Baroness Hollis of Heigham
Main Page: Baroness Hollis of Heigham (Labour - Life peer)Cities and Local Government Devolution Bill [HL]
Baroness Hollis of Heigham Excerpts
Baroness Hollis of Heigham (Lab)
I, too, support the amendment tabled by the noble Lords, Lord Shipley and Lord Storey. I declare an interest. As I am sure Members of your Lordships’ House may know, I was leader of Norwich City Council, but also I was a member of the Press Council for a number of years under Louis Blom-Cooper. So I come at this from both ends.
At no stage in my time on the Press Council do I recall receiving a complaint about the regional press because it was accountable to its local community for everything from advertisements to news, from fetes to weddings, funerals, baptisms and the like. All the complaints that were sensitive or difficult were about the national press, which was essentially promiscuous in the 19th century sense of the term as it was not accountable to a readership, which fluctuated from day to day and of which it had no intimate knowledge. So the regional press served its community in a way that the national press did not, and served it faithfully.
When I was leader of Norwich council an issue started boiling up while I was in Australia. The Eastern Daily Press would not run with the story until it had contacted me in Australia to get a countervailing view. That would have been unthinkable with the national press. That is why the amendment is so important. If we do not support the amendment and encourage the regional press to scrutinise mayoral and other meetings, as it does meetings under the existing local government structure, I fear that reportage of local government, much like reportage of court proceedings, will die on the vine. Twenty years ago we could expect our court proceedings, local council meetings and some of the important committee meetings to be reported. The press would expect to be briefed on them in advance. What we get now—in national newspapers as well—is sketches rather than reports of debates.
Political coverage is shrinking in this country because it is not regarded as sufficiently amusing for people with only 30 seconds’ attention span. The regional press has held on, trying to make both Westminster and local authorities accountable and transparent to the members of their community, to whom it also feels accountable.
At the moment, the leader of a local authority will be monitored by his or her group, the opposition or the press and also by the chambers of commerce and local pressure groups and lobby groups such as the local branch of Age UK, the National Rheumatoid Arthritis Society or whatever, for example, on access to buildings. There must be stringent protection of the right of access of the press. We must not accept one person’s view of what counts as confidential or private, or what he or she would rather was not made public because it might be faintly awkward or embarrassing. Without that protection, I fear that the regional press will continue to opt out of the coverage that we absolutely need if we are to grow a healthy democracy in our localities.
Lord Brooke of Sutton Mandeville (Con)
My Lords, as the speeches so far have come from the opposition Benches, I gently remind your Lordships’ House that the first legislation to allow the general public to attend council meetings in committee was introduced by my late noble friend, Baroness Thatcher. I would not wish my noble friend the Minister to feel lonely at this moment. It is a notable piece of history to which I allude. The Minister for Housing and Local Government at the time was my late noble kinsman, Henry Brooke, who encouraged the new Member of Parliament for Finchley to become involved at an early stage in introducing legislation. It was her first legislative achievement, and he sat on the Front Bench throughout when she took the Bill through the House. I would not wish the metaphor to be misunderstood, but it was a good case of picking out a dark horse before it got into the limelight.
Baroness Williams of Trafford
My Lords, our intention is to devolve far-reaching powers where strong, accountable and transparent governance, delivery and capability can be demonstrated. We are open to discussing proposals from all places, including towns and counties, where there are clear lines of accountability and decision-makers can properly be held to account. Amendments 43 and 44 suggest giving mayoral combined authorities access to a wide range of important taxes and charges. We have always said that we are interested in hearing proposals from authorities, and that nothing is off the table. We have also included provisions in the Bill for a council tax precept to meet the costs of functions undertaken by the mayor. This will be subject to the normal referendum principles as part of the council tax for the area, ensuring that not only will the mayoral combined authority be properly resourced but local council taxpayers will be protected.
Moreover, the Bill will mean that, in future, mayoral combined authorities will become major precepting authorities for the purposes of the local government finance regime. This means that through the existing powers that govern the rates retention scheme, to which the noble Lord, Lord McKenzie, referred, we will already be able to give mayoral combined authorities their own share of local rates income and ensure that they benefit from local growth. We do not need powers to put in place multi-year settlements for authorities; we can already do this administratively, as part of the wider local government finance settlement. Of course, any decision to make use of the existing powers to extend the rates retention scheme or put in place multi-year settlements would be taken alongside part of the wider transfer of powers and functions to mayoral combined authorities.
