass and what it will be used for. I do not have those details. I assure him that he will have them well before Third Reading so that we can come back to it if necessary.

[Lord McKenzie of Luton]

My Lords, on that basis, I am prepared to withdraw the amendment on the proviso that if what comes forward does not really address the point, I will revisit it at Third Reading. I stress that it is not the detail of every pound, it is the principles that will underpin its use that I seek. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, my noble friend and I have tabled Amendment 15 in this group, to which I shall speak briefly. I shall then comment on the other amendments in the group. Amendment 15 is by way of a short probing amendment to follow up a point which I think is still outstanding from Committee. It seeks to determine how the rates generated from the central rating list will feature in the business rate retention scheme. Essentially, it is asking how local government gets the benefit of this measure, if at all. Does it feed into the central share, which is then paid back through certain processes or does local government get half of it up front through the sharing arrangement? Of course, the central list is the list on which utilities find themselves because they cannot very easily be distributed among a range of individual authorities. It would be good to know how local government gets the benefit of the business rate on central list items.

I wholeheartedly support Amendment 37A in the name of my noble friend Lady Thornton, as do all other noble Lords who have spoken on it. An interesting facet of the background to the amendment is that we are reminded, when considering this system, that local authorities can be both payers and collectors of the business rate. That is part of the issue that the measure is highlighting. The solution of seeing mandatory relief on an ongoing basis as a new burden to be met from the central share seems to me absolutely right. I think the intention is that that should be the position between resets and that resets would be the point where you would have a squaring up and look at aggregate business rates and proportionate shares. Therefore, that would be a point at which you could recalibrate tariffs and top-ups and that would deal with the matter. I think that that was the intention behind casting the amendment in that way.

The noble Lord, Lord Jenkin, has, as ever, brought forward some interesting amendments. We cannot support all of his amendments but we can certainly support some. He took us back to the economic analysis which underpins much of the Bill and the benefits of localisation. Although the relevant report was quite heavily caveated, that does not deny the thrust of the points which the noble Lord made. Nevertheless, as my noble friend Lord Smith said, much of the analysis might have referred to a previous era. I think that the starting point of the analysis was a look at what happened in reverse, when the business rate was nationalised and the system went from being a local one to a national one. The noble Lord, Lord Tope, was ecstatic about localism having been achieved. I had understood localism to be not only about getting a share of what you collect but also about having some influence on the rate of tax. I thought that that was the noble Lord’s ambition at one stage. I am not sure whether it is his ambition now.

We have an issue with Amendment 10 in the name of the noble Lord, Lord Jenkin, which basically says that after a period of time there will be no central share. Apart from the fact that I do not think any Government will totally relinquish attempts to influence local government, the amendment raises the issue of how you rebalance the potential inequities that might arise from relying just on the business rate shares. That issue also applies to Amendments 11 and 12, particularly Amendment 12.

I entirely support Amendment 13. In fact, it coincides with the proposition that we make in Amendment 16, which basically means that you should lock in the local share so that it can never be less than 50%. I think the noble Lord’s amendment does more than that, but it achieves that objective as well.

As regards the ratchet, if the proposition is that there should be opportunities for the local share to increase, we can support that. I know that the noble Lord is not necessarily particularly wedded to the mechanistic approach but is addressing the concept. However, when you change the local and central shares, logic demands that you have to recalibrate and reset the system. I do not know what the Minister’s notes say about that. However, I think that once you start doing that, you have to revisit tariffs and top-ups. That follows logically from the way the system is constructed. That is tied up with the other components of the system and the debate we have just had about what happens to any component of the central share and how that is deployed back to local government. Will it be done on a basis that has regard to resources? On one basis, we might be content to see a higher central share than other noble Lords would prefer; not as high as 50%, but not necessarily right at the extreme edge of what might be achieved.

I say to my noble friend Lord Smith of Leigh that there is absolutely nothing wrong with trying to keep down the price of beer, although I accept that doing it via the rates might be pushing one’s luck a bit. Again, we have heard the voice of experience, particularly in the context of the amendment of my noble friend Lady Thornton. The concept of trying to give local authorities a three-year indication about the funding they can have must make sense. The current system is an improvement on what existed in the past. The requirement that there be consultation with local government on the setting of the shares must be absolutely right.

My noble friend’s Amendment 17 requires that the local government finance report specify the central and local shares and that it be laid before the House of Commons,

“including the full details of the consultation undertaken”,

in respect of that determination. That seems a modest but entirely reasonable amendment and it has our full support. I hope that the Minister will feel able to support it.

[Baroness Hanham]

My Lords, this debate has taken us through several areas. Sometimes the groupings are more interesting than the actual outcomes. We have a raft of issues that have come into the debate.

It might be worth, at the outset, repeating something that I said in Committee. All of us here who have had anything to do with local government have for years said, “Let us keep the business rate and bring it all back”. That principle—the fact that local government will retain the business rate—has been accepted in the Bill. However, the noble Lord, Lord McKenzie, made the good point that you would never have been able to keep it all. Some form of an equalisation scheme was always going to be needed, because some authorities receive far more business rate than others. The concept of keeping 100% in every local authority was clearly never going to work.

What has been accepted—and we have accepted it in our discussions today—is the principle, which was never there before, that local government should retain the business rate. Therefore, that leaves us with a movable feast and brings us back to the issue of the 50% retention. We have made it clear, and I made it clear in Committee, that the 50% is there at the moment entirely because of the economic situation. We have to make sure that local government is part and parcel of the resolution of the difficulties that we face. We hope that the deficit will be short-term. It does not feel much like that at the moment, but once the economic situation begins to improve, we hope that there will be a reduction in the percentages. Obviously, I cannot say today that the figure will reduce from 50% by 5% year on year. I am not completely sure that my noble friend Lord Jenkin thinks that that would happen. All I can say is that if we get improvement in the economic situation, we will be in a much stronger position to ensure that that 50% share gradually reduces.

I am not sure whether the noble Lord, Lord McKenzie, is going to debate the next amendment, regarding the heads or tails side of the coin. The answer is yes, so we will come back to that.

Amendments 12 and 17 would require specific consultation with local government on the central and local share. That is an important point. I assure the noble Lord, Lord Smith, that the draft local government finance report will set out the central and local shares, and that in itself has to be consulted upon. Therefore, there will be consultation—actually, a specific consultation within the finance report. I am not sure that anything is to be gained by adding anything to what is there at the moment.

The process of setting central and local shares has to reflect the Government’s ability to protect the interests of the taxpayer. I have said that at length and I reiterate it. It is essential that a judgment is made about the macro economy before any changes can take place. More generally, we have made clear that we would not anticipate central and local shares changing from year to year. At the moment it is going to be a ratio of 50:50, until something happens to change that, and the reset will be in seven years. We would expect the central share to remain unchanged between 2013-14 and 2020. That takes in the reset and the setting of the tariffs and top-ups. We would also expect the tariffs and top-ups to remain within the seven years. As we have discussed, if there are particular problems, it is clear that the Government will need to take them on board.

Also regarding the 50:50, and as laid out at the moment, the Government and local authorities, within the seven years and the split shares, will have a much better idea of how much there will be by way of support—what local authorities’ financial obligations are to central government and what they can receive from it. Local government has wanted that for a long time—the ability to know, year on year for a reasonable length of time, what their income and expenditure, and likely contribution to the Government, are going to be.

Again, I am not sure that Amendment 11, tabled by the noble Lord, Lord Smith of Leigh, will be necessary. Local authorities are going to know reasonably confidently what their central share will be for the next seven years until 2020. I think that he accepts that because I see him nodding.

In talking to Amendment 15, the noble Lord, Lord McKenzie, raised the issue of the central list—the element of business rates that is collected directly by central government from local government and network properties. Income from the central list will be paid into the main rating account, as provided for in paragraph 2(1)(a) of new Schedule 7B to the 1988 Act, as inserted by Schedule 1. I am sure that the noble Lord wanted to know that and that Hansard will be delighted. That will happen. Along with the other money paid into that account it will be used solely for the purposes of local government. As I said when responding to previous amendments, the central share comes back to local government. What we have not bottomed out—and I promise to do so—is exactly what that central share contains. That is what we will do before the next session. The central share will also be used to fund the revenue support grant and/or specific grants in the first couple of years.

The existence of £1.2 billion of central list money collected every year was also taken into account in the macroeconomic judgments that went into the Government’s announcement of the 50:50 share. It is not and should not be taken into account in the arithmetical calculation of the estimated business rates aggregate—I know that the noble Lord wants to know this also—that will determine the total funding in the rates retention scheme, as sought by Amendment 15. If this were to happen, it would simply increase the total aggregate rates income and, paradoxically, would thereby reduce the revenue support grant available to local government. We have heads and tails again.

I hope that I have given a reasonable explanation of why we will not be able to accept these amendments. I am not sure whether my noble friend Lord Jenkin will be persuaded to withdraw Amendment 10, but I ask noble Lords not to press the other amendments on these subjects. However, I hope that he will at least understand my explanation.

In 2012 we held technical consultations to explain to local authorities that they will be fully compensated for both the mandatory and the discretionary relief that they currently give at the point that the scheme is set up. I refer to the amendment of the noble Baroness, Lady Thornton. In addition, local authorities will be compensated for any new mandatory reliefs through the “new burdens” principle. The point has been made by the noble Lord, Lord Smith of Leigh, and others that the setting up of trusts, at the moment and in the future, would form a new burden. However, in line with the general principles that risks and rewards under the scheme would be shared between central and local government, the costs of any changes in the amount of mandatory discretionary relief given by local authorities will be shared. That point was made by the noble Baroness—that the 80% was fully funded by government in the past but now it will be shared 50:50.

We are undoubtedly aware of the concerns that have been raised by authorities about the funding of reliefs, particularly the mandatory relief—we have had that response in the consultations. We will consider the position further before taking a final decision later this year. If the noble Baroness is asking for discussions, I shall be happy to talk about this further between now and the next session if that would be helpful. If we were going to change the arrangements, we think that we could do so through secondary legislation, so let us see where we can get to with that. On the basis that we will have further discussions, perhaps I do not need to go any further into the benefits or otherwise of the amendments, and I look forward to talking to the noble Baroness in the next week or so.

With those comments, I hope that my noble friend Lord Jenkin will feel able to withdraw his amendment.

--- Later in debate ---

[Baroness Hanham]

My Lords, I thank my noble friends behind me for their contributions. In the middle of the previous amendment, I asked the noble Lord whether he was going to move this one but I am very happy, now that he has done so, to reiterate that the Government’s intention is to increase the 50% share of local authorities as soon as there is economic acceptance that we can do so.

As other noble Lords have said, I am not sure that the noble Lord, Lord McKenzie, who was in government and who knows all about the difficulties, would believe at this stage of the Bill that we would be able to restrict the future ability of a Government if the situation ever arose—I hope that it never will and that things will get better rather than worse. I do not think that we could tie the hands of future Governments or of this Government with any statement that the share would never go up. I hope that the noble Lord will accept that. I reiterate that, as and when we get to a situation in which we can see the economy going in the right direction, further consideration might be given to that. I hope that the noble Lord will be able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I thank the noble Baroness for her reply and other noble Lords who have spoken. It seems that we are all on the same page, going in the same direction and all in agreement that the local share must not be less than 50%, but somehow we do not want to commit to that in legislation. Primary legislation does lock Governments in but not for ever. The noble Lord, Lord Tope, said that the Treasury would not allow it. If we passed it into legislation, the Treasury would have to accept it, would it not? The point of putting things into primary legislation is to stop the Treasury’s controlling instincts.

--- Later in debate ---

[Lord McKenzie of Luton]

We have tabled Amendment 82 in this group, to which I will speak very briefly because it has effectively been covered in the subset of the amendments spoken to by the noble Lord, Lord Jenkin. It deals with refunds of non-domestic rates in circumstances where the rates were collected and paid over in a period prior to 1 April 2013 but where, under the new system, an authority has to reimburse a business rate payer on appeal. Our amendment states that there should be reimbursement in the first case from,

“undistributed business rates at 31st March 2013”,

and then from the central share. I take this opportunity to ask the Minister: what is the level of the undistributed business rate at 31 March 2013? A letter before Third Reading would be fine.

Amendments 24, 37, 38 and 40 are extensive and complex, and I know that they have been pursued by the City of London. I am grateful to the noble Lord, Lord Jenkin, for securing a briefing which certainly helped our understanding of what it seeks to do. As we have heard, it seeks to address what is argued to be an inequity in the current business rate retention scheme proposals arising in respect of valuation appeals. As we have heard, they form two types of appeal in particular: those arising from error from an initial valuation being too high; and those arising from market movements such as a general fall in the local property market.

The amendment proposes a three-part solution for the impact of the initial valuation appeals. For any business rates collected and passed over to or shared with the Government, there should be a refund to local authorities which have had to fully reimburse the ratepayer. Those should be very straightforward. Secondly, top-ups and tariffs should be adjusted to reflect lower incomes from the past. Thirdly, top-ups and tariffs should be adjusted for the future to reflect lower business rate income. That is the proposition, and a similar approach is suggested for market property movements.

The case for neutralising the effect of market reductions, as the Government propose for market revaluations, seems entirely reasonable. My uncertainty, without having had the opportunity to work through this in great detail, is whether the express remedies relating to the adjustments of top-ups and tariffs can work as suggested. While the legislation would allow adjustment for individual authorities for those components, the system envisages calculation of aggregate business rates and proportionate shares. Recognising changes to some local authorities would imply changes to the whole way in which the formula works. Obviously, the process of resetting would cover that, but its timing cannot be driven by the outcomes of appeals. The issues raised by the amendments are real, but I look forward to the Minister’s response on the particular solutions proposed.

[Baroness Hanham]

My Lords, I thank my noble friend Lord Jenkin for explaining his long amendments so succinctly. I hope that I can be succinct in response; I can see people looking at their watches. We have recognised the question of appeals from the outset. As early as the summer of 2011, we recognised that the rate retention scheme would have to accommodate the volatility that exists in the business rate system.

My noble friend gave us all the notes and half the answers, so some of this will be repetition. The technical paper to which he referred, published in August 2011, looked at the question of the volatility of the rating system, such as from rating appeals, and considered how it should be treated in the rate retention system.

Rather than seeking to categorise in some way all the many thousands of alterations to the waiting list made each month, we proposed a general safety net to protect authorities from large reductions in their income, whatever the reason for it. Almost 80% of the respondents to the consultation agreed with the general safety net approach, so that is what we have adopted in the Bill. Conversations with local government are still going on about the issue; they went on throughout last year. We continue to explore whether it would be possible to isolate specific types of alteration to the rating list, but we have not seen any proposals—even in the amendments tabled by my noble friend—which would adequately address the issue in a fair way while maintaining a reasonable share of risk and reward between local and central government. Noble Lords will recognise that appeals can go either way. You may end up quids in on one appeal and quids out on another, but a local balance can be struck from that.

The amendments precisely illustrate the problem as, taken together, they would pass to central government all the risk associated with most alterations to the rating list, including all alterations to the current compiled rating list. They would leave central government carrying most of the risk on business rates while allowing local government to pick up all the rewards when the rates go up. That does not strike the right balance, but our discussion with local government has not found any better formulation than we have here at the moment. That is why we are proposing in the Bill a general safety net to protect local government income from alterations to the rating lists, whatever the reasons for that change. The safety net will work on the basis of the baseline.

There was mention of transition. We recognise that when the rate retention scheme commences there will still be historic alterations to be made to the rating lists. Many of these alterations, including additions for new buildings as well as reductions from appeals, will be backdated into years prior to 2013. While this is all part of the system that we will localise from next April, we appreciate that not all alterations have been captured in the baselines when setting up that system. We have therefore promised that some allowance should be made for appeals when setting it up. To deliver on this promise, we will adjust the starting position for local authorities so that they have extra financial headroom for changes to the rating list, such as from appeals—and that will be in the baseline. We will set out the size of this adjustment in the draft local government finance report. The adjustment will provide extra cash for local government to manage its appeals.

I accept that the matter of volatility in the rating system is a challenge for the rate retention system. As I have said, it is a matter we have recognised from the outset. We have been and remain in discussions with local government throughout the passage of the Bill. The combination of a general safety net and an allowance for appeals in the set-up of the scheme seems to provide a reasonable solution and the right balance of risk and reward. My noble friend has laid out at great length the problems which London Councils, in particular, may still see but I hope that I have demonstrated that the Government have listened very carefully to what has been said and that there is a solution here which will be fair to just about everybody. I hope that my noble friend will be able to withdraw his amendment.

[Lord McKenzie of Luton]

Before the noble Baroness sits down, can she deal with the point about the undistributed rates at 31 March and what the quantum of that is?

[Baroness Hanham]

I apologise to the noble Lord but I think that when he asked the question he anticipated that that is actually quite detailed. It is not a figure that I have just got in my head, so perhaps I may write to him to give it.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 10th October 2012 Lords Chamber

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

My Lords, in moving Amendment 31, I shall speak also to Amendments 14, 16, 17, 18, 28, 29, 30, 37, 38 and 50, which, taken together, ensure that the Bill provides for the appropriate assurance of calculations and information supplied under the business rate retention scheme.

Currently the Bill provides for the audit of calculations and information supplied under the scheme, and it should have referred to certification, so that the Government and the major precepting authorities have the assurance that they need about calculations and information supplied by the billing authorities and on which the payments to central government and precepting authorities will be based. This will then mirror what already happens under the current arrangements.

Amendment 50 removes an amendment to the Audit Commission Act 1998 that would have required the Audit Commission to have made the arrangements, if requested, for the certification of calculations and information supplied in respect of the new business rate retention scheme. However, with the proposed winding up of the Audit Commission as set out in the draft Audit Bill published in July, we need to provide for alternative certification arrangements. These amendments, along with the provisions in the Bill, will provide the necessary framework for the appropriate assurance of calculations and information for the new scheme.

With this explanation, I ask noble Lords to accept these amendments.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her explanation of the amendments, but could she say a little more about what is perceived as the difference between a process that leads to a certification and that which is subject to an audit? Is it the nature of the judgment that is different, or is it what is being given assurance on that is different? What are we actually changing here and what is its outcome? I am not making an issue of it, but it would be helpful to have a bit more information as to why this change is being undertaken.

[Baroness Hanham]

I think that an audit is carried out by an independent, external auditor and certification can be done by internal people just certifying that something is correct. I think that that is the difference. It is the difference between having something externally verified and signed off and having something done internally and signed off.

[Lord McKenzie of Luton]

That is helpful. If we are saying that it is the status of the person who is making the judgment that is being changed here, I can understand that. It is whether the judgment being undertaken is of a different nature, given that it is not an audit but a certification, that I was unsure about.

[Baroness Hanham]

It is not intended to be. That is why the amendments are quick and simple, slipping in the relevant words. I shall read the document that I have. I think that that will help the noble Lord enormously. We anticipate that the certification arrangements will be provided through a tripartite agreement. Under this approach the Secretary of State through regulations and directions will define the assurance requirements and produce certification instructions. At the end of the financial year the local authority will make the arrangements for the assurance to be provided, most likely by the auditor who audits the local authority’s accounts in line with the certification instructions. Therefore, I was half right and half wrong, if I am generous to myself.

[Lord McKenzie of Luton]

I thank the noble Baroness. I think that she has half helped me but we shall look at the record and come back in due course if necessary.

--- Later in debate ---

[Baroness Hanham]

My Lords, this amendment removes the requirement for the Secretary of State to undertake consultation on pooling proposals before he may designate a pool or revoke such a designation. This will simplify the process for establishing and closing a pool without materially reducing the safeguards in place for pool authorities.

Amendments 32 and 33 remove the duty to consult those likely to be affected by a pooling designation or its revocation. In tabling these amendments, we are responding to the strongly held views of local government. Local authorities will warmly welcome this change. The rationale is that, in practice, the impact of a pool designation or its revocation is limited to the members of the pool and, because each local authority in the pool must have consented to be there, the removal of the consultation requirement will have no practical impact on the pool authorities. The amendments therefore simply remove a superfluous bureaucratic procedure.

Moreover, the Government also consider that the removal of the consultation requirement will not reduce transparency, since pooling designations will be identified in the draft local government finance report, on which we will consult widely. Other persons will therefore be notified of the pooling designations that are to have effect for the following financial year.

Amendments 34 and 35 concern the operation of the pool and the Government’s ability to alter any conditions they may have attached to a pooling designation. Apart from pool members, no other parties are likely to be affected by the addition, modification or deletion of a condition, so a duty to consult persons outside the membership of the pool is unnecessary. However, the Government will continue to be required to consult pool members themselves before varying any conditions, since pooling arrangements are intended to be voluntary and it is not right that we should vary conditions without first seeking the views of the members of the pool.

These arrangements tidy up the provisions around pooling arrangements and remove unnecessary and burdensome procedural requirements, and are widely welcomed by local government. With this explanation, I hope that noble Lords will accept these amendments.

[Lord McKenzie of Luton]

My Lords, can I confirm that we are dealing with Amendments 63, 64, 65 and 66? I thought I heard the Minister refer to Amendments 34, 35 and so on.

[Baroness Hanham]

The noble Lord is absolutely right. I apologise. I thought it sounded a bit funny when I said it.

--- Later in debate ---

[Baroness Hanham]

My Lords, let me start by confirming for my noble friend that this would come under the schedule he referred to. While I understand the concerns that prompted him to table this amendment, I hope that I will able to convince him that it is unnecessary, and that he can have confidence about the Government’s intentions in terms of the way the rates retention scheme will treat the business rates paid by new renewable energy projects and by nuclear power stations, so that he will be able to withdraw his amendment.

I should say initially that we do not believe that my noble friend’s amendment is needed. Paragraph 38 of the schedule is clear that the Secretary of State may, by regulation, designate classes of hereditaments by reference to such factors as the Secretary of State thinks fit. The regulations will in effect enable the authority to keep the business rates attributable to property falling within that particular class of hereditament. The business rates revenues from that development would be disregarded in the calculation of the levy or any reset of the system. The Bill quite rightly makes no attempt to specify or to restrict the possible classes that may or may not benefit from such provision. The Government have been very clear that authorities which host new renewable energy projects will be able to benefit from the full level of business rates paid on such projects. That particular commitment was set out, as noble Lords have said, in the coalition agreement and we will deliver it—not in the breach, but through regulations under paragraph 38. The Government set out in their statement of intent published on 17 May the technologies that would qualify as renewable energy projects for the purposes of that commitment.

With regard to rateable property which generates electricity from other forms of low carbon sources, including nuclear power stations, the Government’s proposals for business rates retention, as provided for in this Bill, already provide strong benefits to authorities which host such developments. For the new generation of nuclear power stations, the business rates are likely to be substantial, and there is therefore likely to be a significant financial boost to those authorities hosting one. In addition, the Government made clear in the national infrastructure plan that they would bring forward proposals for a community benefits package for nuclear power stations by 2012. We have been working closely across government to develop such a package. My honourable friend in the other place, the Minister of State for Environment and Climate Change, confirmed as recently as 18 September that the Government remain on track to deliver the package. We cannot yet reveal the details of the community benefits package for nuclear power stations or how such a scheme might work. However, I can assure him that, if it were decided to use the business rates retention scheme to provide even greater support to those authorities hosting new nuclear power stations, the Bill already has the flexibility to enable us to deliver such a mechanism. There is no need to include in the Bill specific types of development that may be designated under paragraph 38. I am sure that he will understand from what I have said that nuclear power stations would be included. I hope that, with that explanation, my noble friend will feel able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, before the Minister sits down, will she clarify something for us? I think the thrust of her point was that there is going to be a community package for such provision in any event and therefore it is not planned that it will be provided under the business rates retention scheme proposals in the Bill. It is certainly not included in the list of qualifying technologies in the statement of intent. Is the Government’s point that it will accommodate requests to be included in those qualifying technologies or that nuclear power will have to be dealt with by a different route or a different package?

[Baroness Hanham]

The community benefit aspect of this will be constructed about the nuclear energy, which I think is the point the noble Lord is making. Local authorities—there is likely to be more than one—that host nuclear power stations will get to keep the revenue from the rates. I am not sure that I have convinced the noble Lord.

[Lord McKenzie of Luton]

I apologise. I do not want to prolong this as the clock is ticking, but I did not see that. Perhaps I am misunderstanding the qualifying technologies set down in the statement of intent. I assume the statement of intent is the Government’s starting position on what technologies are going to avail themselves of this support. I am happy for this to be dealt with in correspondence, if that would be helpful, but if the Government proceed on the basis of the statement, it does not seem to include nuclear power.

[Baroness Hanham]

I will write and confirm to the noble Lord. I am pretty well convinced that it does, but I will confirm it.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 24th July 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, this is a probing and, I hope, brief amendment. I apologise for the tardiness in laying it, but it was prompted by the statement of intent on information sharing and powers to tackle fraud —a statement which I found really useful. The problem with statements is that they answer lots of questions but sometimes throw up one that you had not thought of before, hence the amendment.

New Section 14B, inserted into the Local Government Finance Act 1992 by Clause 13, enables regulations to be made to describe a number of offences. It is proposed that they cover such matters as causing delay or obstruction, dishonest representations and false representations. The statement of intent explains the plan to introduce offences that are equivalent to those that currently exist in relation to council tax benefit and other benefits. However, paragraph 3.25 of the statement indicates that not all existing offences are to be replicated, only those that are deemed “necessary and proportionate”. Thus the probe is to ask which offences that currently apply are considered to be disproportionate and unnecessary in the new regime. I beg to move.

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

My Lords, my understanding was that this is a probing amendment, and I thank the noble Lord for confirming that it is. The effect of the amendment would be to remove the words “by a person” from new Section 14B(1) of the Local Government Finance Act.

Powers to investigate potential fraudulent claims for reductions in council tax liability and to prosecute and issue the appropriate penalties will be vital to local authorities to ensure the effective administration of schemes and the control of costs. As the Government made clear when they amended the Bill in the other place by introducing Clause 13 to insert new Sections 14A to 14D into the Local Government Finance Act 1992, we believe that it is important that existing investigatory powers in relation to local authorities offences and relevant penalties to tackle fraud under social security legislation are available to local authorities in relation to council tax.

In response to the consultation on localisation of council tax support last year, a majority of local authorities that responded said that they would need the same or similar powers for local schemes as they currently had to investigate and tackle fraud in council tax benefit claims. Therefore, it is necessary for the Government to provide authorities with the appropriate equivalent powers to be able to deal with fraudulent claims for a reduction in council tax liability.

New Section 14B specifically will allow the Secretary of State to create offences equivalent to those that currently apply. In particular, the Secretary of State may make regulations providing that it is an offence for a person to delay or obstruct an officer exercising his powers to require information or to refuse or fail to provide information when required.

Regulations may also create offences where, for instance, a false statement has been made in connection with a person’s council tax liability or a person has failed to notify a change in circumstances that affects their liability to pay council tax. This includes the ability to create equivalent offences both of dishonesty and of dishonestly and falsely making representations for council tax reductions. We will not be giving local authorities powers to enter premises, powers to conduct inquiries or to remove and copy documents from such premises. The powers we are giving requiring people to supply information and enter into arrangements under which access is permitted to relevant records will be sufficient for council tax purposes.

To be clear, we are not introducing new powers for local authorities through these provisions. We are simply ensuring that some of the powers they currently have in relation to council tax benefit are recreated for reduction schemes. Nor are we simply reintroducing all the existing powers for local authorities that they currently have to tackle council tax benefit fraud. Instead we have worked with local authorities to identify those powers and offences that will be needed for local schemes.

Regulations under new Sections 14A to 14D will be subject to affirmative procedures so that both Houses will be able to consider the appropriateness and proportionality of offences under the regulations. The noble Lord asked me specifically which current powers in relation to fraud we are not planning to recreate in these regulations. Perhaps I may go through the ones that we are not planning to reintroduce. The first is allowing the Secretary of State to authorise individuals to carry out investigations. Local authorities currently authorise the individuals carrying them out, and this power will remain. As for the Secretary of State’s power to require individuals to enter into agreements to supply electronic information, local authorities’ existing powers to require electronic information will be retained, so taking the Secretary of State out of those requirements. On powers of entry, we have made it clear that we will not reintroduce wide powers of entry. Local authorities will have powers to request relevant information which is proportionate to the needs of council tax reduction schemes. I hope that that answers the noble Lord’s question.

In the statement of intent, to which the noble Lord referred, published on 9 July, we set out exactly how we intend to use the powers under new Sections 14A to 14D to make regulations, making clear that these powers would relate only to reduction schemes. I am clear that the powers in the Bill are sensible measures to ensure that local authorities have the appropriate powers to investigate and prosecute fraud. I hope that the noble Lord will be reassured by what I have said.

[Lord McKenzie of Luton]

My Lords, I am grateful to the noble Baroness for that response. We support and accept that local authorities should have powers that are necessary and proportionate for them to carry out their duties in tackling fraud. The noble Baroness itemised the current arrangements which are not to be carried forward. Frankly, I would like to read the record on that, but I believe that it deals satisfactorily with the purpose of this probe. I beg leave to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, we speak in support of my noble friend’s amendment, which is a probing amendment, as she explained. I dug out some of the requirements for getting the benefit of the disabled band reduction scheme. It talks about,

“an additional bathroom or kitchen … a room (other than a bathroom, kitchen or toilet) required to meet the needs of the disabled person, and used predominantly by them … extra space inside the property to allow for the use of a wheelchair”.

It says:

“The room or the wheelchair must also be of major importance to the disabled person's well-being, due to the extent of their disability”.

I hope that that is still available in the system. Is there the potential for an inconsistency in government policy between supporting as we do the disabled band reduction scheme and the consequences of potential deemed under-occupation of social housing, which could lead to the withdrawal of housing benefit?

[Baroness Hanham]

My Lords, with regard to the very last point, the noble Lord has a very neat habit of putting one last question to which nobody has a clue about the answer—and I have to tell him that he has done it again. If I may, we will write, because it involves an interaction between two bits of legislation. I do not think that I am equipped, and my team behind me look a bit blank. So perhaps I could write on that particular aspect, but I hope to be reassuring on the rest.

Amendment 93A seeks to ensure that any changes made by the Bill will not impact upon the disabled band reduction scheme. The scheme offers a reduced council tax bill, where a disabled person lives in a larger house than they would have needed if not disabled or where the living area for normal use has been reduced. The Council Tax (Reductions for Disabilities) Regulations 1992 set out the qualifying criteria for a reduction under this scheme. No part of the Bill has an impact upon the scheme, nor will any of the subsequent regulations that will be made. The Government regard this scheme as an important form of support to disabled people and have absolutely no wish to make any changes to it. Given that there is no question of any change, I invite the noble Baroness to withdraw this amendment.

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[Lord McKenzie of Luton]

My Lords, like my noble friends Lady Hollis and Lord Smith and the noble Lord, Lord Shipley, I am not an advocate or supporter of local income tax. My noble friend Lady Hollis has, as ever, made a challenging case for the introduction of a new band, although her case is, in a sense, seeking a process of consultation. My noble friend is aware that, from this Front Bench, we are not yet able formally to support that proposition, although I note that she has occasionally trail-blazed an opinion and the party—or otherwise—has caught up with her later. There is obviously a range of issues here and my noble friend Lord Smith instanced some of the wider ramifications, such as the redistribution of revenues that might come from this. However, I am interested in the Minister's response on this and we should recognise that there are growing discrepancies and inequities in the current system, if for no other reason than the passage of time. This amendment raises a serious issue.

[Baroness Hanham]

My Lords, I thank the noble Baroness for introducing this amendment and the others who have spoken. I do not think that she will be entirely surprised that I am not able to accept her amendment, but I will give the reasons.

Amendment 93B seeks to create an additional council tax band in England based on properties with a 1991 value above £420,000, as the noble Baroness explained, and with a 21 to nine multiplier based on the local band D amount. This Government, like the previous Government, have made no plans to change the banding structure on which the council tax system is based. We are absolutely clear that such a change would have major implications for local government finance, create additional bureaucracy and administrative costs and have significant distributional implications, to which I shall return. To create a new band, there would have to be a general revaluation, and the Government have been absolutely clear that there will be no revaluation in England during the lifetime of this Parliament. Indeed, the coalition Government—I nudge my noble friend Lord Shipley on this—made a clear pledge to Parliament not to undertake a council tax revaluation in this Parliament. A revaluation is unnecessary, expensive and time-consuming and will lead to higher council tax bills.

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[Lord McKenzie of Luton]

My Lords, we support the amendment. It seems that our debate has had various strands to it, including the issue of governance for bailiffs. My noble friend Lord Stevenson talked about the three fundamentals that are missing—the balance of incentives, no independent oversight and no process for those in financial difficulties. Part of that theme is the need to support people who get into debt and to help them to make their payments, as well as the importance of effective advice being at hand. With regard to the challenges that are being felt now, my noble friend Lady Hollis instanced what is happening to the CAB in her area, and my noble friend Lady Sherlock asked the Minister about the assessment that is being made of available support.

However, one strong strand has been the importance of this issue, because it focuses on dealing with poverty. As the noble Lord, Lord Tope, said, everything that is going on—the economic situation that the country and much of the world faces, as well as specific policies, including those that we are debating in this Bill—has a cumulative effect on people. We heard from the noble Baroness, Lady Meacher, and the noble and right reverend Lord, Lord Harries, about financial hardship and why it is of increasing importance in the circumstances in which we find ourselves.

The noble Lord, Lord Best, made the point that in some ways local authorities are victims of the current circumstances. They have to deal with the effects of this Bill and other legislation, particularly cuts in council tax benefit or support. We know and have debated the consequences of that. I recognise the hand of the Reverend Paul Nicholson and the Zacchaeus 2000 Trust in all this, and he should be congratulated on his continued efforts. As a Minister, I always shuddered a bit when a briefing came through from the Reverend Nicholson; I still do.

This amendment focuses on the enforcement procedures, particularly the relationships between bailiffs and councils, and it calls on contractual arrangements between bailiff companies to allow—why not require?—the bailiffs to return a warrant to the council for reconsideration when certain circumstances arise. We support the thrust of the amendment. I do not know whether we need to unpick some legal issues here in order to differentiate between bailiffs appointed by the court and enforcement agents acting under contract to the local authority—that is, whether the return and possible amendment of the warrant is just an issue between the council and the agent. Doubtless the Minister will be able to help us on that.

We have all heard horror stories about the actions of some bailiffs towards vulnerable people, including the very poignant case explained by the noble Baroness, Lady Meacher. In the National Standards for Enforcement Agents there seems to be no problem in setting out who is considered to be vulnerable; perhaps the Lord Chancellor’s Department will be able to assist the DCLG in this regard. I am sure that we all find some of the instances we have heard about completely unacceptable. The amendment refers to the National Standards for Enforcement Agents, a document issued by the Ministry of Justice, but, as my noble friend said, it is really just a rerun of something that happened in 2002 and the problem is that it is not mandatory. I wonder whether we should at least require all local authorities to contract only with those who explicitly adhere to those standards, although they may not be binding.

The standards explicitly refer to vulnerable situations requiring enforcement agents and creditors—the councils —to recognise that they each have a role in ensuring that the vulnerable and socially excluded are protected and that the recovery process includes procedures agreed between the agent and the creditor about how such situations are dealt with. The document states:

“The appropriate use of discretion is essential in every case and no amount of guidance could cover every situation, therefore the agent has a duty to contact the creditor and report the circumstances in situations where there is … a potential cause for concern”.

That is the essence of what this amendment seeks to achieve, but there is also an issue about how councils play their part and this is also implicit in the amendment.

We have discussed council tax support schemes. In many cases, the cut in support for schemes, effectively of the order of 20%, will leave poor people having to pay council tax when they were previously exempt. Even a few pounds a week could push those existing at the margins over the edge, especially when coupled with the other cuts that they have to endure. Given the reminder that local authorities have had from central government about their responsibilities regarding equalities duties, homelessness provisions and the Child Poverty Act, this places a special onus on local authorities to ensure that life is not made even more intolerable by insensitive and inappropriate enforcement processes. We welcome the content of these amendments.

[Baroness Hanham]

My Lords, I thank the noble Baroness for introducing this amendment. There has been wide discussion, as I rather expected, and I acknowledge the part played by the trust of the Reverend Paul Nicolson and the work it does in support of people who end up in serious debt. I also note what has been said about many people in serious debt having mental health issues. I agree that these are all matters that ought to be taken into account by local authorities, and doing so is very much part of their work. As for the advice agencies, the noble Baroness, Lady Sherlock, will know that this is a matter for local authorities. The funding, apart from the Lord Chancellor’s funding, by and large comes from local authorities and therefore it is in their own interest to ensure that people have proper advice.

The discussion, as I would have expected, has gone widely into the problems that bring in bailiffs, but it is the bailiffs on whom we are concentrating today. That is what the amendment is about, although I understand that it has triggered much concern about the general situation. Unfortunately, it does not quite do the trick. The noble Baroness probably did not think that it did but that it was another opportunity to have this discussion and bring the matter to wider attention again. It does not work for local government because, essentially, it is not properly worded. It requires authorities to include procedures in their contracts with bailiff companies covering the enforcement of council tax. These would allow the bailiffs to refer the decision to take enforcement action to an authority for reconsideration where there are concerns about the debtor’s liability or their ability to pay. I agree with the noble Lord that that should just be part of the practice: that if bailiffs find something wrong, they should automatically take that into account.

I should explain that the amendment does not accurately reflect the way that bailiffs are authorised to take enforcement action in respect of council tax, because no warrant issued by the local authority is involved in the process. Under the Council Tax (Administration and Enforcement) Regulations 1992, bailiffs can be used to recover unpaid council tax—that is, levy distress—only where a magistrates’ court has made a liability order. That was the point made by my noble friend Lord Lucas.

The local authority is allowed to apply for only reasonable costs, and those are capped at £70. There will be further costs only after distress from the bailiffs is levied. I agree with the noble Lord, Lord Smith, that a great deal of work is involved before schedules are produced before the court—I used to deal with them frequently, and magistrates do not just wipe them through; a lot of questions are asked.

That was a slight diversion. I am keenly aware that the use of bailiffs to enforce unpaid council tax is an emotive and sensitive issue—we have heard about many of the reasons why today—particularly when used against vulnerable people. Many disquieting examples have been given this afternoon of where that is happening. The Government believe that the use of bailiffs should be a last resort. I think that most local authorities believe that and that everything else should be done before they say that it must go to the bailiffs. It follows that we do not believe that they should be commissioned disproportionately; they should be a last resort. Councils should take direct responsibility for ensuring that bailiffs abide by acceptable practices. No one can be content with people working on their or the courts’ behalf who do not act reasonably, courteously and sensitively.

However, whether enforcement action is justified is a matter for local authorities and, finally, the courts, having taken account of all the relevant information on a case-by-case basis. Of course it is the local authority’s responsibility to ensure that it is taken only after all the procedures and all efforts have been made to have the matter dealt with in another way.

Although the Government have no plans to make changes to the enforcement regime for council tax, which is what we are talking about in particular, as my noble friend Lord Lucas mentioned, we are looking at bailiff reform. There is a wide perception across the country and across government that it is not working absolutely brilliantly. I say to the noble Lord, Lord McKenzie, that we are talking about the bailiff service, not the enforcement service.

The Ministry of Justice consultation, Transforming Bailiff Action, which was mentioned by the noble Lord, Lord Stevenson, closed on 14 May. It looked at how the Government—that is, going across government —can provide more protection against aggressive bailiffs and encourage more flexibility in their use, including the need for more care in how the bailiffs go about their business. One reason why the amendment is not appropriate to this Bill is that the issue goes across government. The use of bailiffs is a responsibility of the Ministry of Justice; then we get to the Department for Work and Pensions, and then we come back to the DCLG. It is extremely important that this does not just get logged in one department; it must be addressed across the piece. The noble Baroness, Lady Meacher, knows that because she said so. She knows that the amendment is not appropriate, but I do not go over her will to see this matter debated—it is very sensible.

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[Lord McKenzie of Luton]

My Lords, this is totally clear to us and we are very happy to support the amendment.

[Baroness Hanham]

I am grateful and I beg to move the amendment.

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[Lord McKenzie of Luton]

My Lords, we have just heard a compelling and comprehensive case from and on behalf of my noble friends, with which I wholly agree. As my noble friend Lady Sherlock said, it does not cost any money and it would provide some protection for some of the most vulnerable members of our community. If we could unite around this issue, it would be a good way in which to conclude our Committee deliberations.

The proposal concerning local connection rules is at the very least something that the Government should accept. They are prepared to give central direction to protect pensioners whom they see as vulnerable when it comes to council tax support schemes, so why do we not have some central guidance to protect those fleeing domestic violence, those leaving care, the homeless and those leaving institutional care? My noble friend Lady Sherlock quoted assurances received from Ministers during the passage of the Welfare Reform Bill to the effect that funding for what was the Social Fund, now transferred to local authorities will be part of a special revenue grant accompanied by a detailed settlement letter. Can the Minister deal specifically with the inquiry made by my noble friend on that point? We know that there will be a revenue support grant for the first couple of years of the business rate retention scheme, but the position after this is a little opaque. In any event, can the Minister confirm that the funding in question will be provided by central government in addition to the central share of the business rate, on top of the central share?

We know that councils will try to do the right thing for those who most need their support, but life has been made incredibly difficult for them by prior cuts, the cuts in this Bill and more cuts to come. In all the near impossible judgments that councils will have to make, we can provide just a small voice for those who might otherwise not be heard. I support my noble friend’s amendment.

[Baroness Hanham]

My Lords, this has been a short but interesting debate. I thank the noble Baroness for raising this on behalf of the noble Baroness, Lady Lister, and I should say how delighted we are about her honorary degree. I hope that it is in something associated with what we are doing here—but, if not, it is none the less a great achievement.

Amendment 97 relates to the Social Fund. As the noble Baroness said, this is provided for in the Welfare Reform Act, for which the Department for Work and Pensions is responsible. It states that:

“Any grant paid to local authorities under section 70 of the Welfare Reform Act 2012 … shall be expended by the local authority only for said purposes”,

and that:

“Any such grants will be made under the guidance of the Secretary of State with regard to the application of any ‘local connection rules’ … so that any such rule does not apply to”,

various categories of vulnerable people.

Proposed new subsection (1) of the amendment may be based on a confusion, as Section 70 of the Welfare Reform Act 2012 relates to the winding up of the Social Fund and transfer of money into the consolidated fund, rather than the transfer of money to local authorities. However, I believe that the intention behind the amendment is to guarantee that grants allocated to local authorities for local welfare provision, following the abolition of community care grants and crisis loans from April 2013, are used for the purpose intended.

I reassure the Committee that the settlement letter to which the noble Baroness referred will accompany that funding. I am not yet sure when that letter is due, but I will make inquiries and let her know. The settlement letter will set out what the funding is to be used for, the underlying principles and the outcome that must be achieved—although not the method that should be used to achieve it. It will state that the funding is to concentrate resources on those facing the greatest difficulty in managing their income and to enable a more flexible response to unavoidable need.

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[Lord McKenzie of Luton]

Will the noble Baroness say a little more about this settlement letter? I am trying to envisage the settlement letter in the context of business rate retention schemes and revenue support grants, but will she say whether the funding stream for this purpose is going to be additional and will not come from the central share of business rates, which accrue to Government and then go back? Is it going to be funding on top of that?

[Baroness Hanham]

This is funding being moved from one area to another, so is it additional? I suppose the answer is probably yes, because it is coming from the Department for Work and Pensions into the Department for Communities and Local Government. Is it additional in terms of revenue support grant? I think the answer is probably yes, because it is within the funding of the local authority but expected to be used for the Social Fund purpose. As for the settlement letter, it will include the detail. I do not know, I am afraid, what the settlement letter will be. I suspect that there are a lot of people in the DWP who do not know either, but I have told noble Lords that as soon as we know when it is being issued and what it contains, we will let them know.