To devolve the wider basket of taxes referred to in Amendment 43, however, goes further and would represent a significant change to the existing tax landscape, with potentially significant legal, economic and fiscal implications. The other taxes mentioned play an important part in reducing the deficit and restoring the nation’s finances to a more secure footing, so it would not be right to include in the Bill powers to direct these taxes to mayoral combined authorities.
Additionally, such far-reaching powers would have potential consequences not just for the combined authorities but for other authorities, large and small businesses, and taxpayers up and down the country. Given the importance and fiscal character of such matters, we would need to consider whether any proposals would receive the correct level of scrutiny if provided through secondary legislation. I am not convinced, therefore, that it would be appropriate for these matters to be the subject of powers in the Bill or considered outside the Government’s normal fiscal and budget-planning cycle. Nevertheless, we are open to proposals for the transfer of resources as well as power and would give detailed consideration to any scheme that strikes the right balance between encouraging growth and protecting taxpayers.
The noble Lord, Lord McKenzie, asked about any proposals to remove central Government influence on local fees and charges. It would depend on individual deals. The noble Lord also asked about brigading national budgets. I cannot read the writing—
Baroness Williams of Trafford
I would not dare. What part of budgets is devolved and how devolved budgets might be handled are all matters for the discussion in reaching each devolution deal. What is clear is that in all cases where powers are devolved, there will be an appropriate devolution of budgets.
In conclusion, and in respect of the other amendments in this group, I assure noble Lords that we will consider all proposals for devolution deals involving the transfer of both resources and powers and that the framework that would allow for funding from business rates retention is already in place, if needed, in addition to the existing powers for a council tax precept.
Baroness Hollis of Heigham
My Lords, I suspect I may know the answer to this. Would it be possible for a local authority in the negotiations with the Secretary of State for devolution and financial arrangements to, for example, have the right to include extra tiers of council tax bands when raising their council tax for their area?
Baroness Williams of Trafford
My Lords, I think they would have to have a discussion with the Secretary of State.
Baroness Hollis of Heigham
Given everything the Minister has said, that proposal, which has had a fair degree of support in this Chamber in the past, would be one way in which a local authority could raise funds within the existing structure in a way that most of us would think was fair and progressive.
Baroness Williams of Trafford
My Lords, it could indeed and it would be a matter for discussion between that group of local authorities and the Secretary of State.
Lord Beecham (Lab)
My Lords, I find myself in the somewhat unusual position of agreeing with the Minister in her analysis of the impact of what the noble Baroness, Lady Janke, proposed in Amendment 43. As my noble friend Lord McKenzie pointed out and as the Minister implicitly confirmed, the impact of allowing the combined authorities to retain money on what is essentially a nationally based taxation would be formidable and difficult for the Wigans and Kirkleeses of this world as compared to the Westminsters and Kensington and Chelseas, and I was very glad to see her not adopting that position.
Having said that, I must say that there is a certain synergy between the amendments that we have just debated and the one that I am now moving, particularly in relation to multiyear finance agreements, which must be common sense, and to business rates growth. However, I am in another unusual position in having to confess that Amendment 44A as printed is actually in error, because it should have referred to the growth in business rates rather than the implicit retention of an entire business rate. In that way, we are agreeing again with only a part, but an important part, of the amendment that we have just debated. However, the critical factor here is that of the fairness or otherwise of the distribution of the funding. That is the subject of Amendment 44B. Of course, if we had suggested, as it appears on the Marshalled List, that the entire business rate would revert to individual councils, it would be disadvantageous. Even the 50% retention rate is inequitable, unless there are other measures to compensate those authorities in need.
The Independent Commission on Local Government Finance has illustrated this position by comparing Hillingdon, which currently collects £101 million of business rates, and Wigan—and my noble friend Lord Smith will be conscious of the fact that Wigan collects just one-third of that, at £34 million a year in business rates. If we had a more equitable system, and if it was based on need, that would result in Hillingdon receiving £42 million and Wigan £62.9 million. That was the finding of the independent commission. That is an illustration in respect of only that one area of financing, because action is desperately needed across the whole system of local government finance. Local authorities have suffered massive cuts as a result of government policy, which singled out the sector for the biggest cuts in public expenditure in the last five years, a process that is far from complete—and we may hear more next week about what is in store. In any event, even the cuts that are still inchoate and beginning to take place will lead to substantial further difficulties.