Housing: Leaseholder Deposit Protection

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 23rd July 2012 Lords Chamber

[Baroness Hanham]

My Lords, the Government have no plans to implement these provisions at present, but we are keeping a watching brief on the concerns of people within the leasehold reform area. A technical guide was published last year by the Institute of Chartered Accountants in England and Wales on accounting and reporting on residential service charges. We would encourage its adoption across the sector.

[Lord McKenzie of Luton]

My Lords, I draw attention to my interest in the register. The noble Baroness, Lady Gardner of Parkes, has rightly raised the issue of regulating managing agents from the perspective of leaseholders. However, with the private rented sector now at 3.6 million households, and with nearly one-third of all private rented sector households being families with children, is now not the time for effective and comprehensive regulation of the whole sector?

[Baroness Hanham]

My Lords, as the noble Lord will know, there are two parts to this. This Question is not about the private rented sector. It is about leaseholders. We have no policies at present to bring the private rented sector under the law.

Neighbourhood Planning (Referendums) Regulations 2012

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 23rd July 2012 Grand Committee

[Baroness Hanham]

My Lords, I thank those who contributed to this rather short debate. It is an extremely important point—and these are important regulations that set the basis for the processes that will be involved.

My noble friend Lady Eaton referred to the expense of holding a referendum. I was much gratified to have the support of my noble friend Lord Shipley for the proposition that referendums are an important part of the process. The inevitability that some people will not take part in the consultation on the neighbourhood plan or will otherwise be left out cannot be overstated. The process involves neighbourhood forums, and not everybody has to be part of a neighbourhood forum. Although the neighbourhood forums will have to undertake consultations, it is not impossible that some people may miss them—but they will not miss a referendum. It also seems appropriate, as the process is coming up from the grass roots, that the whole of the grass roots should be able to comment.

There are sound reasons for having a referendum. The cost, as we explained, will be borne by the Government until 2015. The Government have provided £50 million of new burdens money. I confirm to the noble Lord, Lord McKenzie, that the new burdens money will be there. That is to make the neighbourhood planning a success, and to ensure that local authorities can fulfil their legal duty to support groups and parish councils. It is pretty all-embracing as to what a new burden involves. As the noble Baroness, Lady Eaton, has said, the costs are estimated at between about £5,000 to £8,000. That, as I say, will be borne by the Government.

On business areas and additional referendums, which the noble Lord, Lord McKenzie, asked me about, it will not be possible to have a referendum of any kind in a designated business area until we make the business referendum rules. Those are not yet out, so these refer only to the neighbourhood planning, not the business area planning.

[Lord McKenzie of Luton]

Can we be clear on that? I think I understand. Does that mean that there will still be areas designated as business areas, but it is just that the additional referendum will not be part of the process?

[Baroness Hanham]

The noble Lord’s understanding is correct.

I was asked whether neighbourhood plans always require a referendum. They do under the Localism Act 2011. Under the Planning Acts they do not. It would be perfectly possible for a neighbourhood to put together a plan. As long as it conforms with the local plan being processed under the Planning Acts, it would not require a referendum. If it were done under the Localism Act, it would.

That probably covers the main points. The noble Lord, Lord McKenzie, asked me a couple of others, which I have temporarily lost.

Assets of Community Value (England) Regulations 2012

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 23rd July 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her very full explanation of these regulations. They relate to legislation that we support, as my noble friend Lady Thornton said, and we wish them to work effectively. A policy to assist local community groups and to preserve buildings or land of importance to their communities and social well-being is clearly important. It is of course not a right to buy, nor is there any obligation on the owner to sell.

As my noble friend and other noble Lords have said, this is a very complex piece of primary legislation, as are the regulations before us. It is to be hoped that that complexity will not deter engagement. There will inevitably be complexity around issues relating to land law and charity law. To a certain extent that is unavoidable, but I hope that some simplified guidance will come out. The noble Lord, Lord True, said it is quite difficult to gauge how onerous the duties on local authorities will be in practice.

A number of noble Lords posed a series of specific questions, and I await the Minister’s answers with some interest. In fact, I wanted to ask some questions myself. The first relates to the right to nominate. The regulations and the Explanatory Memorandum state that a neighbourhood forum is included among those who can nominate. Does that right extend to a neighbourhood forum that is designated as a business area?

Paragraph 7.14 of the Explanatory Memorandum refers to the powers relating to the fact that non-community nominations have not been used. Perhaps the Minister can remind us of what the intent of including such a possibility in the legislation was and why it is not being taken up.

I should also like to understand a little better the exemptions for disposals by one body corporate to another. Specifically, is a disposal of the shareholding of a group company into which an asset has been transferred a relevant disposal for the purpose of these provisions? Clearly if that was not the case, there is a gaping hole in the legislation.

A number of noble Lords touched upon compensation issues. It is clear that the claim for compensation is rightly limited to delay wholly caused by delay under the Act, but if there are joint causes for the delay, assuming that one can apportion the effect of those joint causes, is the part attributable to the delay caused by the Act still capable of compensation; or would the fact that there is another contributory factor, even if the value of it can be stripped out, deny that compensation?

I want also to make sure that I understood what happens as regards the difference between a freeholder and a leaseholder. As I understand it, if there is a freeholder and a leaseholder, the ownership of a lease that was originally granted for 25 years would be deemed to be that of the leaseholder, because one would look to have one owner for the purposes of the operation of these provisions. If that is right, what would be the position on the grant of a new 25-year lease at the point of expiry of the original lease? Would that be a disposal? How does that work under these provisions?

The Secondary Legislation Scrutiny Committee recites the one-off and ongoing costs, and other noble Lords have referred to that. We have an assurance that those costs are going to be met by DCLG, at least during the course of this spending review. I do not know whether that means that it definitely will not under the new spending review or whether we simply have to wait and see what that review entails. I will be interested in the Minister’s answer on that point.

This is something that we want to see work and we are supportive of the Government in seeking that, but there are a number of technical issues here on which we need to be satisfied that we are not opening up easy routes out of the application of this legislation that the wise, or at least the well advised, will take every opportunity to use.

[Baroness Hanham]

My Lords, I thank noble Lords for their interest in the regulations. I am particularly grateful for the kind remarks that have been made about them; the Localism Act is certainly one that I will recall for many years as one where we made as much difference in this House as was made anywhere.

There have been a number of quite technical questions, so let me see if I can deal with at least some of them. The costs of the referendums will be new burdens, so until 2015 they will be supported by the Government. The Government are committed to meeting the new burdens on local authorities, and have set aside up to £50 million to 2015 to meet those costs. It is right that we ensure that those referendums take place. I beg the Committee’s pardon, that is wrong; I shall start again.

Regarding my noble friend Lord Cathcart’s question about the use of “non-ancillary”, we talked about this quite a lot during the process of the Act. It has been decided that it is up to the local authority to determine whether the use of building land is non-ancillary. It is the local authority’s job to put these regulations into effect and to be the guiding light. The local authority knows its own area, its own people and its own tensions so we believe that it should do this, and of course first it has to establish whether the building or other land meets the definition of an asset of community value.

On his question about what is meant by “recent past”—here we go. This could be a very interesting and long discussion. Once again, this is something that we discussed during the process of the Act. How long is a piece of string? My definition of “recent past” would be reasonably short and my definition of “not recent past” quite lengthy. However, I am not defining this; local authorities once again are going to be in the position of defining it. Any normal logic would suggest that “recent” would not be 20 years or, probably, even 10 years, but further than that I will not go; I am not going to be committed in future to having said that it was five years, because I have not done so. I see the rationale behind what my noble friend was trying to adduce, but I do not think that we can give a definition of that. However, anyone who looks up “recent” in the dictionary will quickly get an answer to what “recent” is meant to be.

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[Lord McKenzie of Luton]

Will the Minister deal with the issue around intergroup transfers and the extent to which parcelling an asset in a company and selling the shares is caught as a relevant disposal?

[Baroness Hanham]

That is pretty technical. May I write to the noble Lord about it? It is more technical than I can deal with today.

[Lord McKenzie of Luton]

I am very happy to have a letter, although I think that we touched on this during the passage of the Bill.

[Baroness Hanham]

I shall write to the noble Lord.

Motion agreed.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 19th July 2012 Grand Committee

[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

[Baroness Hanham]

My Lords, I think I need to come back to the noble Lord.

[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.

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[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

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 10th July 2012 Grand Committee

[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.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 5th July 2012 Grand Committee

[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 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.

--- Later in debate ---

[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.

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[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.

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[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.

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[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.

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[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.

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[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

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 3rd July 2012 Grand Committee

[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.

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[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.

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[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.

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[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.

[Lord McKenzie of Luton]

Perhaps I should write to the Minister.

[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.

--- Later in debate ---

[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.

Community Right to Challenge (Fire and Rescue Authorities and Rejection of Expressions of Interest) (England) Regulations 2012

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 13th June 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her very full explanation of this order. As the noble Baroness has said, this is in a sense an affirmative order, which has come before us in parallel with a negative order. I have a couple of questions on that order, which I am going to tuck away at the end of my presentation, and I hope that she will be able to deal with them. In a way, this is a return to the Localism Act, which I thought was going to be just a happy memory but clearly is not. I have some questions for the Minister, which is how I would like to deal with this matter.

First, have any other bodies or persons been specified, or are they planned to be specified, under Section 81(2)(d) of the Localism Act 2011? This affirmative order, as the noble Baroness has said, is about the fire and rescue authorities, some of which are already included because they are county councils. I would like to understand a little better the relationship between functions and services and excluded activities. Perhaps I can take her back to paragraphs 2.4, 2.5 and 2.6 of the consultation to which she referred.

Paragraph 2.4 says that certain services are required,

“to be delivered by the authority. These will not be subject to the Community Right to Challenge, and will be listed as excluded services in regulations”.

Paragraph 2.5 says:

“For example, in relation to Fire and Rescue, the 2004 Fire and Rescue Services Act effectively requires that certain core activities are specifically delivered by employees of Fire and Rescue Authorities, some of which are the County Council … The following activities will be excluded from the Community Right to Challenge”.

Those activities concern employing,

“firefighters to put out fires and undertake rescues from fires”,

and how,

“Fire and Rescue Authorities respond to road accidents—fire-fighters undertake this role, jointly with fire fighting”.

Can we have some clarity as to whether these activities are excluded because they are specified in some regulation or because they are deemed to be functions and therefore outwith the right to challenge in the first place under the primary legislation?

Paragraph 2.6 states:

“There may also be other reasons why there is a case for excluding particular activities from the Community Right to Challenge. This may relate to those integrated with services that are excluded due to existing legislation, such as Fire and Rescue Authorities responding to other emergencies, including collapsed buildings and hazardous materials”.

Again, is that within the scope of the community right to challenge under this order or is it excluded? If it is excluded, is that because it is specifically excluded somewhere or because it is deemed to be a function and therefore not within the scope of the primary legislation?

All this is leading me to try to get a much clearer idea of the services that are likely to be within the scope of the order. If these other activities, one way or another, are excluded, what is included? Perhaps the noble Baroness can give us one or two more specific examples of that. If the issue of fire and rescue authorities dealing with emergencies such as collapsed buildings and hazardous materials are not automatically outwith the scope of the order and are therefore potentially within the operation of the community right to challenge, can the noble Baroness specify why those particular activities have been included? It was clearly thought during the consultation that they would be excluded. They are obviously very important and, in some respects, highly technical services.

On grounds for rejection, the noble Baroness referred to paragraph 3. What happens if there are changes in the consortium or changes in subcontractors during the course of a contract? Is that simply a matter that has to be dealt with within the contractual arrangements, or are there other provisions which enable a rethink or review in those circumstances?

Paragraph 5, to which the Minister referred, is something with which we instinctively agree, but can we hear a little more about the specific type of services which are envisaged being excluded under that paragraph?

Paragraph 7 is, presumably, in part about making sure that what is being conducted is evidenced. It talks about it being committed in writing. Would the position not be the same if, although not actually committed in writing, there was some other evidence that suggested that there was a negotiation under way?

What is the position if a community right to challenge involved, as might well happen, the disproportionate cost of a procurement activity? I can see nothing specific in the order which would take that, of itself, outside the scope. Similarly, what about repeated challenges? Each one might not, of itself, be frivolous or vexatious; indeed, they might come in a succession of challenges from different organisations or consortia. Is there not, or should there not, be provision, which says: enough is enough, we have had, within this time period, too many challenges under these provisions and this is consuming a lot of important and valuable time? I understand that there is no appeals process, because a lot of this is the judgment of the relevant authority, and I think that that is the right thing to do, but presumably it does not preclude the authority from acting reasonably, because there would be other legal challenges if it did not.

The noble Baroness referred to the consultation and the paucity of responses from fire and rescue sector respondents. I think that only six responded positively in favour of these authorities becoming relevant authorities. The noble Baroness referred to consultation with representatives of the sector. Was the Fire Brigades Union one of the consultees in that process?

I refer finally to the negative order which has been brought out in parallel, because the clock is ticking, if we are to do something by way of a take note or other Motion; we have to think carefully about that. Paragraph 7.18 of the Explanatory Memorandum, refers to the exclusion from community right to challenge of,

“services that are: jointly commissioned by a relevant authority and the NHS; that are commissioned pursuant to a partnership arrangement between the NHS and a relevant authority; or are commissioned by the NHS on behalf of a relevant authority”.

That is only until 1 April 2014, as the Explanatory Note to the order says—namely, during the critical period of major changes to the NHS commissioning architecture. My specific question is on what basis it is considered that the deadline of 1 April 2014 is sufficient for those other arrangements to bed in.

Paragraph 7.10 talks about the requirement to carry out a procurement exercise if the relevant authority accepts an expression of interest. I do not think that anywhere in the arrangements the cost itself—I refer to it in relation to the other instrument—would be a reason in itself for rejecting an expression of interest from a relevant authority. I would be grateful if the Minister could deal with those matters. Our full support for these instruments depends in part on understanding the scope of what remains within them for fire and rescue authorities and what is outside for one reason or another.

[Baroness Hanham]

My Lords, I thank the noble Lord for his usual searching questions and being well briefed. I start with the provision that fire and rescue services and any other public body could be included, but they are not at the moment. Beyond the fire and rescue authorities, other public bodies could be included if that seemed right, but that would have to come through in regulations. We would consider such an extension, which could also include an extension to central government services; so this could be widened. We know that a number of respondents to the consultation supported the extension to implement the right as currently constituted. I hope that that covers that.

On what would be subject to challenge, as I am sure the noble Lord appreciates, fire and emergency services are subject to primary legislation, part of which says that fires must be fought by recognised firefighters. Anything that would be suitable for a contract or a bid would be outside that, unless some form of mutualisation were being considered. That would mean something such as procurement and the maintenance of fire appliances, training, emergency call handling, IT or administration. Those are the areas where the challenge could be effective and could take place.

The noble Lord asked whether the Fire Brigades Union was a consultee. The consultation was open to all interested parties, which included the union. It did not respond, but as I said in my opening remarks, because it did not the department went out to further consultation with the fire brigades and their representatives, and they were broadly supportive of what was being considered.

On the reasons for rejection, vexatious rejections can include expressions of interest on the grounds of being frivolous or vexatious, and that can be interpreted quite widely. If something was considered to be being put forward without very good grounds, it could probably be rejected on that basis.

Right at the end of his remarks, the noble Lord asked whether costs could be taken into account once a bid had been put forward. My gut reaction is that it is only an expression of interest at that stage; it is not a bid with a fully worked-out contract. If there is an application or consideration that a voluntary organisation could do the job better, having put forward the bid, as it is entitled to do, at the next procurement, either triggered by that or at the normal stage, it would be invited to put a bid forward and the costs would then have to be taken into account. Clearly, if it was not competitive, it would not win the bid.

[Lord McKenzie of Luton]

As I understand it, if there is an expression of interest, the relevant authority has either to accept it or to reject it on some grounds. If there are no grounds for rejection but the cost of a procurement exercise might be wholly disproportionate to the service sought, that of itself does not seem to be a reason to reject the offer. If it is, perhaps the noble Baroness can explain within which of the provisions it is covered.

[Baroness Hanham]

As I understand it, the cost to the authority of accepting a bid is not covered, because this is a challenge that triggers a procurement exercise, and the procurement exercise would include other bids from other people; so it would be a normal tendering process. The cost of that would be normal expenditure. Am I missing the point?

[Lord McKenzie of Luton]

With respect, if the bid were rejected in the first place, procurement costs would not arise. That is the point that I am pressing. If there are no other reasons to reject the bid and there therefore has to be a procurement exercise incurring costs, the pass is sold. Should the potential costs of procurement themselves be a reason to be able to reject the offer?

[Baroness Hanham]

The answer to that, on projected costs, is no, because, as I said at the outset, the initial challenge is on the standard or quality of service. The question of cost would come subsequently when the bid was being considered. I am hearing much from my officials behind me. Is that correct? They think that it is, unless I misunderstood the noble Lord’s question. If that is not correct, I will come back to it.

This note gives me the other side of the story. The procurement exercise might actually lead to savings for the authority. We are still on the same level. Any cost to the authority comes if and when the procurement process takes place. The cost to the bidder or the local authority at the challenge stage is not taken into account. I think that that is all right.

The noble Lord also asked whether, once a bid has been put in process and contracted by a consortium, any change to the consortium would affect the contract. As with any other contract, it would jeopardise the contract. It cannot just change people mid ship. I think that one issue behind this is concern that a voluntary organisation could put forward a bid and then end up being hijacked or taken on by a bigger company. The answer is no, we have to take it as it starts. If there were any changes to that, the contract would have to be dealt with.

On the National Health Service and the 24-month time-limited exemption, only a short deferral to 2014 is being asked for to enable the new National Health Service commissioners—both the clinical commissioners and the NHS commissioning boards—sufficient time to bed in, because they are not bedded in yet. Subsequently, contracts will need to be considered and, if need be, retendered. The NHS also needs to develop relationships, including with co-commissioners and providers or potential providers. That time gap will enable it to do that. Without it, the NHS may not have the capacity to do everything that is being asked of it and there could be considerable disruption to the system if a procurement exercise has to be undertaken within that period. That is the reason for the delay.

Any social care or health-related service provided by a relevant authority in its own right will be included as services. That includes children and adult mental health services, including those associated with dementia and learning disabilities. If they are integrated with health services, continued integration is critical. Therefore, they can be challenged as well. I hope that that covers the noble Lord’s questions.

[Lord McKenzie of Luton]

On potential repeat processes under the community right to challenge from different people but in succession, does there comes a point whereby the accumulation of having to deal with them of itself ought to be a reason to say, “Look, hang on. There ought to be a pause. We cannot forever go through this process.”?

[Baroness Hanham]

A series of bids would automatically trigger a procurement process so that they could be taken into account.

[Lord McKenzie of Luton]

I hear what the noble Baroness is saying.

Local Government Finance Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 12th June 2012 Lords Chamber

[Baroness Hanham]

My Lords, I thank all noble Lords who took part in the debate. As I expected at the outset, it covered not just principles but details, and I will not be able to answer every point made. I think that some speakers recognised that as we went through. However, all the points raised will be noted, and I have not the slightest doubt that we will return to them in Committee.

One of the first criticisms made was of the timetable. Perhaps it is worth dealing with that first. We recognise that because of the time taken for the Bill to get through the other House and this, the process will be challenging—but we are quite clear that it will be achievable. Local authorities have already received statements of intent and impact assessments. They are well apprised of what will be involved. We have published guidance to all local authorities for them to understand what their responsibilities are and are likely to be, particularly in relation to vulnerable groups and the setting out of general principles of incentives. Therefore, they can start consulting, forming schemes and thinking about discount schemes. The noble Lord, Lord Beecham, shakes his head, but the information is there. Local authorities know the purpose of the Bill; they were involved in local working parties; and while they may not all agree with the outcome, there is not the slightest doubt that they will be able to go forward and start on implementation.

I hope and expect that we will be able to discuss the issues that have been raised. I will make an offer immediately: anybody who wishes to discuss points with me and my noble friend Lord Attlee, who will deal with some sections of council tax benefit, may do so. We are open to discussion. We may not entirely like or agree with what you say, and we may not conclude that what you say is right, but it is important that Members of the Committee should know that we are available if that is what is required.

I cannot cover all the points, but there were one or two that I cannot overlook. The retention of business rates is something for which local government has asked for ages. When I was a local government leader, I thought it would be a very good idea if we were able to retain local business rates. The process we have started does that. It makes it clear that local government collects the business rate and, instead of passing it all on to central government, can keep some. That is fine. The 50% Treasury requirement will absorb some of it, but the 50% will come back to local government in the form of grants. So it is not lost to local government. I totally accept that it is not within the power of local government to alter it, but it is not lost. It is not going into the Treasury coffers and staying there; it is coming back.

As to the points that were made about Kensington and Chelsea and the north, no Member has commented today on the fact that there is a levy system. That levy system will work on councils which raise what is called “disproportionate” sums of money. It will affect councils such as Kensington and Chelsea and Westminster, whose contributions will be top-sliced off because they are deemed to be too high. By any other name it is an equalisation scheme, and noble Lords will want to recognise that.

There has been a great deal of discussion on the relationship between universal credit and the welfare reform process and how council tax benefit is aligned up with that. I know that we will have those discussions at length in Committee but I will confirm immediately to the noble Lord, Lord McKenzie, that the implementation of universal credit is not slipping from 2013. The expected date for implementation is 2013 as it has always has been. There has been no change to that.

[Lord McKenzie of Luton]

Can the Minister confirm whether the implementation in October 2013 is in respect of all new claimants or only some new claimants?

[Baroness Hanham]

There is a nod from the Box. I shall have to let the noble Lord know. I said the scheme would be implemented in 2013. My noble friend Lord Attlee will retrieve that information and I will pass it on.

The noble Lord, Lord Tope, who I thank for his basically supportive speech, asked when the draft regulations for the council tax support would be published and whether we would have an opportunity to see them. The Government will publish those draft regulations for the pensioner and default schemes in July. These key regulations will be needed by local authorities and IT suppliers, which is why we published on 17 May the statements of intent on both pensioner protections and the default scheme. As I said earlier, that information is there and should be available to local authorities.

Indeed, I know of at least one local authority which has already constructed its scheme on council tax discounts on the basis of what it knows already and it is ready to announce it. So it can be done. It is not something that anyone needs to hide behind.

I am grateful that practically everyone has supported the principle of TIF. There is no doubt that with TIF 1 councils are free to put up projects and take them forward. TIF 2 is limited because of the general financial situation at the moment; we will not be able to spend a huge amount of money on it at present. However, it is there and, if it goes well, further consideration will be given to it. As noble Lords know, TIF 2 is confined basically to the core cities putting forward good projects. That is already happening and we know that there are projects which can be developed quite quickly.

My friend the noble Earl, Lord Lytton—I call him my friend because he was very nice last time and I hope that we will get the same this time—has raised with me the question of parish councils, the contributions that they make and the fact that they do not get support from the business rate. I will come back to that because I am sure it will come up in Committee. With regard to valuations and the revaluation, as the noble Earl knows, there is no intention to re-evaluate the council tax base at the moment. On the appeals process for current appeals, we are working with the Valuation Tribunal and the Ministry of Justice to establish the mix of expertise that may be necessary to hear these appeals and ensure that they are not held up.

On impact assessments, as I said earlier, we have published a statement of intent so that there is enough information available, particularly on the equality impact assessment. We are satisfied that the work is now well under way. The amendments made on Report in the Commons are intended to make it clear that there are no legal barriers to preparing for and carrying out consultation prior to Royal Assent. A number of noble Lords referred to the complexity of the scheme. It is only fair to say that the current scheme is blindingly complex, but it is anticipated that the new one will be less so once the situation is understood and we get through the legislation.

I touched on the 100% of business rate not being held by local government, and I am sure that it is something we will discuss.

I was asked about places that struggle to attract economic growth; it was a point made by the noble Lord, Lord Smith of Leigh. Part of that will be addressed by the system of tariffs and top-ups. The base, as noble Lords have said, will be that of 2010, but it will be supported by tariffs that take funding away from local authorities with more than the base and given to those with less. There is a level playing field when all this starts, and those tariffs and top-ups will be raised by RPI.

The noble Lord, Lord Best, asked whether local authorities will be able get guidance on how to support the universal credit taper. I am pleased to confirm that the department has already published guidance on the key considerations that local authorities will need to take into account in designing a scheme that supports work incentives and the objectives of universal credit, so that is under way.

I turn now to the noble Lord, Lord Wigley, with regard to the Welsh clauses. The amendments to the Bill moved in the other place were tabled at the request of the Welsh Assembly. As we understand the process—the noble Lord may differ from me on this—the legislative consent Motion can be tabled only after the amendments have been passed and the new clauses have been laid, and they must be considered by the Assembly before the Bill completes its passage through the House. I think that the procedural arrangements sound all right but if, having thought about it, the noble Lord still does not feel they do, perhaps he will let me know as soon as possible.

The noble Lord, Lord Warner, raised the question of adult social care. I cannot answer that specifically, but as he and the House knows, adult social care is at the front of everyone’s mind. The issue is not confined to local government because it covers a number of departments. A White Paper is being completed at the moment. I think that there will be other venues in which to discuss adult social care, and in a way I hope that it does not trip up in this Bill because, while it is part of local government finance, it is not the major financial implication for local government.

Housing

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 22nd May 2012 Lords Chamber

[Lord McKenzie of Luton]

To ask Her Majesty’s Government what action they propose to take in the light of the housebuilding data for the quarter to March 2012.

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

My Lords, the Government are already taking action. The housing strategy launched in November last year announced an ambitious measure to boost house- building substantially, including a £1.3 billion investment to get Britain building and plans to deliver up to 170,000 affordable homes. We are releasing public sector land for up to 100,000 new homes and helping buyers through the NewBuy scheme.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for that reply, which I suggest is massively complacent but surpassed by Grant Shapps, the Housing Minister, who is on record as saying that “Building more homes” in this country,

“is the gold standard upon which we shall be judged”.

Yet there were just 109,000 completions in England in 2011—the second lowest total of any year since 1946. Seasonally adjusted housing starts to March 2012 were 11% below the December quarter and, for the year to March 2012, 6% below the previous year. Things are getting worse not better while homelessness and rough sleeping are increasing—even without further housing benefit cuts coming down the track—and private sector rents are rising. At a time when the construction sector needs work, people need jobs and families need homes, what are the Government going to do to step up to the challenge?

[Baroness Hanham]

My Lords, the housing strategy steps up precisely to the challenge. Some of the completions depend, of course, on when the start was and not all the starts were since 2010, so the previous programme had some effect on the programme now. However, the Government are determined that there will be a big boost to housing starts, to affordable housing and to private housing. There will be support for that in the programmes that we have outlined. By the time the spending review is completed there will be, as I said, 170,000 new affordable homes built.

Housing: Rented Homes

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 1st December 2011 Lords Chamber

[Baroness Hanham]

My Lords, the Government have a number of policies. The right reverend Prelate will know that a community right to build is one of the policies coming forward, which will enable communities to decide whether they can contribute in some way to getting affordable housing. Secondly, we are allowing decisions about the requirement for housing to be made locally so that local people have a bigger say in what is provided and where. We fully recognise the fact that affordable housing is needed in country villages but we also believe that if local people know where it is going to be, understand where it is going to be and are happy with that, there is far more likelihood that those properties will be built.

[Lord McKenzie of Luton]

My Lords, the Minister will be aware of provisions in the Welfare Reform Bill whereby housing benefit will be docked for those tenants deemed to underoccupy their house, even if there is no suitable available accommodation for them to move into. The noble Baroness will also be aware of the announcement on Tuesday about the so-called reinvigoration of the right to buy, with 50 per cent discounts. Will those tenants deemed to underoccupy their house be able to benefit from the right-to-buy provisions at the full 50 per cent discount?

[Baroness Hanham]

My Lords, I must be perfectly honest that I cannot answer that correctly. I will write to the noble Lord on that aspect. However, as regards the proposal on the right to buy, it is suggested that the discount will go up to 50 per cent, which means that there will be more opportunity for people to take advantage of the right to buy. The other side of that is that, unlike in the past where a substantial proportion of a deposit had to come back to central government, it will be retained locally so that it can be used to provide further affordable housing.

Population: United Kingdom

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 31st October 2011 Lords Chamber

[Baroness Hanham]

I hope the noble Lord is not expecting a reply to that question in those terms. To some extent, land is divided up just as this country is. There is agricultural land; countryside land, which is not used for housing; and land in cities. It is interesting that at the moment 13 per cent of land—1.6 million hectares—is green belt; 25 per cent of England is in a national park or an area of outstanding national beauty; and the area of England—around 13 million square hectares, just over 50,000 square miles—is divided up into greenfield land, green belt, city development and other uses. Where Solomon comes into this or whether there should be an organisation or group to spread out the land and say what it is used for is not on the radar at the moment.

[Lord McKenzie of Luton]

My Lords, the introduction of a new planning system has not been without controversy. In particular there are concerns that, where local development plans are not up to date, the presumption in favour of sustainable development could lead to largely unfettered development. What assurance can the Minister give us about transitional provisions to cover and protect those situations where local plans are not fully up to date?

[Baroness Hanham]

My Lords, there has been quite a lot of misinformation in the media about the presumption in favour of sustainable development. That presumption originated in 1947. It was then turned into the plan-led approach in 1991, and the presumption has been there all along.

With regard to the presumption now coming through from the Localism Bill, where plans are not up to date, as the noble Lord knows—we have had plenty of discussions about this—the expectation is that local plans must be brought up to date as quickly as possible in order to make sure that development is carried out within the right parameters. Where those local plans are not up to date, the policies set out in the national planning policy framework will provide a robust framework for making decisions and safeguarding the things that matter to people, such as the green belt and areas of physical flooding.

We have discussed the transition over many weeks, and all I can say at the moment is that the need for some transition is well understood.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 31st October 2011 Lords Chamber

[Lord McKenzie of Luton]

When the draft NPPF was issued for consultation, did the Government seek to change what had hitherto been the balance between the various components of sustainable development at that stage? Was it the Government’s intent to place greater emphasis on economic growth at the expense of the others? I do not assert that that is where the Government may end up, but obviously there was great concern from the wording of the document that that was the intention at that stage. Can the noble Baroness dispel that concern, or is it a real issue?

[Baroness Hanham]

My Lords, the initial expectation in the NPPF was that there would be a balanced approach to this. There are the three legs that are really relevant to planning: economic, social and environmental. Brundtland, of course, includes science, and we have been given lots of other ideas of what it might include. If I can just leave it at that, we expect this to be a balanced approach to sustainable development and we recognise that there are elements that are more reflective of the planning system. Then we will have to wait and see what comes out of the discussions.

--- Later in debate ---

[Baroness Hanham]

My Lords, I thought the noble Lord had had his last word on this Bill, so I am a little bit taken aback. I will get an answer to that question as we go along. The answer is no—only adopted plans will have the certificate of conformity.

I hope that I have made it clear that the transitional arrangements are still under consideration but that there will be transitional arrangements. I have been asked whether there will be guidance from the Secretary of State. It will set out as clearly as possible what the transitional arrangements are and any other procedural issues.

Let me conclude by reiterating—this is not my last word, unfortunately—the importance that this Government place on local plans and the need for effective arrangements, delivered through policy or guidance, to manage transition. I want to offer a firm reassurance that the Government recognise the importance of this, as I said earlier today, and will ensure that this is addressed alongside the revisions that are made to the NPPF itself. We are of course looking very closely at all the suggestions that have been made about transition during the consultation process.

We recognise there are genuine issues to be addressed about the status of local plans during the transitional period. I hope that I have addressed some of these tonight, but we will also be considering them further. With these reassurances I hope that the noble Lord will withdraw the amendment.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for as clear an indication as she is able to give about transition. I take some comfort from that. Whether it ends up in the NPPF or in guidance is not the most important issue as long as it is there and it is effective.

I thank other noble Lords who have supported and argued in favour of transition, including my noble friend Lord Howarth and the noble Lords, Lord Best and Lord Greaves. I thank the noble Lord, Lord Greaves, for his kind words—this must not get too much like a love-in—which we ought to reciprocate. This has been an interesting experience for those of us who are new to planning legislation. It has been an intriguing position. I used to think that Luton was the centre of the universe, but I understand Pendle now may begin to be a bit of a rival—perhaps we will pay a visit one day to see.

I am happy to withdraw the amendment because I believe the noble Baroness has given us the strongest degree of reassurance I have heard to date on this issue.

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[Lord McKenzie of Luton]

My Lords, this is the last time I shall speak on the Bill. Perhaps I may start by expressing support for the noble Lord, Lord Best, and his inquiries. I hope that he will receive the confirmations that he sought, certainly on the basis of the helpful background note that we received from the Government today, which confirms that proceeding via development plan documents and local development orders would obviate the need for referendums.

I should like to offer my thanks to several people. Certainly, I thank the Bill Minister, the noble Baroness, Lady Hanham, and her team, the noble Earl, Lord Attlee, the noble Lord, Lord Shutt, and the noble Lord, Lord Taylor of Holbeach, who has gone on to other things. I know what hard work it can be working on a Bill and what a tremendous amount of effort has been put in. It has been a listening team, which has boded well for the outcome of the Bill. I thank also the noble Lord, Lord Tope, the manager, and his team, who have had a tremendous input into the Bill.

The noble Lord, Lord Tope, made the point that a substantial number of changes have been made to the Bill. I have not worked on a Bill that has changed quite so much during its passage through your Lordships’ House. That has been due to the power of the contributions around the Chamber. It has not been the Opposition particularly or any particular group. The Government have listened to the voices of experience and common sense. Certainly, the Cross-Benchers have played their full part and I pay tribute to the noble Lord, Lord Best, in particular. I think that we all look up to him on housing matters. I thank my team and I offer big thanks also to the Bill team. Particularly at this stage of the proceedings there are a lot of last-minute amendments in order to try to get everything in shape for the conclusion of the Bill. The team has worked very hard and has always been receptive to inquiries that we have made. This has been a really good exercise in scrutiny of what, frankly, was not a great piece of legislation when it arrived in this place. It goes back to the other place in much better form. I am not quite sure how it will find the time to deal with all the amendments but I wish it well.

[Baroness Hanham]

My Lords, before we get lost in the fact that we are nearly there, I will answer the noble Lord, Lord Best, briefly, but I hope satisfactorily. I want to make it clear that local authorities can use existing planning mechanisms to take forward planning proposals that a neighbourhood forum or parish council has produced without needing to hold a referendum. The draft neighbourhood plan policies can be taken forward by the local authority as a development plan document which is subject to independent examination but not referendum. Similarly, the permissions in the neighbourhood development order can be taken forward as a local development order which is subject to neither independent examination nor referendum. So both development plan documents and local development orders are required to be subject to appropriate and effective consultation.

However, it is an underpinning principle of this Bill that a parish council or neighbourhood forum should always be able to ask the wider community to decide in a referendum whether a neighbourhood plan or order should come into force. Therefore, neighbourhood development plans and neighbourhood development orders, which are tools that the Localism Bill introduces for planning at a neighbourhood level, will always be subject to a referendum of the neighbourhood. The referendum gives everyone in the community the opportunity to have their say and demonstrate evidence of community support in a manner that cannot be demonstrated through a petition or consultation.

Local authorities that work effectively with their communities in planning at a neighbourhood level will be in a good position to decide whether to take emerging proposals through the development plan or local development order route, but it has to be right that if a local community wants it, it can use the power in the Bill to prepare a neighbourhood development plan or order and ensure that the wider community has the final say in a referendum. The removal of that right would undermine one of the core building blocks of neighbourhood planning as envisaged in the Localism Bill.

With those reassurances and clarifications, I hope that the noble Lord will be willing to withdraw the amendment.

Draft National Planning Policy Framework

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 27th October 2011 Grand Committee

[Baroness Hanham]

My Lords, the planning inspectorate will be responsible for issuing the certificates and also for ensuring that the fast-tracking of plans is put in hand.

[Lord McKenzie of Luton]

The noble Baroness has been very generous with her time, but, just for clarity, if there is a local plan which is otherwise bang up to date, would the introduction of the NPPF itself cause that to be out of date or incomplete?

[Baroness Hanham]

The answer to that is no, quite categorically. It is not going to be out of date but the NPPF will then be a matter that has to be taken into account alongside it.

I hope that I have dealt with the more general aspects. If there are specific aspects that I need to take up further, of course I will do that. I again thank noble Lords who have taken part and who have given us the benefit of their advice, for which I am very grateful. I am grateful for the many and calm contributions we have had this afternoon. With that, I beg leave to conclude the proceedings.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 17th October 2011 Lords Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

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[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 McKenzie of Luton]

My Lords, we support all three amendments.

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[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.

--- Later in debate ---

[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.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 17th October 2011 Lords Chamber

[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.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 12th October 2011 Lords Chamber

[Lord McKenzie of Luton]

I thank the noble Lord, Lord Greaves, for moving this amendment. We have added our names to it and give it our full support. On a point of detail, I wonder if the reference to the Planning Act in subsection (3) of the amendment should be 2008 rather than 2004. I particularly commend the spelling out of the guiding principles rather than the adoption of the usual shorthand of the 2005 principles.

The amendment adopts the formulation of promoting sustainable development rather than contributing to it or furthering it, which we discussed in Committee. As the noble Lord said, this amendment would enshrine in primary legislation the duty to promote sustainable development at every tier of the process, including the Secretary of State, although the duty imposed on the Secretary of State relates only to the functions concerning applications for development consent, and this would not appear to cover, for example, the Secretary of State’s engagement with promulgating a national planning policy framework. We might just reflect on that.

There has been a divide in part of our debate today between those who say that these definitions should not be in primary legislation, those who say that it should be in the national planning policy framework and those who say that we should not necessarily seek to spell these out at all. We believe that it is right for it to be in primary legislation. I agree with the noble Baroness, Lady Parminter, on that. A number of noble Lords, including the noble Lord, Lord Deben, and my noble friend Lord Howarth, queried whether doing so in a sense gives litigants a chance to challenge every decision whichever way it goes. I would argue a corollary: that not having a reasonably sophisticated framework in which these things can be judged equally, if not creating a greater opportunity for litigation, which is one of the key issues with the national planning policy framework as it stands, is a lawyer’s charter.

The noble Lord, Lord Lucas, said that we cannot possibly live every part of our life by this wording. He is right. There will always be a balance, a judgment, to be made about future generations and the current, and about local and national. To do that within the context that this wording creates gives us a real opportunity of achieving what we would broadly all sign up to.

When we discussed this matter in Committee, I understood that the Minister had indicated no change to the Labour Government’s position on the meaning of sustainable development. I think that we had one exchange and I thought that that was confirmed. If this is correct, it is very hard to see how this is reflected in the draft NPPF, which might be interpreted as giving primacy to economic development and be a view that the noble Lord, Lord Deben, may support.

A number of inclusions or omissions suggest a move away from the definition reflected in the amendment in the name of the noble Lord, Lord Greaves. The abandonment of brownfield first, the lack of content around social justice or equality and weaknesses around affordable housing proposals do not seem consistent with no change to the definition of sustainable development. If this debate does nothing else, it gives us the opportunity to hear directly from the Front Bench whether that definition is something to which it adheres, however it may be expressed in legislation or be the framework itself.

The right reverend Prelate raised spirituality and the extent to which that is included. One might argue that it is encompassed within ensuring a strong, healthy and just society, which may be the root to addressing the issues identified by the right reverend Prelate. The noble Lord, Lord Deben, referred to sustainability as being what conservatism was all about. I read these principles and say that it is a fairly good description of what socialism is all about. I am not quite sure what conclusion we might reach from that. It will never be an all-encompassing definition. Certainly, it seems to me to be not inappropriate, if we can get this in the Bill, to spell it out, to expand it and to meet the aspirations of my noble friend about including cultural in the definition. It seems to me that a strong strand from this debate is that there does not have to be a conflict between growth and the environment. The two can be encompassed. There will always be a balance in that judgment.

I was as interested as ever to hear from the noble Lord, Lord Jenkin, about his earlier experience and his historical references. He was there right at the start, although perhaps there is a competing claim that it was the noble Lord, Lord Deben, who produced, via John Major, the term “sustainability” first. I do not mind who produced it first but we should seek to make sure that we encompass it in these important planning changes before us in the most appropriate way.

We would sign up to the definition and to it being in the Bill. Given where we are in this process, it is very important that we have a clear position from the Government certainly no later than Third Reading. Whether we get partial satisfaction today on this remains to be seen but we certainly cannot let it drift beyond Third Reading. If the Government are not able to bring something forward by then, I urge the noble Lord, Lord Greaves, to revisit this—we would support him—and test the opinion of the House.

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

My Lords, in the daily horoscopes sometimes I am a Virgo and sometimes a Librarian. Today I shall be a Librarian because they are hugely well balanced and see both sides of any discussion. That is precisely the position that I am in today. It has been a very helpful discussion with, as so often, real feelings behind it. From the outset, I shall say that I hear what everybody has to say about this. I may not be able to provide a definitive answer by the end but we are getting nearer to one.

The balancing act here is to do with the question of a definition. The noble Lord, Lord Howarth, put his finger on it: the more you define it, the more trouble you get into legally. This is something that we have to take into account. Indeed, what we have also learnt from the debate is that there are potentially still extras that people would like to put into the definition. I fully see why and accept the wish of the right reverend Prelate to see spirituality included, and what the noble Baroness, Lady Andrews, said about culture and heritage. I hear what my noble friend Lord Cormack says about the importance of development enhancing. However, with this we begin to string out a lot of things that sustainable development is meant to cover. This is a difficulty that perhaps both Governments have had over the period. We all believe in sustainability. We can all define it to our own satisfaction, but the question is whether through that definition you end up in a legal minefield. The comments and speeches today have been very helpful in that regard and will certainly take us forward.

The first thing that I want to say is that we support the principle that planning should promote sustainable development. Indeed, it is central to the approach that we have taken in the draft national planning policy framework. The framework, as presently structured, makes it clear that planning has three pillars: the environmental, the economic and the social. Those are the three pillars that contribute most to a planning decision. We fully recognise that we have to balance those three elements.

Secondly, we also believe that the objective of sustainable development is appropriate for statute. There is already a duty on those preparing local plans to do so with the objective of contributing to the achievement of sustainable development. That is already the situation. The Bill will introduce a new duty to co-operate in relation to planning for sustainable development, which will ensure that councils and other public bodies co-operate effectively on strategic planning matters, including sustainable development. Our Amendment 210D, which I will move formally at the end, would extend this principle to neighbourhood planning by placing on all neighbourhood planning proposals an explicit condition relating to sustainable development. This ensures that the principle of sustainable development runs through all levels of plan-making—strategic, local and neighbourhood.

Thirdly, I understand the desire to ensure that there is clarity and consistency in the meaning of sustainable development. We have heard this afternoon how difficult that is to achieve. Everybody sees just another little gate that they might open to put forward something that they feel strongly about. I recognise that there are strong views and, as I said at the beginning, I have heard clearly what has been said. I shall ask that we reflect on that when I come to the end.

--- Later in debate ---

[Baroness Hanham]

I did not say that. I said that they will be put forward as soon as possible after Royal Assent. The consultation on the environmental assessment is taking place. You cannot do anything without having taken account of the consultation, so the revocations will be only after the consultation has been considered.

[Lord McKenzie of Luton]

I am sorry to ask the Minister again, but I think it is important we get to the bottom of this. Can she tell us why there is this change in approach? This was not the original plan, was it? If it was, this group of amendments would not be necessary. How does the presumption in favour of sustainable development work in the interim? For so long as those local plans and the regional spatial strategies which support them are in place, will they hold sway? That will obviously change the minute the plug is pulled, if it is, on the regional spatial strategies. I am interested to understand why and at what point it was decided to undertake these environmental assessments. Can the Minister confirm that what is being assessed is the consequence of the revocation of those strategies? It seems a fairly significant change in where we all thought we were heading and did not want to head.