What is particularly galling is the unfairness of the way the burden has fallen on those areas with the greatest need. The 10 most deprived councils in the country, as defined by the department’s own measure, have suffered cuts 10 times greater than the 10 least deprived. Liverpool, the authority with the highest deprivation score of all—I repeat that these are on the department’s own measure—has suffered a loss just under 30 times greater than Hart District Council, the least deprived authority.
Interestingly, 14 councils were lucky enough to receive an increase in government funding over the past few years, and by sheer coincidence all but one of these have Conservative MPs, including Michael Gove, Chris Grayling, Philip Hammond and Jeremy Hunt. Some of us think that one or two of those have been lucky to have been in the Cabinet for these past few years, but certainly their constituents have been lucky to have received this benison from the Government.
If the Government’s ambitions for cities in the context of devolution are to be carried out and are not to suffer the same signal failure as their northern rail transport policy, as was revealed last week, or, in the light of last week’s belated disclosure of a three-year-old report, the fate that may be awaiting HS2, their philosophy about devolution must be accompanied by a needs-based funding formula and not rely on a continuation of the present system, which is so damaging to so much of the areas that could most benefit from the Government’s well-intentioned approach to devolution. That is why Amendment 44B calls, initially at any rate, for a report on the fairness of the distribution of funding, taking into account the cumulative cuts so far—and, indeed, those that are pending—in spending power and resources per household. I beg to move.
Baroness Hollis of Heigham
Will my noble friend read into the record, if he happens to have the information to hand, the 10 most rewarded local authorities and the 10 most deprived, in terms of grant, and their political complexion?
Lord Beecham
I am afraid that I am going to have to follow the usual ministerial procedure and say that I shall have to write to my noble friend. I do not have the information. I copied the report to my noble friend this morning and I think it runs to 163 pages. I do not have it immediately to hand, or anything big enough to contain it, but I will communicate with my noble friend.
Lord Scriven (LD)
I wish to emphasise what my noble friend Lord Shipley and the noble Lord, Lord Smith, have just said. In Committee last week, I said that the real elephant in the room was the issue of fiscal devolution; otherwise the Bill is about decentralisation. I listened to the Minister and I agree with my noble friend Lord Shipley and the noble Lord, Lord Smith, that this will ultimately get lost unless there is something specific in the Bill. I hear what the Minister says about this being an enabling Bill, but there needs to be something in it that gives a framework—not a straitjacket—to understand the kind of fiscal autonomy that local authorities could have. If there is not, then we are, fundamentally, talking about a local government finance system that is not fit for the 21st century possibly being reallocated in a different way.
I accept that there is talk about TIF or business rate growth being able to be held at local level. However, it is fundamentally much more than this. As my noble friend Lady Janke said, it is about different approaches. Last week, the noble Lord, Lord Heseltine, spoke about the Mayor of Tokyo talking to potential international investors in his city. I am a former council leader who talked to international investors. As I said last week, they do not necessarily ask about the nameplate on your door. They want to talk about what tax incentives my area can give compared to elsewhere, rather than there being a national scheme. In the real world, those are the kind of issues being looked at.
So I ask the Minister to reconsider. This is so important; we are talking about a brand new deal for devolution and for local areas to become much stronger and authors of their own destiny. But we need some framework in the Bill. Otherwise, like the noble Lord, Lord Smith, I fear that when the Treasury gets hold of this, it will not treat it, as the Minister wishes, from a local government perspective.
Baroness Hollis of Heigham
My Lords, I support the comments made by my noble friend Lord Smith about the increasing frailty of the existing council tax structure to bear the responsibility we ask of it. I believe I am right in saying that, had the older rates system remained in place, the most expensive properties, compared to the median average, would be in a ratio of something like 20:1. In fact, the ratio of the top band to band D—the fulcrum point on the council tax scale—is only 3:1. That shows just how narrow the redistributive effect of council tax has become.
In the past, the Government have resisted looking at council tax revaluation, even though a full-scale revaluation went through fairly smoothly in Wales, without any great hiccups in the procedures. A few years ago, some of us did some work on this. It was clear that it would be desirable to revalue all properties—but at the very least, you could fish the top band. I was advised, by the Valuers’ Association and the Government’s valuation service that that would represent less than the valuations which happen now whenever a flat becomes a shop, a shop becomes a flat or a house is sold and is given a new valuation. So the amount of work required to allow local authorities to increase the bands above the current top band would be quite modest—I am assured of that by the district valuers who carry out this work, day in, day out, on other use changes and so on and so forth—and would allow us to stretch more fairly and produce more revenue in a way that was more reasonable.