--- Later in debate ---

[Baroness Hanham]

My Lords, I think I am right in saying that there was a legal challenge that required these environmental assessments to be carried out. It is a necessity to make sure that they are all carried forward properly. The noble Lord asked about the relevance to the presumption in favour of sustainable development. There will be no change to that until the local development frameworks are developed and the national planning framework comes in.

[Lord McKenzie of Luton]

If the noble Baroness would forgive me, I am trying to understand the status of the NPPF in the interim before—or if—these strategies are revoked. Where does that leave the presumption over that period? It seems from what she said that there has been a legal challenge which, essentially, has forced the Government to go down this route. I therefore presume that this is not just a cosmetic exercise but is real; and the consequence could be that some strategies might be revoked and others not. Is that right? It seems to me to leave an entirely chaotic situation. Does the Minister recognise that it could lead us into a situation which nobody has contemplated or to date recognised?

[Baroness Hanham]

My Lords, the national planning policy framework is being consulted upon and, once it is an approved document, it will be the document to which people will refer and will replace the regional strategies. The consultation on the environmental impact assessments is a consultation, as I have said, and we will need time to consider it. If all the orders can be dealt with at, or nearly, the same time, they will be. All I can say is that a consultation is a consultation and there are always results; you cannot ignore them so we will have to wait and see the response and the impact of it. I will not know that until the 12-week period is over and the consultation can be considered.

As for regional spatial strategies, their effect stays until they are revoked. The national planning policy framework will then either have been put forward just before that or very shortly afterwards. By that stage, anyway, it will be capable of being the primary document.

[Lord McKenzie of Luton]

I will not press the Minister again but, given what I think is a quite significant development, could I ask for the chance of discussions before Third Reading, so we fully understand all its ramifications?

[Baroness Hanham]

I am sorry that I have not succeeded in convincing the noble Lord but, yes, of course we are happy to discuss this issue further and we will make arrangements to do that.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, my noble friend Lady Young’s amendments are entirely reasonable and I see the thrust of them, but I thought that they were about removing the term “sustainable” from provisions in the Bill and not adding it.

On the duty to co-operate, the noble Lord, Lord Deben, makes an interesting point about knowing how to be local. However, to be local on a sustainable basis in some respects needs co-operation and engagement not only with near neighbours but on a broader front. Some of us have ongoing concerns about the demise of regional spatial strategies. They were not necessarily the answer to everything and were perhaps not perfect, but with those gone the only thing that exists between the regional strategies that were there hitherto and local authorities is this duty to co-operate.

It seems to me that there should be requirements on local authorities to co-operate. Part of the problem is knowing how extensive that co-operation would and should be—for example, on transport or waste issues. Unless there is recognition that this must be an integral part of the way forward, then I think this really is going to be a recipe for isolationism, that we are going to draw up the barriers around our little location, irrespective of what happens around us. As regards definitions of the eastern region, I can say as somebody who lives in Luton—long since known as the urban bottom of the county—that Luton and the rest of Bedfordshire do not always do things the same way. I must apologise—I have been referring to the noble Lord, Lord Gummer, and it should be Lord Deben. I do apologise. Thank you for that correction.

I hope that I have made my point. It seems to me that my noble friend is addressing the strength and importance of the duty to co-operate, and in that we support her.

[Baroness Hanham]

My Lords, I, too, am guilty of the terrible solecism of not referring to the noble Lord as Lord Deben. I have known him so long as John Gummer that Gummer naturally slipped out. None the less, I apologise.

--- Later in debate ---

[Baroness Hanham]

My Lords, I thank noble Lords for their contributions. As one would expect, it ended up with a wider discussion on housing. We have had that on earlier parts of the Bill, which does not mean that we do not have to listen again to the important points that were made. Before I start on the amendments, two areas of thought were triggered in my mind. A concern was raised by the noble Lord, Lord Newton, that with localism and local neighbourhood planning, no one would accept having housing in their area and that they keep trying to shovel it off to somewhere else. That will not be possible because the neighbourhood plans will have to conform to the local development plans, which will have a clear indication of, first, the number of properties and housing they expect to be built and, secondly, the general area. The neighbourhood plans will be able perhaps to say, “Well, we would rather not have it there but we could have it there”. There will be no possibility that they will not deliver what the local development framework requires. That should be helpful.

The Government are committed to 150,000 new homes before the next election, which will be a great deal more than we have seen over the past few years. My honourable friend Grant Shapps at the other end is actively pursuing policies to ensure that housing is developed. The new house bonus is meant to contribute to and encourage both the building of new housing and the improvement of properties. It covers affordable rents and encourages other capital expenditure. The pressure to produce more housing will be there from the Government.

We are asked to talk here about the possibility of a mandatory housing assessment, which we have already discussed a couple of times. I have tried to persuade the House, so far without success, that it is unnecessary to put this in the Bill formally. As my noble friend Lord Greaves has just helpfully pointed out and as I was going to say, the draft national planning policy framework has very clear policies on how much housing must be built and what the local authority’s responsibility will be. That has been combined with the guidance on strategic housing market assessments, which already sets out a framework for local authorities to take account of need and demand for both market and affordable housing, and to keep this under review over the plan period.

Local authorities already need to prepare an annual monitoring report covering housing delivery, which they must publish locally and which sets the context for reviews of plan policies. Preparing evidence is part and parcel of the plan-making process that has its own robust requirements for publication and consultation. Making local authorities publish assessments prior to undertaking local plan preparation would add yet another layer of unnecessary bureaucracy. I fully agree that local authorities should understand and plan properly for housing and affordable housing requirements. However, since existing requirements perform the functions intended by these amendments, I cannot support them. They are already being carried out.

An important point was raised by the noble Baroness, Lady Whitaker, and much supported by my noble friend Lord Boswell, on Gypsies and Travellers. I am sure noble Lords are aware that local authorities have a statutory responsibility for assessing Travellers’ needs. Every local authority, when undertaking a review of housing needs for its district, is required to consider the needs of Travellers under Section 8 of the Housing Act 1985. Local authorities are also required to prepare a strategy to demonstrate how they will meet the accommodation requirements of Travellers. All the requirements are there; it is up to the local authorities to make sure that they fulfil them and carry out their obligations under the various aspects of legislation.

With the explanation that these amendments are not needed, and that there are good, robust policies to ensure that there is housing assessment as well as to make sure that affordable housing and other housing will be built, I hope the noble Lord will withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I am grateful to the Minister for her response, although I do not agree with some of what she said. More than 150,000 new homes a year—

--- Later in debate ---

[Baroness Hanham]

Over four years.

[Lord McKenzie of Luton]

I am sorry—over four years. However, even 150,000 a year is less than what the previous Government achieved. If you go back a couple of years, the number of housing starts was the highest for around 20 years. The Government constantly quote a later figure, which was affected by the financial crisis. However, if you look at the data over the period you will see something else.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 7th September 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I can be extremely brief. As the noble Lord, Lord Jenkin, indicated, we have put our name to the amendment and support it for the reasons that have been advanced by the noble Lords, Lord Palmer and Lord Jenkin. It is about getting long-term security of what has been agreed and what is seemingly in place into primary legislation. I am bound to say that we do not expect that Ken would overturn these arrangements any time soon. I can well understand that people may want security just in case it might cross his mind.

It is good to hear the noble Lord, Lord Jenkin, again in our debates. His long-standing engagement with housing in Luton under the old system was seen as one of the more important committees. It was 10 years before I was allowed on it. He has a great deal more experience than I do. I support the amendments and urge the Government to take them forward. We do not need to be apart on this. There is agreement on what is happening. It is the right thing to do.

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

My Lords, I thank all noble Lords who have participated in this. One of the most enlightening things that we have heard today is that the noble Lord, Lord Jenkin, took up the Housing Committee at the age of 35, as he has admitted that it was exactly 50 years ago and we know that today is his birthday. On behalf of the House we wish him a very happy birthday. Patrick, thank you for all that you do and the contribution that you make.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 5th September 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, my noble friend Lord Kennedy is having a well earned rest. He has passed the easy stuff to me.

In moving Amendment 23, I shall also speak to Amendment 24, which is consequential. Amendment 23 addresses the issue of tenancy strategies and seeks to replace the provisions in the Bill with an alternative formulation. It provides that the local housing authority in England, working with registered providers of social housing in its area, residents and other stakeholders, shall consider appropriate responses to relevant tenancy issues. The local housing authority must publish information detailing the approach taken locally to tenancy issues in any manner that it considers appropriate. The information may include how the local housing authority, registered providers and partners will work together in relation to a range of tenancy issues. The powers may be exercised by a single local housing authority or two or more local authorities acting jointly.

We have no objection in principle to tenancy strategies but consider the formulation in the Bill as it stands to be misplaced and too prescriptive. This was debated in the other place, so the issues are not new, just unresolved. Noble Lords will recognise that the amendment has been provided by the LGA and the National Housing Federation. The fundamental concern with how the Bill is drafted is that it reflects a centrist approach that of itself will do little to support better housing outcomes locally. Our amendment is an encouragement for co-operative working in developing strategies that reflect views not only of the local housing authority and registered providers of social housing but of residents and other stakeholders. The amendment could very much go with the grain of how councils are already working across the country with local landlords to identify and meet housing need. This work requires a good understanding of the local housing market, including new supply, the private rented sector, social housing, the impact of the new homes bonus and affordable rent—many of the issues debated earlier.

We have been presented with case studies that underline excellent work that is ongoing. I shall refer to two. There is the case of Hackney, where the Better Homes Partnership brings together a wide range of partners, including housing providers, community and voluntary representatives, to identify support and steer the delivery of Hackney’s long-term strategic objectives as set out in its sustainable community strategy. The partnership board is co-chaired by the deputy mayor and the chief executive of Hackney Homes, and the board has a housing management and housing investment subgroup that focused on strategic issues affecting Hackney’s people and places, such as antisocial behaviour, overcrowding, investment challenges and opportunities and the design and sustainability of new homes.

Shropshire Council’s housing strategy identifies housing needs and sets out how the council will meet them through an action plan agreed with internal and external partners. There is a clear focus on strengthening partnership with both registered social landlords and the private sector, and the council’s affordable housing allocation has been developed in consultation with tenants, applicants, housing associations and other stakeholders. The council is currently in discussion with registered providers regarding the development of its strategic tenancy policy.

The amendment would facilitate working across single local authority boundaries, as we have just instanced, and the development of local tenancy forums. Further, as the LGA points out, the timing of policy in Clause 137 is not well thought through. It requires the commencement of strategies that start in April 2012 but, given that the affordable rents model commenced in April 2011, that seems to be a bit late. I do not believe that we are apart on the need for strategic tenancy strategies, nor, I suspect, on the vision of how they might be developed. We suggest, though, that unfortunately once again the Secretary of State cannot let go and trust local councils and communities to deliver as they see fit. I beg to move.

[Baroness Hanham]

My Lords, I recognise that the amendment is founded on the concerns that the creation of tenancy strategies would enable local authorities to dictate to the housing associations in the area—exactly what the noble Lord, Lord McKenzie, said. I reassure the House that that cannot and will not be the case.

A housing association has to be aware of the strategy and take it into account as a relevant consideration when deciding what its own tenancy policy should be, but each individual landlord will be able to decide for himself—or itself, as far as the association is concerned— how it will use the new flexibilities that the new provisions in the Bill offer. We discussed that on the previous amendment.

Concerns in other quarters that a tenancy strategy represents the imposition of a heavy and centralist burden are, we believe, unfounded. All we are seeking to do is ensure that local policies on tenure are developed collaboratively and transparently, and that the tenancy strategy provides a simple framework for that to happen.

A tenancy strategy is not going to be difficult or burdensome to produce. There is no requirement for it to be in a specific format or to be of a particular length, and there is no barrier to local authorities working jointly with social landlords to produce one. I believe that we have struck the right balance between encouraging joint working and maintaining an individual landlord’s freedom to decide how they will use their new flexibilities, and that this is done in a light-touch way.

Clause 139 adds tenure to the matters on which the Secretary of State has the power to direct the social housing regulator regarding the standards that it has set. This power is key to the delivery of our proposals on tenure reform. The revised tenancy standard, to which I have already referred, will determine the detail of the additional freedoms on tenancies available to landlords and protections available to tenants, so it is right that the Government are able to give a direction on tenancy standards to the regulator. The Government’s power to direct the regulator is limited to a very few key areas, and it has always been acknowledged, including by the current regulator, that tenure is fundamentally a matter of government policy.

It is important to remember that the overall effect of the changes that we are making to the standards will actually be to reduce the level of regulation to which social landlords are subject and increase their flexibility. I hope that the noble Lord will accept that response and be willing to withdraw the amendment.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her response and her explanation of the Government’s position. She says that she is interested in and focused on a light-touch approach. I would, if anything, describe ours as slightly lighter and less centric, but we shall not argue about this. It is an issue that we have aired tonight and in another place. It is important that there is genuine flexibility in these arrangements, and that there are opportunities for full engagement across the piece locally when these strategies are being developed—not only by local housing authorities and providers but by representatives of tenants and the community more widely. That is the particularly important thing that we sought to probe in this amendment. Having said that, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, my noble friend Lord Kennedy has added his name to this amendment. I support everything that the noble Lord said in moving the amendment. I have nothing further to add. I do not propose to move Amendment 33, which is grouped with this amendment, when we come to it.

[Baroness Hanham]

My Lords, as I said in Committee, Amendment 28 is not necessary. The review already ensures that a decision by the landlord not to renew the tenancy must be fair and in line with the landlord’s published tenancy policy. Should the reviewing officer decide that the decision is not in line with the landlord’s policy, the landlord will need to reconsider his decision. Where a landlord seeks possession of a tenant’s property despite a review concluding that he was not acting in line with his own policy, the court will refuse to grant possession, as the Bill makes clear. Amendment 33 will not be moved. I hope that the noble Lord, Lord Shipley, is minded to withdraw Amendment 28.

--- Later in debate ---

[Lord Wigley]

My Lords, I intervene briefly to ask about the implications for Wales. I am grateful to the Minister for indicating that she has taken up the view supported by the National Assembly. That is very good and moves things forward. With regard to Amendment 36, the Explanatory Notes, to which I referred in Committee and which refer to the original Bill presented to us, suggested that the clause on repairing obligations in leases of seven years or more was applicable to both England and Wales. Was that incorrect or have things changed during the passage of the Bill? My question is parallel to another that I asked. On that occasion, the Minister said that the clause was intended to cover possibilities that might arise in future. I would be grateful, when she has had an opportunity to get advice, if she would clarify the position so that we in Wales know where we stand on the amendment.

[Lord McKenzie of Luton]

My Lords, I will speak briefly, subject to anything that arises from the question raised by the noble Lord, Lord Wigley. Obviously we support the amendments. I take the opportunity to thank the noble Baroness and her team for the volume of correspondence that we have had, which has explained the government amendments and the position on amendments that were withdrawn. I will not comment on timeliness—I understand that we have had a further missive during the course of our proceedings today—but it is generally helpful to have things set down in correspondence in the way in which they have been.

[Baroness Hanham]

My Lords, I thank the noble Lord, Lord McKenzie of Luton, for that. A prodigious amount of work went on during the Recess. We were very conscious that, with the withdrawal of all the amendments at the end of the previous stage, it was important that noble Lords understood what we had done. I say to the noble Lord, Lord Wigley, that we made this correction in line with the Welsh Assembly's wishes that the repairing obligation change would not apply to Wales.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 20th July 2011 Lords Chamber

[Lord McKenzie of Luton]

We had a canter round this yesterday—at least it seems like it was yesterday. We are very supportive of these amendments.

[Baroness Hanham]

My Lords, we did indeed discuss this yesterday and we had a bit of discussion on the subjective nature of design decisions. I think we all agree that design is an enormously important part of planning, as indeed it is an important part of developing and ensuring how a community looks and what an area is like.

I have great admiration for the noble Lord, Lord Best, but I think this amendment is unnecessary. As he has already pointed out, planning authorities get independent expert advice from the Design Council, and local planning authorities are already able and indeed encouraged to submit applications to design review panels and to heed their impartial, expert advice. I am not sure that putting any more legislation forward on this will do anything. However, we will undertake to give encouragement to local authorities to make sure that they understand that design review panels are a good thing. So there really is no reason for this. We need to keep it out of legislation. I understand the purpose behind it but there are already proper ways of dealing with this. I hope that the noble Lord will feel able to withdraw his amendment.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 19th July 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, we have Amendments 148AZZD and 148AZB in this group, but before I touch on them perhaps I should say how much I agree with the noble Lord, Lord True. I think that he very much set the tone for this debate, and the noble Lord, Lord Newton, and others have supported him. We need a system which is flexible, and everyone should not be forced to follow the horrendous bureaucracy included in these provisions.

Our Amendment 148AZZD is consistent with those of my noble friends Lady Whitaker and Lord Whitty and also consistent with the amendment in the name of the noble Lord, Lord Brooke of Sutton Mandeville, whose improvisation is always a joy to the Chamber. I very much agree with his addition of the word “cultural” to one of the considerations for well-being. Amendment 148AZZD simply reiterates the point that my noble friend Lady Whitaker made—that there are concerns, particularly expressed by the RTPI, that the inclusion of the words “either or both” could mean that a local plan might be focused only on business and not have the rounded sustainable development approach. I am bound to say that concerns over that are particularly reinforced by anxieties generally that the Government are shifting the definition of sustainable development. We could be reassured on that point if we had sight of the NPPF, which I understand is very close to publication —or it was last week. That may be one point on which the noble Baroness can enlighten us when she comes to respond.

Amendment 148AZB is aligned with the amendment of the noble Lord, Lord Cotter, which has not been spoken to. Frankly, I am not enamoured of our wording but the amendment seeks to ensure that when membership of a neighbourhood forum includes individuals who work in the area, they should, like individuals living there, reflect the type and size of businesses in the area to prevent possible domination by large businesses.

Picking up a little on the point made by the noble Lord, Lord Newton, who asked what on earth is meant by “wanting to live” in an area, perhaps the Minister can help us with the definition of neighbourhood forums being open to individuals who work there. What does that mean? Clearly, if someone has a place of work in a particular area and turns up there every day, that is clear cut and straightforward, but what about a jobbing plumber who may spend part of his time working in the area and part not, or a window cleaner who has part of his round in the area and part not? Indeed, what about someone delivering those free newspapers that we get these days? Would they be included as working in the area? What about someone who works on a construction site which may be in existence for two years, possibly when the neighbourhood forum is part-way through its work? Once work is finished on the construction site, do all the workers on it cease to be members of the forum? There are real issues of definition here which simply add to concerns about bureaucracy and we deserve some answers on them.

I turn to some of the other amendments that have been spoken to. As I have indicated, we very much support the thrust of what the noble Lord, Lord True, said on his amendment. We obviously support the government amendments which provide the opportunity to withdraw designation from a neighbourhood forum, although how rare that will be remains to be seen. I have indicated that we certainly support the noble Lord, Lord Brooke, in adding “cultural” to the requirements.

The noble Lord, Lord Greaves, took us through some of the democratic deficit in his terms and what needed to be done to try to redress that: forums should be open to all individuals and must have all-elected members. We absolutely support that. He also has Amendment 148AZZJ which says that organisations must have zero or minimal charges. That is important because you could have people squeezed out of membership by someone ratcheting up the charges.

There are a number of detailed points on some of the other amendments but the broad thrust of them is to make these arrangements more democratic and more inclusive. We are certainly supportive of all that. I think that the Government should take this collection of amendments seriously and address the issue of why everyone should be forced down the same route that is prescribed in the Bill when, at the moment, there is good practice which could be developed in other ways by a range of local authorities.

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

My Lords, I thank all noble Lords for their contributions on this immense number of amendments now before us. At the outset, I shall apologise because I know that one or two of them have not been spoken to, but I shall probably reply to them on the basis that I find this system of numbering confusing. Trying to work out my notes against all this ZZZ-ing has been almost impossible. If I overstretch the mark and reply too often or not enough, please forgive me and we shall sort it out at the end.

I think it is reasonable to start with the government amendments. My replies to the other amendments are clustered under various headings, and if I do not respond to them all I shall try to pick up the points that were made.

The government amendments, which are 148AA, 148AB, 148AC, 148AD and 152B, address the issue of what happens if forums fail to continue to meet the conditions and criteria and empower local councils to remove the designation of a forum in these circumstances. That is what noble Lords have pointed to.

Amendments 148ZCA and 148ZMA are intended to remove the ability of neighbourhood forums to bring forward neighbourhood planning proposals. We agree that, where they exist, parish councils will be the appropriate body to bring forward neighbourhood planning proposals. Where parish councils do not exist, we do not think that communities should be prevented from having a say in the future of their areas. Therefore, our proposals for neighbourhood forums are a pragmatic solution with safeguards in place. Those are the government amendments in this part.

Amendment 148ZZZEA, in the name of my noble friend Lord True, would allow local planning authorities to bring neighbourhood development plans and orders into effect. To achieve this, too much of the power to lead on neighbourhood planning, we believe, would be transferred back from the community to be shared with the authority. I know that my noble friend has already set up his own plans and way of operating. I say to him that neighbourhoods do not have to set up forums; if they do not want them, they do not have to have them.

Government Back-Bench Amendment 148C seeks to expand the definition of development which is excluded from neighbourhood planning. A number of noble Lords have raised this issue, which I will talk about in more detail a bit later on. Our position is that we have excluded development types and classes which, due to their scale and complexity, are inappropriate to be given planning permission through a neighbourhood development order. These include nationally significant infrastructure projects and county minerals and waste applications, which are far too big for a neighbourhood to consider. These amendments would constrain the ability of communities to develop detailed, ambitious neighbourhood plans if they choose to do so. We believe that Amendment 148C would inappropriately widen the range of development that is excluded from the scope of neighbourhood planning and thus constrain the ability of communities to develop detailed plans with major-scale proposals if they choose to do so.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I will be brief. First, can I say how much we appreciate the effort that the noble Lord, Lord Jenkin, is making to try to get some of the bureaucracy out of this Bill? We would be very interested in staying in touch with his considerations, with the LGA and the Minister, to see what progress is being made. That would certainly help the passage of the Bill when we come to Report and subsequent stages.

On the separate amendments, I agree with the noble Lord, Lord True, that we should not be in a situation whereby you can designate a neighbourhood forum only if you are asked to do so. There ought to be flexibility for an authority itself to do that, as long as there is sufficient community support. I will not go into the arithmetic of how the 5 per cent works. We support the thrust of that. The idea of two or more parish councils joining together has been supported.

The noble Lord, Lord Shipley, in seeking to deal with overlap with parish councils, made a very valid point. He is right in the sense that the best solution would be for it all to be a parish council, or more than one parish council. But even if that is not the case, I do not see why that overlap could not be part of the flexibility that is around these provisions.

The noble Lord, Lord Greaves, wanted a suitability test. I am not quite sure why that is not encompassed within the desirability test, but perhaps we should not at this hour get into the semantics of that. I see what he is seeking to achieve, and I certainly support the noble Lord in seeking to delete a lot of the regulation-making powers in the provisions.

[Baroness Hanham]

My Lords, I thank noble Lords for their brevity in introducing these amendments. I do not think that I want to comment widely on what my noble friend Lord Jenkin said in addressing the stand part. It was not entirely to do with this part of the Bill but was a much more wide-ranging discussion on the nature of the Bill and his concerns about it. I am glad to know that he will be able to express them to the Minister who is handling the Bill, Greg Clark, and I am sure that the discussions will be well received, because Greg Clark has been very notable in consensus in the other place. Whether he will be able to be consensual with what is being said, I do not know. Noble Lords say that the Bill is trying to micromanage all the processes, but we do not think that that is what we are trying to do. It intends to provide guidance in regulations and to use a light-touch way to bring in what is in many cases, in many parts of the Bill, a new way to manage local areas and authorities.

I want to address one or two areas that were raised. The noble Lord, Lord True, has a very great deal of concerns about this Bill. There is not a lot that I can say to reassure him to make it any better. But as regards why the local authority should make decisions, I think that the noble Lord himself, as leader of a council, would be very upset if the council did not have a role in ensuring that neighbourhood forums were where they were wanted by the neighbourhood. He would be upset if they were not properly constructed in a way that the council thought was sensible, as well as the people who lived in that area. On why communities will be taking the initiative in planning their areas and on who will initiate the process of deciding a neighbourhood area, the local council will have an important role in the work of ensuring that they are coherent. On overlapping areas and ward boundaries, the latter are reasonably sensible in towns, being well understood and well designated. They largely cover similar areas and similar problems. However, I do not believe that there is any difficulty in cities. If I am wrong about this, I will be corrected and will come back on it but I see no reason why there should not be two forums within a ward, if that is the way the ward splits up.

--- Later in debate ---

148ZB: Schedule 9, page 305, leave out lines 5 and 6 and insert—
“(5) If—
(a) there are two applicable referendums under that Schedule (because the order relates to a neighbourhood area designated as a business area under section 61GA), and(b) in one of those referendums (but not the other) more than half of those voting have voted in favour of the order,the authority may (but need not) make a neighbourhood development order to which the proposal relates.”

[Lord McKenzie of Luton]

My Lords, perhaps I might ask the noble Baroness a question on this. I am sorry, I think it applies to Amendment 148ZA as well—I think I am in the right amendment here, with all these Zs. I am grateful for the explanatory letter that came with these government amendments, which touch upon issues of non-domestic ratepayers and their involvement with a referendum. Can the noble Baroness confirm that with non-domestic ratepayers we are not just dealing with businesses, we are dealing with a whole range of other organisations which would be non-domestic ratepayers, for example, charities?

Could we have clarity in respect of how many votes somebody gets? Is it one vote per hereditament, even though there might be several hereditaments occupied by the same entity, or is it one per entity, however many hereditaments are actually occupied? The amendment presupposes that there will be more than one referendum in relation to a proposition, although the noble Baroness’s letter referred to there being one referendum at the same time, although the votes will be counted separately. The proposition seemed to be that it was one referendum, not more than one referendum, but perhaps the noble Baroness might clarify that for us.

[Baroness Hanham]

My Lords, if the referendums are on different subjects, I think that is where the duplication came from. Of course, they would be counted separately, they would be carried out on the same day, and they might even have different rules attached to them, depending on what they were about. I hope that answers the noble Lord’s question. With regard to votes, there would be one vote per listed non-domestic ratepayer and, as I understand it, there would be one vote for anybody on the electoral register. “Non-domestic ratepayer” is one business and if there was a resident it would be on the electoral register.

[Lord McKenzie of Luton]

If, for example, a supermarket had two different establishments in a particular area, they might be separately rated, separate hereditaments—is that one vote or two?

[Baroness Hanham]

My Lords, I do not know if the scheme we are running can do that. I will check and I will write to the noble Lord, but my gut feeling would be that if they were in the same neighbourhood area it would probably be two if they were separately rated because it is one per listed non-domestic ratepayer. If that is not correct, I will write to the noble Lord.

I will just say to my noble friend Lord Lucas that I thought I had addressed his concern about financial inducements by saying that there could only be an exchange of money around planning on the basis of agreed local development plans and any negotiations that have been done on those to reduce CIL or Section 106. Having said that, I also agree that anything that is done needs to be transparent, and we will make sure that that is the case.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, the Minister might say that these issues are otherwise covered in legislation. If they are, fine, but if they are not I certainly support these amendments. If one needs any convincing, one can just turn to the department’s own equality impact assessment. The answer to the questions,

“Which group(s) of people have been identified as being disadvantaged by your proposals?”,

and,

“What are the equality impacts?”,

is people from black and minority ethnic communities. Where any group within the community participates less in the preparation of a neighbourhood plan, for whatever reason, there is a risk that those plans will not reflect the needs or wishes of those people. Those needs or wishes might not necessarily be linked in any way to the particular characteristics of those groups, but nevertheless might concern matters that are properly addressed through the planning system. There is, however, evidence to suggest that members of minority ethnic communities are less likely to engage with the planning system in the preparation of a neighbourhood plan. It is vital that we address that issue, so it is important that we address these propositions in relation to the Equality Act.

[Baroness Hanham]

My Lords, I thank the noble Lord, Lord Greaves, for his amendments and the noble Lord, Lord McKenzie, for his comments. Our position is that the safeguards are in place in the neighbourhood planning provisions. Neighbourhood forums do not exercise a public function, so the public sector equalities duty does not apply. The Bill requires forums to have an open approach to their membership and to have sought secure membership from across the neighbourhood area, so there is more than an expectation that everyone will be represented in the area, particularly if there are ethnic minority groups living together, because there often are. Neighbourhood planning proposals cannot be approved unless they are compatible with human rights obligations, and will be subject to consultation, publicity requirements, independent examination and a community referendum.

We particularly want neighbourhood planning to be an open and inclusive process, and we want the whole community to be at its heart. I want noble Lords to know that we will set out regulations and requirements for consultation with and participation by the public to ensure that this is the case. I hope that with the assurance I have given that the amendment is not totally necessary—we do have in mind the areas that have been discussed—the noble Lord will withdraw his amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, this has been a short but fascinating debate. The noble Lord, Lord Newton, said that he had left the Chamber for a respite from our deliberations, but the discussion on this amendment has given us all some relief from the turgid stuff with which we were dealing earlier. Clearly each noble Lord who spoke—the noble Lords, Lord Renfrew, Lord Newton and Lord Brooke, and my noble friend Lady Andrews—spoke with great knowledge and authority. In this job you learn something every day—and I certainly learnt something from that exchange.

If it is right that the Bill would remove protections that are in place at the moment, it must be right that amendments are put in place to address that. If the Minister in responding can assure us that that is not the case and spell it out—we need to know the detail—all well and good. Part of the problem comes back to the dear old NPPF. The Minister said earlier that it will be with us soon but her colleague, the noble Lord, Lord Taylor of Holbeach, last week told us that it would be very soon—we seem to be going backwards on this.

My noble friend Lady Andrews made the important point that if there cannot be satisfaction on this, the risk is that a process of scheduling will take place that would involve local authorities in huge expense. It would be a huge capacity issue for them and we should seek to avoid it. We all want to do everything that we can to make sure that heritage assets, particularly those of national importance, are preserved and that the planning system plays its role in doing that. I look forward to the Minister’s response and her justifications of why she believes that that will happen and that we do not need to change the Bill.

[Baroness Hanham]

My Lords, we are hugely sympathetic to the whole question of heritage. The noble Baroness and I discussed this before at a very early stage. We have been working with English Heritage to ensure that neighbourhood development orders do not weaken the heritage protection. The matters the noble Baroness has raised are not unfamiliar to us and I can assure her and the noble Lord, Lord Renfrew, that consultations are still ongoing to ensure that there is no slip-up and that the concerns raised are addressed.

We recognise the importance of protecting heritage and all proposed neighbourhood development orders must meet certain conditions, which we discussed earlier, before they can be put to a referendum. Most importantly, they must have special regard to the protection of listed buildings and conservation areas. In addition, every plan and order must be appropriate having regard to national policy. I appreciate that that takes us back to the NPPF, but that matter will be addressed when we have a chance to discuss it. The plan or order must also be in conformity with the strategic policies in the local plan. We have made it clear from the outset that the plans must be coherent and will then have to go to independent examination.

We believe the concerns are covered with that procedure alone. All heritage aspects would be covered under the planning conditions anyway but we shall be delighted to have further consultations with English Heritage to make sure that there is no slip-up. On that basis, with those assurances, I hope the noble Lord will be content to withdraw his amendment.

--- Later in debate ---

[Lord Lucas]

My Lords, I am a little puzzled, because the noble Baroness was kind enough to allow me a meeting with her officials a few days ago. I am always capable of misunderstanding things, but I had expected rather different replies from those that she has given today on the subject of how far one could reach in neighbourhood plans in order to affect things related to the local environment; such as the two illustrations I gave of the way in which streets are used, speed limits, pedestrianisation and the way in which parking rules are set out and enforced. I am clear that both those things belong with the local council but I certainly came away with the impression that neighbourhood plans could be written in such a way that they had an influence on such matters. I also came away with a much more positive view on parishing and the department’s attitude to it than the noble Baroness has conveyed today. I am puzzled by that.

Coming back to my general purpose in these amendments, we have to look carefully, if we think this is a beneficial thing—which I very much do—at how we make it beneficial within cities. There is an awful lot to be said for the amendments of my noble friend Lord True in this regard on how local neighbourhoods get designated and the flexibilities that exist as to their extent and overlap, as well as other aspects reflecting life in cities. If we are to have a process that results in a referendum, there is also a great deal to be said for saying there must be incentives for the people involved and those voting, in terms of the referendums being about things they really care about. If we go back to Battersea, what do I care about planning? The place is built up and there is no space to put anyone else. There are only little bits and pieces, which the council deals with perfectly adequately, in terms of access to light and disputes between neighbours. There is no incentive there to go through the whole process that is in this Bill. By contrast, other things about the environment and the way the council interacts with the neighbourhoods that make it up are matters of extreme concern to locals that they will pay a great deal of attention to.

My noble friend’s answers do not encompass any offer of further consultations and do not seem to incorporate the consultations that I have already had. I remain puzzled and not a little bruised as to why the Government think this is for rural communities only. I can see the advantages and importance of that, but where we need community and where coherence and community understanding are important is, by and large, in cities. Villages have pretty good communities for the most part—they can be argumentative or constructive, but villages get together at frequent intervals, in my experience, to celebrate various things or do things together. Getting them together is easy. Within cities it is much harder to do those things and it is much more important to set about creating communities. I am really concerned at the difference between the replies from my noble friend and what I had thought was the underlying direction of her department; and about the lack of interest in using the period between Committee and Report to extend this. I am also somewhat puzzled by the lack of interest from the Labour Party in how one develops communities within cities. Perhaps there is a belief that all wisdom resides in councils.

[Lord McKenzie of Luton]

I am not quite sure why the noble Lord concluded that we have a lack of interest in developing communities within cities. I would have thought that we could demonstrate lots of places up and down the country where we have been very supportive of developing communities. I am not sure I have convinced the noble Lord here and now, but I hope to reassure him. I can see that the noble Lord is getting ticked off by his noble friends on the Front Bench—perhaps I ought to sit down or they will start on me soon.

[Baroness Hanham]

I am disappointed that the noble Lord, Lord Lucas, is disappointed. If he has had consultations that have said something different to the reply I have got, then I think I should offer to have discussions with him between now and the next stage of our proceedings.

--- Later in debate ---

[Baroness Hanham]

They will be bound by the local development plan, and the national policy framework will impact on them through that. The local development plan must have more than regard to the national planning policy framework, and that will bite through the local authorities’ plans.

[Lord McKenzie of Luton]

As I understand it, they have to be consistent with the strategies in the local development plan. Do those strategies encompass design?

[Baroness Hanham]

My Lords, I do not think so, because I do not think that design is part of the planning consideration, for the very reason that we discussed: design is fairly subjective. I remember that when we were discussing the Planning Bill in 2008 there was a huge discussion on design. Eventually, we came to the conclusion that it could not be a requirement because everyone saw things differently, although we would want to ensure that development was as conforming as it could be.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 19th July 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, before the Minister responds, perhaps I may comment on the amendments which have just been moved. I thoroughly support the amendment of the noble Lord, Lord Cameron. Issues around capacity are vital, not only to the planning aspects of the Bill but to the whole issue of localism and whether people can make a reality of it. The impact assessment sets out the range of figures that might be involved in developing neighbourhood plans and holding referenda. Those are not small figures—I have forgotten what the range is, but it is not insignificant.

If there is not proper capacity building, proper training and proper funding, then, as the noble Lord, Lord Cameron, said, the people who will be able to take advantage of these arrangements will be the better off. They will inevitably—from their point of view not unreasonably—use them for their benefit and not necessarily for the benefit of the community as a whole. We should guard against that.

As regards the amendment of the noble Lord, Lord Lucas, he wishes for people to be involved in the referendum from the age of 14. I do not disagree with that but, as the schedule is constructed, to be able to vote in a referendum you need to be able to vote for your councillor in the first place. You therefore need to be 18 years of age and so he might need a slightly different amendment. However, the concept of involving young people in their neighbourhood is absolutely right and I support it.

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

My Lords, I can be reasonably helpful over all of these amendments. On the first amendment, the noble Lord, Lord McKenzie, is concerned about putting a requirement for consultation in the Bill. That is not necessary. We do not believe that it ought to be in primary legislation, anyway. The right place for consultation is in secondary legislation and the Government have appropriate powers to do this. I say that the amendment is inappropriate not because the provisions are there already but because consultation is about to take place in this area. We shall congregate in the summer and I hope that by the time we meet again we will have some views on the issue. I hope that will satisfy the noble Lord.

On Amendment 153A, our approach has already been to encourage consultation and participation as early as possible. Proposals can only proceed to examination if they have been the subject of consultation with the wider community and it has to be made clear that that has been done. However, as I say, there will be more consultation on consultation over the summer.

As to the amendment of the noble Lord, Lord Cameron, the Government have already undertaken to implement a package of measures to ensure that neighbourhood planning is successful and to strengthen people’s ability and understanding of how to do it. In order to help with this, we have already given more than £3 million to four organisations which are tasked with providing the training, back-up and experience for neighbourhood forums to access so that they receive the support they need. We are also considering whether to provide direct financial assistance to neighbourhood forums for very much the same purpose. The intention is there and it is well understood.

As regards the amendment of the noble Lord, Lord Lucas, it is a requirement that those who take part in a referendum have to be entitled to vote in a council election on the day of the referendum. As the noble Lord, Lord McKenzie, said, someone aged 14 is not entitled to vote in a council election and, therefore, they would not be entitled to vote in the referendum. We believe that it should be only people who are eligible to vote in council elections. These are the people who elect local councillors—and the local councils then go on ultimately to make the final planning decisions —and we believe that it is right that only those aged 18 and above should be involved in these referendums.

With those explanations, I hope the noble Lord will feel able to withdraw his amendment.

Local Government Finance

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 18th July 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the noble Baroness, Lady Hanham, for repeating the Statement on local government finance and for the offer of a plain English guide to be placed in the Library. I also thank her for the prospect of another local government Bill which might keep us busy for a few days.

In a recent publication on local government finance, the Smith Institute observed that local government finance has been a backwater for most national politicians. Since the poll tax debacle, Ministers have been cautious about reforming local taxation, not least because the issue is seen as divisive and complex. The challenge is to seek a lasting consensus on how to change the system in a way which satisfies councils which are rich as well as those which are poor. Indeed, that is the test for these proposals.

That is why we will look closely at the Government’s announcement because the devil is, of course, in the detail. We should make it clear, as we did in another place, that we back a funding system for local authorities which supports jobs and growth and encourages enterprise. We support the taking forward of tax increment financing and the continuation of small business rate relief, and we welcome the publication of the responses to the consultation. Yes, we support localism—but true localism, which is why we have opposed the raft of centralising powers that the Secretary of State has taken to himself in the Localism Bill. We also support localism in matters of finance.

We hear today that the proposals on local government finance are balanced, fair and equitable, I think was the term, but the precedents are not good. Where, for example, is the fairness in the cuts we are seeing right across the country to home helps and care services, to street cleaning and bin collections? The Statement reiterates what the Deputy Prime Minister told the LGA last month: no one will be worse off when the new system is introduced. Even if that is the case at the point of introduction—and we are not all reassured by cast iron promises from the Deputy Prime Minister—what will the position be at the end of year one, year two or year three? Perhaps the Minister can tell us.

The Minister tells us that the spending review totals are to remain unchanged. Therefore, if there is a fixed pot of money for any council to gain, logically others must be losing out. Can the Minister say what assessment has been made of winners and losers, and how this squares with the assurances of the Deputy Prime Minister?

We recognise some of the weaknesses in the current system. However, a local government finance system that does not reflect needs and available resources could have disastrous consequences for some councils, while others would enjoy large surpluses compared to existing budgeted expenditure. It remains to be seen whether the proposed detailed system of tariffs and top-ups is a fair mechanism to ensure that all local authorities have resources that are adequate to deliver services that are needed and that will allow all communities a chance to prosper. Our fear is that the poorest areas, with the most deprived communities and the smallest business base, will again miss out. Those very communities that saw their area-based grant cut, putting services like children’s centres at risk, through a finance settlement that singled them out for the heaviest cuts, will now lose out on the localising of the business rates.

We know that currently the formula grant is financed significantly by local business rate income, and the latter is forecast to grow as the grant is forecast to fall. The Government are planning to hold back something like £2 billion in local business rate income to give effect to these cuts. Business rate localisation would clearly be one way of stopping this. However, what will happen to the surplus business rate, amounting to some £2.2 billion in 2014-15? Will it now be available to local authorities or will it be retained centrally? Can the Minister tell us the forecast baseline above which local authorities will be able to benefit from growth in business rates? The Statement refers to an area benefiting disproportionately from growth in business rates, which will be subject to a special local levy to capture a share of the benefit. How will it be determined that an area is benefiting disproportionately from growth in business rates?

Cutting funding to areas with the highest need does not free councils from central control or empower them. It stops them from doing the things that their communities need of them. If people do not believe that their council can make a difference, it does not encourage civic activism; it undermines it and fuels a sense of disengagement from the political process. We want a funding system that supports jobs and encourages enterprise. However, as the Minister recognised, not every area has the same ability to attract investment and new businesses. Not everywhere can be like Westminster or the City of London. Areas with the highest levels of deprivation and the weakest business base need the most support; they do not need funding cuts. We will support incentives to boost enterprise and put councils and communities in control, but fairness must be at the heart of the system.

[Baroness Hanham]

My Lords, I thank the noble Lord for his comments and contributions. From the outset, I remind noble Lords that this is a consultation. Therefore definitive answers may not be pouring out of my mouth, although I will do my best to answer as much as I can about the consultation. However, technical documents will be ready by August to back up the consultation, so some of the points will be considered there.

I am grateful to the noble Lord for his indication that he supports funding for jobs and enterprise. Naturally that is what we are trying to achieve. I am also glad that he supports the tax incentive finance, which will come about as a result of business growth and will be a useful area for borrowing.

The noble Lord referred to the fairness in cuts. The whole process will start in 2012. At the start of this spending review, for the first two years there will be no change at all. Only in year 3 will we begin to see the changes with the business rate being kept within the local community. We are proposing that in years 1 and 2 it will stay as it is, and in year 3, instead of the local authorities collecting the business rates and passing them on to the Treasury, they will collect the business rates and, under an arrangement, pass some of them on to the Treasury. The rest will be held by local government in year 3 and subsequent years.

With regard to the tariffs and top-ups, the control totals will not change within the four-year spending review. However, in areas where we believe the business rate is in excess of those totals, a tariff will be levied that will help poorer areas, about which the noble Lord spoke in terms of top-ups. There will be a swing of money between one and the others, so the poorest areas will be given the help that they need.

The £2.5 billion that will be held by local authorities will be directed to other local grants. It is suggested that the levy, which again is a matter for consultation, will be on top of the business rates, from which local authorities make what is called in the consultation paper a disproportionate amount. They will then share that through a top slice with other authorities.

[Lord McKenzie of Luton]

The Minister answered a number of the questions I raised. Could she tell us how the test of disproportionately benefiting from business rates is going to be set?

[Baroness Hanham]

My Lords, I think I am going to direct the noble Lord to the consultation, because this is one of the areas where we want to talk to local authorities to understand the nature and impact of that issue. At the moment, I do not think I can give a substantive answer, but it will be in an authority that has access to far more business rates than perhaps other local authorities comparably.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 7th July 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I endorse what the noble Lord has just said. We increasingly have concerns about the timing of the process. We are doing everything we can to make sure that we make progress, but there is an issue with trying to resolve some of these matters when the House is in recess. Frankly, some Ministers will be away, and writing to everyone will be more difficult when officials are also likely to be away with their buckets and spades. If we want to get the Bill right, I urge the noble Baroness to consider that point.