Certainly the compression that has come from council tax bands compared to the old rate bands is probably, in my understanding, the narrowest in the OECD. In America, Australia and most of the countries in Europe, the property range of bands is far wider than we now have in the UK as a compression of council tax. As I said, we have only about three or four bands above the band D fulcrum compared to the 20:1 ratio that we used to have under the old rates system. So it is a perfectly serious proposition that this would be a fair and appropriate way to increase revenues to local authorities and to reflect local need and local ability to pay.
Lord Beecham
My Lords, perhaps my noble friend would agree with me that a major part of the problem is that the council tax embodies a significant element of the poll tax, and that that is what leads to such narrow banding.
Baroness Williams of Trafford
My Lords, as worded, Amendment 44A would allow the Government to confer powers on a combined authority to set multiyear finance settlements and to retain business rates. In introducing this amendment, the noble Lord made clear that the intention behind it is to allow central government to put in place multiyear finance settlements, thereby allowing a combined authority greater certainty over its budget-setting process. In fact, we already have the powers we need to do this administratively as part of the wider local government finance settlement.
A combined authority is already able to set a multiyear budget; it is not necessary for central government to confer powers upon it allowing it to do so. Nor, as I have made clear in responding to Amendments 43 and 44, do the Government need new powers to allow a combined authority to retain some of its local business rates. The Bill will already set up a mayoral combined authority as a major precepting authority, and therefore we will be able to use our existing powers under the Local Government Finance Act 2012 to give the authority a share of its locally raised business rates, should we decide to do so.
Of course, any decision to make use of the existing powers to put in place multiyear settlements or to allow the retention of local business rates, or business rates’ growth, would be taken alongside any wider transfer of powers and functions to mayoral combined authorities. I further assure noble Lords that we will consider all proposals for devolution deals involving the transfer of both resources and powers.
Amendment 44B would require the Government to publish a one-off report about the impact on combined authorities of how resources had been distributed through the local government settlement, particularly with regard to levels of deprivation. I do not think the amendment would add anything to the information that we already provide. By looking only at the resources distributed through the settlement, the reports required by this amendment would separate government funding from other sources of income available to local authorities. By isolating deprivation from other drivers of spend—for example, the impact that population sparsity plays in rural areas—it would fail to present a properly rounded picture of the settlement.
As noble Lords know, we already publish annually an assessment of the impact of the settlement on authorities’ wider spending power and an equalities statement on the settlement’s effect. Moreover, the settlement is subject to wide-ranging consultation and comes before Parliament for approval. I am not persuaded that anything further is needed.
The noble Lord, Lord Smith of Leigh, talked about Manchester’s gains from economic growth. The devolution deal for Manchester illustrates what the city has gained as a result of its growth. A reformed “earn back” deal can earn up to £900 million over 30 years.
The noble Lord, Lord Beecham, talked about the relative impact of cuts in different areas. I know we could argue about this all day and all night. People have different views about cuts, but comparing regional spending in terms of spending power per household shows that in the north-east it is £2,154, in the south-east it is less, at £2,023, while in the north-west it is £2,230.
The noble Lord, Lord Smith, and the noble Baroness, Lady Hollis, talked about the revaluation of council tax. I understand the comments about this but, in practice, since 2010-11 council tax in England has fallen by 11% in real terms, and a total of £5 billion has been provided for five successive years of freezes that are worth up to £1,059 for average households. The noble Baroness mentioned the revaluation of just one band, the top band. As far as I can recall from my local government days, a simple revaluation has to be revenue-neutral. In the light of those comments, I would ask the noble Lord to withdraw his amendment.
Baroness Hollis of Heigham
I understand that a revaluation would have to be revenue-neutral, and obviously it is up to the local authority to make the total proceeds exactly the same, so that if you get more from X you can reduce the imposition on Y. However, I do not think that the noble Baroness should rejoice on behalf of local government for the freeze in council tax over the past few years. Obviously, it has helped council tax payers, but what they have gained by not having to pay council tax increases, they have lost in the social wage of the services that have been cut as a result. You need only go to cities to see exactly what that means when children with no books at home no longer have a library to which they can go because it has been cut. Their hopes of social mobility have, to that extent, been depressed. I think that was a much more contentious remark than perhaps the noble Baroness intended.
Baroness Williams of Trafford
My Lords, I do not rejoice and I did not intend to be contentious. I was simply illustrating the effect of the council tax freeze and the money the Government have given to that. In difficult times, council tax payers will have been glad of lower council tax.