[Baroness Hanham]

My Lords, it is not for me to consider. As the noble Lord knows, government business and the timing of that business are dealt with by the usual channels. That does not fall within my remit at all. We have three weeks left with virtually two days a week to be spent on the Bill. Somewhere within that time people will, I hope, come together and we will be able to discuss the issue. I just make the point that I have had several meetings and I am very happy to extend the invitation to those meetings to the Opposition.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Tuesday 28th June 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I am grateful to the noble Lord for moving this amendment. We were not quite clear what was behind it but he has been very clear about the thrust of the amendment. We support its general direction, which is about protecting open space, particularly urban open space. I do question the use of the phrase “equally advantageous to the public”. I do not know if that is an existing term used in other legislation, but one of the requirements of the amendment is that it must be “not less in area”—understood; that is quite easy to determine—and is “equally advantageous to the public”. There will not necessarily be a single approach by the public as to the advantage of a particular piece of open space: it might be the tranquillity of the view or the opportunity for some recreation pursuits or indeed somewhere to walk the dog, whereas an alternative piece of open space may not be able to satisfy people in the same proportion or mix. I am sure that that issue could be overcome but I would be grateful if the noble Lord, when responding to the Minister, might expand a little on that test; the Minister may also have some views on that. However, I do see the thrust and the benefit of this amendment.

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

My Lords, I thank both noble Lords for those short contributions—short, I suspect, because I have indicated that I would be happy to have discussions with the noble Lord about this. This amendment has appeared quite late on in proceedings. I do not quite understand its place in the Bill. I think it has found its way in by a devious route. It would be more helpful for the House to see exactly what lies behind the anxiety of the Open Spaces Society about this.

In acceding to speaking to the noble Lord about it, I have to say that we have particular reservations about paragraph (c). As the noble Lord, Lord McKenzie, has just pointed out, that requires a council to provide land in exchange for that appropriated or disposed of unless they can provide reasons under subsection (2) of the proposed new section. This is a difficult area. In order to provide an alternative piece of land, it is possible that the local authority would have to compulsorily purchase another bit of land in order to fulfil this obligation. So we would have considerable doubts and that is one area that I would expect to have a sharp discussion on. Having said that, I am happy to talk about this and come back to it at a later stage if the noble Lord will withdraw his amendment for the moment.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 20th June 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, we should congratulate the noble Lord, Lord Greaves, on giving us an early opportunity, during the course of the Bill, to debate this very important issue. We agree that it is important to enshrine, at an appropriate point in the Bill, a definition of sustainable development and the principles that he has outlined in the amendment. We agree with the definition and with the principles that he has set out. I anticipated that we would have this debate a little later when we got to Part 5 of the Bill, but important points have been made about this not being just about narrow planning; there is a broader dimension to it.

I agree with what the noble Lord said in moving the amendment. There are concerns about sustainable development being sidelined by the Government. He referenced the Budget pronouncements. Clause 124 could be a change in the balance of the assessment of sustainable development, and we have a lack of clarity over the NPPF; indeed, the advisory group’s draft has moved us some way away from what the previous Government had accepted and which I thought was generally accepted as sustainable development.

With some hesitation, I disagree with the noble Lord, Lord Lawson, that sustainable development is a meaningless concept. The fact that we may have had 1,000 years of growth generally in the economy and growing prosperity is fine, but are there not judgments to be made along the way about what that has done to the environment? Certainly in latter years, has not that growth often been achieved by recognising that you have to balance the impact, for example on the environment? I do not believe that it is a meaningless concept.

I agree with the point made by the noble Lord, Lord True, about the framing of the amendment, and I shall come on to that in a moment. There is a real risk that you create a lawyers' paradise. One of the assessments of well-being powers, and why they were not better used, was that lawyers, who were very cautious, got involved and that that precluded the use of the power more extensively than was anticipated at the time. I therefore very much agree with the right reverend Prelate the Bishop of Exeter in his approach to sustainable development, and with the noble Lord, Lord Taylor of Goss Moor. I disagree with the noble Lord, Lord Lawson.

When thinking about the Opposition’s response to this amendment, I considered how it sits with the local authority’s duty to prepare community strategies. That is set down in the Local Government Act 2000. There has hitherto been a requirement to prepare community strategies for improving economic, social and environmental well-being and contributing to the achievement of sustainable development in the UK. I asked the DCLG whether that obligation still exists. It does, but perhaps the Minister will confirm the Government’s intention to repeal the duty to prepare a sustainable community strategy. Instead, the Government have set down light-touch, best-value statutory guidance, on which they are consulting. The consultation document is extremely interesting, and shows about four pages of rubric on one page of a draft definition of “best value statutory guidance”. Only one sentence potentially touches on sustainability. It states:

“Under the duty of best value, therefore, authorities should consider overall value, including environmental and social value, when reviewing service provision”—

in place of the existing obligation to have sustainable community strategies.

The noble Lord, Lord Greaves, said that he wanted something that ran throughout the Bill, but I do not believe his drafting achieves that. Specifically, it states:

“A local authority shall exercise the power conferred by section 1”,

which is the general power. Again, analysis of the well-being power showed that it was not used in preference to statutory powers that local authorities may have. If we saw that replicated with the general power, in a sense what the noble Lord is seeking to achieve here would not capture that.

I understand that this is a probing amendment, and we support its thrust. We certainly want to see those definitions in the Bill and are happy to work with the noble Lord to achieve some refinement to the approach set down in his amendment.

[Baroness Hanham]

My Lords, I understand that this is a probing amendment and I thank all noble Lords who have taken part in this short debate. The Government are not unsympathetic to the attempt to describe “sustainable development”. In fact, they have already done so on two occasions. They support the Brundtland definition, and their statement on maintaining sustainable development, published in February this year, includes a commitment to embed these principles across government policy. Therefore, it is not only in this Bill that the sustainable development is likely to come about.

We accept that there is a strong relationship between the Government’s approach and the ambitions of this Bill. However, whether we can spell it out in a way that is acceptable on four fronts is probably more difficult. It would put it on to a statutory framework that is a lawyers’ paradise. The expectation and understanding is that local people will be best placed to understand what is right for sustainable development locally, and noble Lords may have become aware of the definitions that have appeared in the consultation on presumption in favour of sustainable development that has just been published.

On the planning system, we believe that there is a presumption in favour of sustainable development at the heart of the new planning system. We will look to local planning authorities to prepare local plans on the basis of objectively assessed development needs and with sufficient flexibility to respond to rapid shifts of economic change. They should approve without delay development proposals that accord with statutory plans—noble Lords opposite mentioned that—and should grant permission where the plan is absent, silent or indeterminate, or where relevant policies are out of date.

That issue is one of planning. Noble Lords also referred to the generality. February’s Statement made clear the Government's view that there are three pillars—the economy, society and the environment—which are interconnected. We recognise that long-term economic growth relies on protecting and enhancing the environmental resources that underpin it, and on paying regard to social needs. Those are the principles of sustainable development that we need to take forward.

I will resist, at least for the moment, having a definition such as that put forward by the noble Lords, Lord Greaves and Lord Tope. If there was ever going to be a definition, we would need to be very clear and sure that it would be legally unchallengeable, because definitions never define the whole process and all the opportunities; sometimes they are restricting rather than helpful. Some of my noble friends behind me may be slightly sad about this. I say to them that in general the Government have some sympathy with sustainable development. As I have indicated, they have already made commitments on the subject. However, I regret to say to the noble Lord, Lord Greaves, that his proposed new clause would not be helpful at this stage.

Localism Bill

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 20th June 2011 Lords Chamber

[Baroness Hanham]

My Lords, I confirm that the statutory instrument relating to this is in the Library and has been there since 15 June.

Clause 8 defines local authorities for the purposes of the chapter, which are the bodies that will have the new power. By restricting the definition to “eligible” parish councils, the clause provides a power for the Secretary of State to set conditions by order for which parish councils will have the general power.

We are not making the general power of competence available to all parish councils, as the noble Lord suggested. Our view is that, given the breadth of the power and the widely varying circumstances of parish councils, there should be some criteria in place to demonstrate that the parish is representative of its community and has some understanding of the power to help to prevent misuse.

The draft statutory instrument that we made available to the House in the Library on 15 June indicates our intention that, to access the power, two conditions need to be met. These are that two-thirds of the councillors are democratically elected and that the parish clerk has received training in the use of the new power. These criteria have been discussed with the National Association of Local Councils and other interested parties.

Our aim is to ensure that eligible parish councils will be able to use the new power at the same time as other local authorities—an improvement over what happened with the existing well-being power, which was extended to some parish councils only in 2009. However, the noble Lord asked me particularly about the criteria, and those are the criteria that will be in the statutory instruments.

Amendments 26 and 28 are being considered. I will come back on these at a later stage.

[Lord McKenzie of Luton]

I wonder if the Minister could help me on one point, although I have not participated in this debate. Is the order in the description of eligible parish councils for the general power the same one that will run for parish councils for neighbourhood planning?

[Baroness Hanham]

My Lords, I would have to get an answer to that for the noble Lord. I am not sure. This specifically refers to the general power. I think that it might be different for neighbourhood planning where there is a parish council, but I would like to be sure. Perhaps I can wave my hands and find out. No one seems to know. If my runner, my noble friend Lord Attlee, can achieve something, we can deal with this. I think that the noble Lord has asked a question that we will need to give a written reply to.

--- Later in debate ---

[Baroness Hanham]

My Lords, as the noble Lord has said, this was discussed in the other place. My honourable friend Andrew Stunell gave an assurance that this matter would be looked at and that the attention of the Secretary of State for Transport would be drawn to the debate in Hansard, which would have been very much along the lines of the debate here this evening about making decisions on what should be done.

I cannot go further than to say that discussions are taking place between the Secretary of State for Communities and Local Government and the Secretary of State for Transport. I will expect to have details of them in the not too distant future. It would be sensible, if and when we know the outcome of the discussions—and I am sure we will—for the noble Lord to come and talk to me about it before Report, when we can discuss whether the amendment is appropriate and correct. I am happy to offer him that discussion, depending on the outcome of the discussions between the two Secretaries of State.

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord, Lord Shipley, for his support for the amendments. Clearly he is knowledgeable about what goes on in ITAs and PTEs and about the importance of this extended power. The noble Lord, Lord True, was astute to spot that the amendment was a version of one moved in the Commons—it was the original one, tabled before the amendments to Clause 5 and other clauses that we debated tonight. As I indicated when I moved it, if we took this forward on Report we would need to align it with where we were hoping to lead the others.

I am grateful for what is probably a quarter of a loaf from the Minister. Clearly, we will hope for clarity and a decision to be made by the Secretaries of State by the time we get to Report. This is an important issue that we want to take forward, and if we can do so on the basis of agreement, so much the better. I should be grateful if the noble Baroness could keep me and other noble Lords who have an interest in this informed as the discussion unfolds so that we will have the opportunity to consider the matter in good time before Report. Having said that, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Jenkin of Roding]

If I may express a view, I have to say that I think that that is the right course because it may well be that when the amendments to reflect the change announced this afternoon have been made, this whole passage of the Bill, several pages of it, may look very different. It would then be necessary to consider which of the remaining parts of the Bill the noble Lord, Lord McKenzie, might still like to amend. At the moment I do not see how we can do that.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her brief reply. Clearly, we need to get back to these serious issues on Report. I say to the noble Lord, Lord Jenkin, that, from reading the Bill, I understand that this issue is not linked to how someone becomes a mayor; it is focused on a mayor and executive arrangements, however they are created. I do not think that what we discussed earlier would strike those down. If it did, the amendments would become otiose.

Notwithstanding that point, I say to the noble Baroness that there were a series of questions which deserve a serious answer about why this power is limited to mayors and executives, and does not apply to executive and cabinet arrangements. Why is it only that one model that can be the recipient of the Secretary of State’s powers? More particularly, the protections and the fettering of that very wide power that needs to be undertaken is not just my worry—the Delegated Powers Committee is very clear on it. We will certainly wish to return to that.

The noble Lord, Lord True, made reference to an each-way transfer. My main point was that, if it is to apply at all and if sufficient safeguards can be put in, it should be when there are leader and executive arrangements, and when there are mayor and executive arrangements, as well as the supplementary point about what happens if you go from one to the other.

I do not know whether the noble Baroness has any further information as a result of the missive. If not, I will withdraw the amendment and leave the issue until Report but this is most certainly a matter to which we will return, if we have to, on the basis of the point made by the noble Lord, Lord Jenkin.

[Baroness Hanham]

My Lords, I am grateful for that. It would be helpful if we came back to all this. In the mean time, before Report, I will make sure that the noble Lord and the rest of the Committee have a full answer.

[Lord McKenzie of Luton]

I beg leave to withdraw the amendment.

Allotments

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 8th June 2011 Lords Chamber

[Baroness Hanham]

My Lords, self-help and people working for themselves, producing their own answers and working without government intervention of course is the big society at its best. After all, the big society is just about that; it is about local people working for themselves and for others and looking after their neighbours. In that regard, what could be better than working on an allotment?

[Lord McKenzie of Luton]

My Lords, the noble Baroness has referred to the neighbourhood planning regimes of the Localism Bill and how they may be beneficial to allotment development. What protections are in the system to prevent aggressive development of allotments by narrowly focused neighbourhood forums?

[Baroness Hanham]

My Lords, allotments are protected: one cannot just come in and take them over. Land is made available for allotments and it is a statutory right for them to be there. It would only be if allotment owners did not want those allotments that they could be addressed within a neighbourhood plan and with the wish of the neighbourhood that they should change hands. I do not believe that anybody can aggressively take over allotments.

Anti-Semitism

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 10th March 2011 Lords Chamber

[Baroness Hanham]

My Lords, we must do all we can to ensure that the use of words such as “Jew” in a way that causes people to feel upset or afraid is not taken up for threatening, antagonistic or hatred purposes. Of course, schools must stamp it out at the very earliest stages so that no child ever considers it to be an acceptable way of talking about someone.

The internet is another area of great concern, and it is also quite difficult to handle because we do not always have ways of tackling the problem. The task of removing hate from mass media channels, such as the internet, is daunting and challenging, but we have to look at how we can do so. Many states still view the balancing point differently from the United Kingdom, and that makes the task much more difficult because they do not all see the same pressure and impact. However, we continue to look for opportunities and ways to deal with the problem. In fact, what is on the internet goes beyond hate, and very soon we will have to find a way of obliterating and blotting out such unacceptable material.

[Lord McKenzie of Luton]

My Lords, does the Minister think that the promotion of multiculturalism will help us to meet these challenges?

[Baroness Hanham]

My Lords, there are two ways of looking at multiculturalism. One is the bringing together of communities and cultures, and the other is where disparate groups keep their cultures separate. Whichever way you look at it, I do not think that multiculturalism is going to have anything to do with hatred. My view is that hatred is generated not by culture but by fear, and there is a need for groups to be brought together. If, as I am sure he has done, the noble Lord looks at the report, he will find mention all the way through of incidents in which two or three people get together and are horrible. They use the word “Jew” and then assault or impact in some way on others. Therefore, I do not think that multiculturalism has anything to do with this.

Local Authorities: Redundancies

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 9th March 2011 Lords Chamber

[Baroness Hanham]

My Lords, they can make their own decisions about it. All that the Government are doing at the moment is providing some flexible resources with the £300 million capitalisation for those that are finding it particularly difficult. They will have to implement that capitalisation against criteria, and if they do not meet those criteria they will not be given permission to do so.

[Lord McKenzie of Luton]

My Lords, is the Minister aware that the tired mantra that she keeps trotting out that it is all down to local authorities is growing very thin? People are well aware that it is the Government that are responsible for making these cuts and that they are simply hiding behind local authorities and local councils.

[Baroness Hanham]

My Lords, I suppose I could also produce the statement that I have made frequently in this House that if it were not for the previous Government’s mess we would not have to make these reductions. I point out that the previous Government had also seen the ill of the way in which they were going about this, as they were also making provision for substantial reductions in the budgets for local government in this financial year. The fact that this Government have had to make slightly more reductions than expected should not have been totally unexpected by local authorities—they knew perfectly well that they were going to have to make reductions.

The “tired mantra” that the noble Lord refers to is not a tired mantra; it is just a truth. The truth is that all the money for local government has now been given to local government by this Government. It is no longer ring-fenced—there are now only two areas that are—so local government can use every bit of money that the Government get, except in the areas of education and health, and can decide how to use it. Local government can decide how to provide its services and how to provide the most value to its own communities with all the resources that it has.

Local Government: Finance

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 13th December 2010 Lords Chamber

[Baroness Hanham]

I thank my noble friend for that. He will also recall that thousands of years ago I knew him when he was Minister for local government. I am not quite sure what that says about either of us.

I accept what my noble friend says. First, the Opposition have not offered anything by way of a useful contribution to how this deficit will be dealt with. We have had considerable carping but no ideas have been offered as to what they would have done instead to deal with the deficit that they caused. Of course, the flexibility needed to deal with budgets, policy and organisation is absolutely essential. That will come directly out of the Localism Bill and how we look forward to local government working in the future.

[Lord McKenzie of Luton]

My Lords, in thanking the noble Baroness for repeating the Statement, I deprecate the very last minute at which the data came forward. It is a bit like the late arrival of the Localism Bill; it shows a Government not quite in control of their agenda.

We reject the assertion that these are necessary reductions in public expenditure, just repeated by the noble Lord. Of course, the deficit must be dealt with and, of course, we, as an opposition, have set out credible means of dealing with it. One example is that we would not be spending £2 billion to £3 billion on unnecessary top-down reorganisation of the National Health Service. Even if we were to accept the programme of overall expenditure set out by the Government—which we do not—how do they justify local government having such a savage component to deal with? It is worse than for any other department. What is the justification for that?

The noble Baroness spoke of the focus on the most vulnerable, and I understand that the Government have come up with this revenue spending power comparison—looking at like for like in the current year and next year. I understand that it includes council tax potential and grants. Incidentally, I have a question for the noble Baroness along the way. When is a transfer from central government a grant and when is it a handout—an unfortunate term? To get back to the comparison on revenue spending power between authorities, taken with the assertion that we are focusing on the most deprived, why is it, when comparing the current year with next year, on the Government’s own figures, that Hackney loses 8.9 per cent, or £33 million, and Kensington and Chelsea loses 5.5 per cent, or £11 million? How is it that Tower Hamlets loses 8.9 per cent, or £34 million, but Barnet loses 2.6 per cent at just £7.7 million? How can Hartlepool lose 8.9 per cent, or something like £10 million, and Rutland 2.2 per cent? How does the noble Baroness justify that within the parameters of the settlement?

[Baroness Hanham]

My Lords, first, perhaps I may remind the noble Lord, the former Minister, that I sat on that Front Bench all the way through the previous Government and I always complained about the lack of time that one was given for dealing with a Statement. Never ever did I receive a Statement more than about 40 minutes before I was due to answer it. So there will be no lessons from across there with that complaint.

The necessary reductions come about because of the deficit. I cannot keep on saying that—we must all deal with the deficit and deal with it we will. We will reduce the deficit more quickly than the party opposite ever indicated it would do.

As regards the reductions in grant for Tower Hamlets, Kensington and Chelsea or wherever, their spending power, which is how the Local Government Association wanted to present it, means that reserves and council tax are taken into account. The reductions of 8.9 per cent will depend on how much they can contribute to that, how much council tax they get, how much revenue can come from elsewhere and how much comes from government. The reductions would have been higher all round if extra money had not been made available for the transitional period. However, now no council will lose more than 8.9 per cent. It has been done on a very fair and measured formula to ensure that people do not have big swings within their council tax settlements across the country. They should not be too great.

Housing: Spending Review

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 4th November 2010 Lords Chamber

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

My Lords, I thank everybody who has spoken today and I accept that this has perhaps been a difficult debate on an important subject. I really have to start my response to it by looking at the other end of the telescope from the noble Baroness, Lady Hollis, and some others. The reason the changes have to be made, both to the capital programme and to housing benefit, is precisely that the Government have been left with a huge deficit. There is no point in people sighing and looking at the ceiling; this is a fact. It is also a fact that even if the now Opposition had come back into government, they would have had to face up to the fact that there was a deficit which was going to have to be dealt with. Indeed, Alistair Darling, the former Chancellor, has said that they would have had to introduce very serious measures which would, as I understand it, have been very much along the lines that we have to deal with it—first, to bring the deficit under control and, secondly, to try and put the economy back on a proper basis.

We have had many very detailed questions today and, inevitably, I cannot answer all of them. However, we need to look at what has been happening and why the Government have to take enormously tough decisions to reduce the public deficit. The Budget and the spending review have brought reductions across the piece, not only in the Department for Communities and Local Government. While it is fair to say that our department has had a quite substantial reduction in capital which will affect the programme for the future, we want to try to ensure that local authorities themselves can do as much as possible with the money available without too much direction from the centre. Some of the individual questions that your Lordships have raised will, indeed, be dealt with in due course by local government itself. Localism—the bringing down to a more local level—will in fact answer some of the questions raised.

It is clear that if we do not tackle the deficit, mortgage rates will rise, making housing even less affordable than it is now. The interest payments on £1 trillion of debt would also suck money away from front-line services and future investment. There was mention, too, of first-time buyers. They depend above all on the return to economic and financial stability, which the Government are seeking to achieve through debt reduction and a commitment to abolish the structural deficit. We hope that this will keep interest rates low and improve credit availability.

Despite the fiscal constraints—and despite what was said today in what I thought was a slightly apocryphal and apocalyptic introduction by the noble Baroness, Lady Hollis, for whom I have a great regard, because she produced a forensic speech, as I think the noble Baroness, Lady Dean, said, although it was far more apocalyptic than is necessary—there will still be £6.5 billion of taxpayers’ money put into housing. That includes £2 billion for decent homes. That program will continue and we will therefore have more accommodation coming through which that money has made decent. There will also be £4.5 billion to fund new-build homes over the spending review period. It has been estimated that that will amount to 150,000 homes. That will of course include—I think there was a question about this—the programme instigated by the previous Government. Those properties, amounting to about 60,000, will be part of that. It will also include empty homes which are being brought back into use by this money.

We are also prioritising services to the vulnerable. We had two or three speeches today on the disabled and their difficulties with accommodation. We will still be supporting the elderly, the disabled and the vulnerable with £6.5 billion in the Supporting People programme. That problem is already de-ring-fenced and local government already has access to it. We expect that it will be used for the programme already outlined. There will also be the homeless grant, which is maintained over the spending review period at a total of £400 million, while the disabled facilities grant is being protected over the same period. We are backing local growth and will introduce the new homes bonus, which we have not discussed much today. It will be a powerful fiscal incentive for local government to be able to build and generate the building of new houses.

Today’s speeches have focused mostly on the effects of housing benefit and the likely effects in the future. There is too much experience around this House for me to say that none of the case studies is likely to come about, and I would not dream of doing so. The reduction in benefit will have some impact. However, I am afraid that it will need to have some impact if the deficit is to be reduced, as it has to be. It would be fair to point out that we are currently paying more in housing benefit in one year than we spend on the whole of the police and universities. I think that the amount has actually doubled over the past five years. It was suggested that it has doubled not only because of the increase in property prices but because of the increased number of people in poverty. We will have to control it with the amount being spent on it and bring it back to a level that can be afforded.

We expect about 17,000 households to be affected by the cap in London, while 32 per cent of cases will experience no shortfall at all between their benefit and rent. A third of the properties in London—it will be better elsewhere—will still be affordable to people on the local housing allocation. I agree that housing benefit levels could mean that some tenants may need to move from the most expensive areas, but that is no different for working people who have to move if they cannot afford to live where they want. There are many people of working age who are living out of London and coming into it every day of the week, spending a fortune on travel, because they cannot afford the rents in London. I am sure that it is an extreme example—it is from my own previous local authority, which I represented—but the sum of £2,000 a week on housing benefit is far more than investment bankers earn in a year, and it is coming from taxpayers’ money. There is an equation here which we have to look at as regards the equitability of somebody working and paying rent or a mortgage subsidising to such an extent others who are not in jobs and are on housing benefit. There has to be a rationalisation of that, and some of that will come about as a result of the reductions in housing benefit that we have talked about today.

We are, however, putting transition money in place to support this where it happens. We have provided a substantial increase in the discretionary housing payments budget to allow local authorities to provide additional support where it is needed. Along with the additional £10 million that my honourable friend Grant Shapps announced last week, the Government have committed £140 million of additional funding for local authorities to provide support where they need to manage these changes. The suggestion that people are going to be left on their own to manage for themselves under these circumstances is not correct.

People worried about the changes or who are likely to be impacted by them will be able to get help from their local authorities to renegotiate their rents with their landlords. There is more than a suspicion that rents have risen quite substantially on the back of knowing that housing benefit will be paid. Rents are now very high; they rose substantially during the previous Government’s reign, and that is where we are now with the level that they are at.

[Lord McKenzie of Luton]

I apologise for interrupting the Minister. Is she suggesting that the policy was built around a suspicion about the impact of housing benefit on rents, or was there evidence that supported that suspicion?

[Baroness Hanham]

My Lords, there is a suggestion. I think I will put it like that. There will be help for these people to move to a new property, with the potential for relocation grants for more vulnerable households.

We are also protecting the vulnerable; we have had quite a few speeches about that. We are protecting the homelessness grant with over £400 million. We have also committed £6.5 billion of investment to the Supporting People programme, which will help also with tackling homelessness. This reflects the Government’s commitment to tackling homelessness and to protecting the most vulnerable groups in society.

We intend to support the mortgage rescue scheme so that it can remain open to support vulnerable homeowners. We are also talking to the Council of Mortgage Lenders about the question that was raised on intermediate housing and shared ownership to see whether we can free that up.

The right reverend Prelate the Bishop of Bath and Wells raised the question of rural housing and what can happen there. We hope that rural housing will be picked up by the community right to build, where the neighbourhood will be able to decide what it wants and where it is. That will also help to keep young people and local people in their own home area. We are also keen to see that the decent home programme is maintained; as I say, there is £2 billion of capital to support that.

The noble Lord, Lord Greaves, asked particularly about the former pathfinders and the areas where that programme has been carried out. Our expectation is that the current contracts, where there are any, will be honoured and carried out. Other than that, as he also suggested, access to the money will be from the £1.4 billion regional growth.

I have a few moments to go through some of the questions that I was asked. If I cannot provide the answers as quickly as I should within the next six minutes, I will ensure that I write to all noble Lords who asked them.

With regard to the question raised by the noble Baroness, Lady Thomas, people should not be found intentionally homeless if they are genuinely unable to afford the rent and no other reason is attributable. We intend to keep this practice under review and to reissue guidance if necessary, but the intention is that the support should be available so that people are not made unintentionally homeless.

The noble Baroness, Lady Dean, asked about the key priorities, including the affordable housing programmes and the regional growth fund. In many areas we are focusing on delivering existing commitments; as I said earlier, 60,000 of the 150,000 homes will be those that are already in the programme, and the figure of 150,000 also includes bringing empty homes back into use.

Regarding the equalities impact on affordable rent, which is the other measure of housing that we will be looking at in future, we will be publishing the equalities impact assessment as part of the overall impact assessment, which comes out shortly. The noble Baroness, Lady Wilkins, asked about affordable rent. It is a tenure that will offer people stability where it is needed. There will be affordable rent where there are flexible tenancies, where some people will need life tenancies but others will need only a short time before they move off into other areas. We think that that would be a valuable contribution.

On the question raised by the noble Lord, Lord Shipley, the Department for Work and Pensions, which I represent, will publish a full impact assessment alongside the regulations in November. Much of the impact will depend on how landlords and tenants respond to the changes, so I cannot predict entirely how many households will need to move.

The noble Lord, Lord Best, as I had expected, raised many salient points. I just underline the fact that the claimants of housing benefit of working age are 20 per cent working and 80 per cent not working—I think that those figures were said the other way round.

The noble Baroness, Lady Meacher, was concerned about the assessments for people moving from ESA to JSA. Clearly we cannot comment on individual cases, but the JSA will support people in hostels, often suffering from drug or alcohol addiction, to adjust to new circumstances, and they will be protected by the £400 million homeless grant.

I cannot tell the noble Lord, Lord Howarth, how much I agree with him, for once, on the need to have well designed housing. Perhaps one of the things that we have suffered from most from the 1960s and 1970s has been the delivery of unimaginably awful housing, and I accept that it is important that we see that any housing that is built now is built to a standard that we would all recognise as being for the future.

I think that I have answered the questions of the noble Lord, Lord Greaves, and the noble Baroness, Lady Greengross. If I have not answered all the points now, I will ensure that I do so in writing. I thank everyone who has taken part for their informed speeches, and I look forward to continuing this debate in due course.

Mobile Homes

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 27th October 2010 Lords Chamber

[Baroness Hanham]

My Lords, I agree entirely with my noble friend that mobile homes are largely occupied by elderly people. These homes do not have a huge initial capital value but, by the time their owners come to sell them, they are probably the only asset that they have. It is the Government’s intention to amend the Mobile Homes Act 1983 to change the appeal procedure by tenants or residents from the county court, which is expensive and slow, to the residential property tribunal, which is cheap. In fact, I do not think that it costs anything and it can be very quick and easy to use. It is absolutely essential that these owners, who are very vulnerable, have the speediest possible access to the law.

[Lord McKenzie of Luton]

My Lords, in view of the very serious examples raised by my noble friend Lord Graham, will the Minister also now commit to taking forward proposals which were under way but not completed by the previous Government to strengthen local authority licensing powers to encompass, in particular, a fit-and-proper-person regime for site operators?

[Baroness Hanham]

My Lords, I am aware that there was quite a lot of legislation for mobile homes which was ready to go at the last election. As I said, we are committed under a statutory instrument, which is now waiting to come to the House, to make some changes to the law to ensure better regulation.

Allotments

Debate between Baroness Hanham and Lord McKenzie of Luton

Monday 18th October 2010 Lords Chamber

[Baroness Hanham]

My Lords, I agree with the noble Lord that anything that encourages people to have allotments and take up gardening is to be welcomed. I am not aware of the funding of which he speaks and will make inquiries and respond to him in due course.

[Lord McKenzie of Luton]

The Minister will be aware that legislation gives a local authority the right to terminate a tenancy when it discovers that a tenant lives more than one mile outside of the area for which the allotments are provided. In assessing the impact of this and, generally, on supply and demand for allotments, what regard has been given to the effect of the proposed draconian cuts in housing benefit, which will force many poor people out of their current homes and away from their existing communities?

[Baroness Hanham]

My Lords, this Question is about allotments, not housing benefit. I shall resist the temptation of being drawn into the whole question of housing benefit and simply say that the rules governing allotments are in the hands of local government, which presumably pays attention to them when considering these matters.

Audit Commission

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 14th October 2010 Lords Chamber

[Baroness Hanham]

My Lords, yes,

[Lord McKenzie of Luton]

My Lords, the Minister has talked about value for money. Please will she tell the House what impact assessment has been undertaken of the proposals to abolish the Audit Commission and whether she will publish it? In particular, will she say what are the estimated winding-up costs and how long it will be before any savings are anticipated?

[Baroness Hanham]

My Lords, clearly there will be savings. At the moment, the estimate is about £50 million, but I expect that may vary either up or down. The Audit Commission has appointed Gareth Davies to see how the commission is taken into the private sector, which is an excellent move forward. I look forward to seeing how that goes and the Audit Commission’s proposals for the future.

Local Government Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 28th July 2010 Lords Chamber

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

My Lords, we have had one hour’s consideration of a matter which is nothing to do with this Bill. We have spent one hour listening to the noble Lord, Lord Howarth, and others giving us a treatise on local government organisation. That is not what this Bill is about. We have had one hour hearing about the merits of Exeter and Norwich. That is what this Bill is about.

This Bill was introduced to stop Exeter and Norwich becoming unitary authorities. It was introduced because the previous Government went back on what they originally believed, which was that these unitary authorities were neither value for money nor would they be able to manage. Until a very late hour in December 2009—merely months before the election—the Government held that position. The Boundary Commission held the position that this was not value for money. The Merits Committee, chaired by the noble Lord, Lord Rosser—he has been very quiet about this today and on other occasions—drew attention to the fact that it was rotten value for money. Everybody who looked at these proposals up till the 99th hour said this was not value for money, and therefore should not be allowed until, amazingly, some compelling reasons arose. Those compelling reasons were not able to go out to consultation, which is what had been suggested that the judge said in his winding-up, because, clearly, there was not time before the election.

I draw attention to the fact that this Bill has been superseded by the judgment of the court. The court has stopped these orders. No restructuring of Norwich or Exeter is allowed. It has been stopped and we have spent a whole hour discussing the situation. I would accuse the Opposition of filibustering if I did not know them so well. I know that the noble Lord, Lord Howarth, and the noble Baroness, Lady Hollis, like to give us the benefit of their full experience.

We need to move on. This Bill is not about, and does not attempt to consider, the organisation of local government in general. The amendments try to interpose a possibility of that. If this Government decided on a reorganisation at any stage, I assure the House that they would not do it on the back of an amendment to this Bill which asks them to bring forward proposals within three years. I can tell the House that they would have a lot more authority than that if they ever wanted to do it. However, we still have the local government legislation of 2007 and it is perfectly right that those provisions have not been repealed. It is perfectly clear from the Bill we are considering that what is being stopped is any consideration of a reorganisation of a unitary authority, which encompasses Suffolk and Norwich and Exeter. The Bill is not about the reorganisation of local government; it is not a treatise on unitary authorities; and it does not discuss whether there should be two-tier or other government. I have lived in a unitary authority but there is no question of my unitary authority or any other unitary authority being worried about this Bill. Let us be clear: the previous Government reneged on what they believed, which was that those two unitaries were not viable or value for money. I do not know what made them go back on what they said—you may—but these amendments do not do anything for the Bill, they do not do anything for the organisation of local government, and they do not in any way persuade me to say that they are of any benefit at all, have any merit or have anything to do with the Bill.

I have been asked a lot of questions and a lot of people have been quoted. The noble Baroness, Lady Eaton, is unable to respond at present because she has not made her maiden speech. She is extremely welcome as a Member of this House and it is unfortunate that someone should call into question something that she has said, when she cannot rise to speak for herself. Eric Pickles is not in this House, either.

So I am responding for the Government when I say: stick to this legislation only, and let us not go into the wider field. If we are going to have reorganisation, then this Government will have the courage of their convictions and come back. At the moment, they have no intention of doing that, as far as I know; at the moment, they have no intention of allowing Norwich and Exeter to proceed; and they have no intention of accepting these amendments.

[Lord McKenzie of Luton]

My Lords, it goes without saying that I am disappointed by the response of the Minister. As has been the case on previous occasions, an amendment has engendered a debate far beyond its particulars. Let me say to the noble Lord, Lord Tope, that I greatly appreciated the contributions of my noble friends Lord Howarth and Lady Hollis about their experience. I very much share their views, although I accept that they went somewhat wider than the specifics of the amendment. I ask the noble Lord, whose argument is that we should not now be distracted by reorganisations, given the economic climate, to tell us how that fits in with his plans for the health service, the police service, education and much else.

I say to the noble and learned Baroness, Lady Butler-Sloss, that this was genuinely not intended to be a wrecking amendment. It makes a straightforward proposition. The Minister has accepted that the 2007 provisions remain on the statute book and give an ongoing opportunity for the Secretary of State to invite proposals. That is good and we support it. All that this amendment sought was to put on the statute book a requirement on the Secretary of State to come back within a period of time during the course of the Parliament to say whether further proposals for unitary status are to be considered. The amendment does not require him to consider them, nor does it set out the criteria that he would have to adopt if he wished to go down that path. As I explained when I moved the amendment, we had to tie it to Norwich and Exeter in particular because the Bill was confined to them, but there is a broad principle here.

At the moment, the Government’s basic proposition is: no more unitary authorities during the course of this Parliament. That is despite what the Minister heard from around this Chamber about the benefits that unitary authorities can bring. However, we are entering almost a new era for local authorities—given the economic constraints and whatever our arguments and views on how those came about—which will have to be even more innovative by embracing new partnerships and new ways of commissioning. Is it therefore not right that the starting point for any particular local authority, whether it happens to be two-tier or unitary, is its place in the queue, and which could have a significant impact on its ability to deal with the challenges that will arise this year, next year and for some years to come?

All that we are seeking here is to give the Secretary of State an opportunity to revisit the current judgment that he has made—that there will be no more unitary authorities—in light of actual experience on the ground and how those different types of authorities are coping with the new and constrained environment. We are not requiring him to change or to make any particular judgment, but are asking him simply to report back to Parliament to say whether the judgment that he has made now holds good in light of experience, not just in Norwich and Exeter but elsewhere. That would seem to be a very straightforward and simple request, which is not intended to wreck the Bill at all. It is just to give an opportunity for local authorities to have this revisited. Currently, if they are on the wrong end of what they perceive to be the right structure, they are stuck with that for perhaps five years, depending on how long the coalition lasts. This was an interim opportunity to get the Secretary of State to report to Parliament on these matters.

Clearly, the noble Baroness does not want to accept the precise terms of this amendment—or accept it at all—but I was hoping that at least she would give some undertaking of an interim report to Parliament. That assurance might have been helpful: again, it was not an unreasonable request. However, I am conscious of the time and of the other matters that we have yet to discuss. I am genuinely disappointed by the Government's response, but I beg leave to withdraw the amendment.

Local Government Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 14th July 2010 Lords Chamber

[Baroness Hanham]

My Lords, I have made it clear that the gross costs are those that would have to be paid at the moment to set up the structural changes. I agree that there would be savings, but they are a long way down the road and they might never be achieved. It is the capital sum now—

[Lord McKenzie of Luton]

I apologise for further intervening, but it is important that we have clarity on this point. Yes, there were gross costs of £40 million, but there were also savings over the transitional period of almost an equivalent amount. There was a separate issue about ongoing savings of £6.5 million thereafter. Over the transitional period, looked at on net-present-value basis, the gap between costs and savings was very small indeed. As my noble friend says, it is important that we have that clearly on the record.

[Baroness Hanham]

My Lords, I shall write to the Opposition with those costs.

[Lord Rennard]

Does the Minister agree that many of the potential savings that could have been made had the reorganisation gone ahead could be achieved by better and greater co-operation between the councils in any event? Therefore, many of the savings identified in the impact assessment could be achieved without the reorganisation. However, if we had had the reorganisation, we would still have had the massive costs identified in the impact assessment.

[Lord McKenzie of Luton]

If that is the noble Lord’s view, why on earth would he reject an amendment that calls for a report to establish just that?

[Baroness Hanham]

As I have said, the position is that the gross cost would be £40 million and the gross savings would be £6 million a year. If you tide that over seven or eight years and there is a consistent £6 million saving a year, I think that after eight years you would get up to the figures that the noble Baroness was talking about. I think that we will leave that.

[Baroness Hanham]

My Lords, I think that I just said that. The savings would be about £6 million. However, savings can also be made by organising services in a different way and by co-ordination and co-operation between the various tiers of government. I am sure that that is what the local authorities will want to do now, rather than spending any more time on this matter. I cannot offer any further advice on this.

[Lord McKenzie of Luton]

Will the Minister comment on the point that my noble friend Lady Hollis was pursuing about unhappiness with the process? If there is a will to take forward unitary status for Exeter and Norwich, that could be done under the Bill; I do not think that that would have to rely on Clause 1(3), because those orders are in fact dead, but the structure of the rest of the Bill, leaving intact the provisions of the 2007 Act, would enable it to happen. If the main gripe is about process, once the Bill is enacted there will be nothing in it, in its amended form, to prevent future proposals from coming forward.

[Baroness Hanham]

My Lords, it was the process that was wrong. It was judicially reviewed and it was found to be flawed. As well as the process, the problem related to the criteria and the fact that the previous Government were not accurate in what they were doing.

My understanding of the Bill is that it stops the creation of unitary authorities in Exeter, Norwich and Suffolk—none of those can go ahead—but that, if there is an application in future, it will be considered. I do not say that it would be considered just against the background of process, though; there would be a whole other raft of considerations at that stage.

It is worth saying that the Boundary Committee concluded that unitary Exeter and Norwich did not meet the affordability criteria and recommended that those proposals should not be implemented. It is equally wrong to speak of massive savings that the unitaries would have yielded. At most, the savings would have been £6 million each year. We have been through that again and again; it gets you up to the figures that we were first talking about.

In my letter, I said that the costs would be around £40 million and that there would be savings in the order of £39.4 million. We have come to that; I have already said that we acknowledge that there would likely be savings in the region of £6.4 million, so six years would take us to £39 million. However, the point is not savings over a number of years; those will have to be made by whatever form of government is in these counties, otherwise the counties will find themselves in very straitened circumstances.

Housing

Debate between Baroness Hanham and Lord McKenzie of Luton

Thursday 8th July 2010 Lords Chamber

[Baroness Hanham]

Once again, my Lords, this is a matter for local authorities, particularly with their own housing. I know that some local authorities have not made the maximum use of it, and of course we will encourage them to do that. The private sector will still be encouraged to ensure that empty properties in the private sector are brought back into use. I think we would all agree that empty property is not desirable, by any stretch of the imagination, and it denies homes to people who need them.

[Lord McKenzie of Luton]

My Lords, will the Minister please share with us the coalition Government’s assessment of the impact on homelessness and the need for social housing as a consequence of the proposed draconian—indeed, wicked—cuts in housing benefit?

[Baroness Hanham]

My Lords, there will be reductions in housing benefit via a cap, but I am sure everyone will note that the real-terms costs of housing benefit have risen from £14 billion 10 years ago to £21 billion today. I think we would all agree that that is completely unsustainable. The measures announced in the Budget will refocus the welfare system on supporting those who should be working while continuing to provide for those most in need. Housing benefit reform will help to make better use of all our social housing, for example by freeing up larger homes for overcrowded families.

Some noble Lords will have read that up to £2,000 a week is being spent on housing benefit in the private sector. That is well beyond the means of all but a very few of the richest people in this country.

Local Government Bill [HL]

Debate between Baroness Hanham and Lord McKenzie of Luton

Wednesday 30th June 2010 Lords Chamber

[Baroness Hanham]

The noble and learned Lord has raised a point that I knew I ought to have cleared up before. There is one aspect of Clause 1 that would still proceed. Clause 2 would become otiose and we would have to see how much was left to proceed with. I have been advised that, whatever happens, the Bill will have to proceed to the end now that it has started.

[Lord McKenzie of Luton]

I know that we are getting into detail that is probably Committee stuff, but if Clause 2 effectively falls, does that not create a problem with what the Bill provides for the changes in electoral arrangements? As it lays them out, they are predicated on somebody immediately before the commencement of the Bill remaining in office under an article of something that would have been quashed.

[Baroness Hanham]

My Lords, that was the bit I had forgotten. Clause 2 moves the elections from 2010 to 2011. If it is quashed, we go back to 2010 being the defining moment for the elections. In that case, by-elections would have to take place within the next six weeks, and it may be decided that it would be more helpful to move them on.

I have been asked a number of questions. I have probably answered those asked by the noble Lord, Lord McKenzie, but I shall make one point. I am not surprised that the noble Baroness, Lady Hollis, made a very passionate speech, as it is clear that this is something that she feels very strongly about. However, I am just a little bit perturbed by the fact that she said that once the judgment appeared to be taken against the councils, that was the reason why they did not pursue or give evidence to the Examiners on hybridity. This action to challenge hybridity caused a lot of difficulties and trouble and brought into question the decision of the Public Bill Office of this House. It was a well argued trap the last time—