Non-Domestic Rating (Multipliers and Private Schools) Bill

Baroness Scott of Bybrook Excerpts

2nd reading
Wednesday 29th January 2025 Lords Chamber

[Baroness Scott of Bybrook (Con)]

My Lords, first, I send our condolences to the noble Lord, Lord Khan of Burnley, and to his family in Burnley. He is always in our thoughts and prayers. This will be a difficult time for him, as I know. I declare my interest as vice-president of the Local Government Association.

This Bill represents another stealth tax for businesses. Not only are the Government increasing business rates; at the same time they are also reducing business rate relief for retail, hospitality and leisure businesses up and down this country. This is the wrong approach and we will scrutinise this Bill very closely in Committee.

Throughout the election campaign, the now Chancellor promised that the Labour Government would be the

“most pro-business government this country has ever seen”.

Yet the choices they have made indicate the exact opposite. This Budget has been decidedly anti-business and the decision to increase business rates demonstrates this Government’s failure to understand how to achieve growth.

On Monday, the CBI reported that firms expect another significant fall in activity over the coming three months, with the CBI’s growth indicator suggesting a 23% fall in the three months to January. The only official estimate of the revenue from this Bill is just £70 million for the Exchequer in 2025-26, but the impact on businesses will be disproportionate to that figure. When paired with all the other damaging tax increases in the autumn Budget, it provides a clearer picture of the campaign of crippling tax rises that this Government are imposing on our businesses.

As we scrutinise this Bill, we will be focusing in particular on the impact of these changes on our high streets, including hospitality and leisure businesses. Businesses are being asked to pay more through their employer national insurance contributions and the inflation-busting increase in the national living wage. With this Bill, the Government are hitting businesses with a triple whammy. It is our duty to hold the Government to account and to scrutinise the unacceptable negative impacts this Bill will have.

While the Bill will ensure that these online giants pay higher business rates, the Government have singularly failed to protect businesses on the high street, some of which will also be subject to these higher rates. Although the Government set out to separate online businesses from traditional retail, the Bill uses the rateable value of £500,000 as the distinction. This will allow a higher rate for

“the majority of large distribution warehouses, including those used by online giants”.

I do not dispute that this distinction will capture many online retailers, but it will also capture additional businesses such as supermarkets, hotels and department stores. The Bill fails to distinguish between these different business types, and it will have unintended consequences. The CEO of John Lewis & Partners has confirmed this, explaining that the prime location of its stores means they have a higher rateable value than out-of-town warehouses. He has called the combination of higher business rates and the national insurance tax raid as a “two-handed grab”.

We are also concerned that the new business rate multipliers have not yet been set. We are being asked to trust the Government and give them these powers without knowing how they intend to use them. I cannot understand why the Government would not set these rates before publishing the Bill; we need clarity if we are to proceed. Would the Minister be willing to give the House an explanation of the Government’s plans in this area before we go into Committee?

We are deeply concerned about the impact these changes will have on businesses, which will be hard hit by these measures. We know the Bill will mean that retail, hospitality and leisure businesses on high streets up and down this country are going to be closed. This will be yet another setback for our high streets, which we already know are struggling. The Minister claims these higher rates will affect only 1% of businesses, but I am certain that the impact will be wider spread and it is vital that we protect our high streets. In the world of public finances, the Bill does not raise an extraordinary amount. The £70 million referred to in the impact assessment will not go very far, but the impact on businesses that are forced to close as a result of this, alongside other measures included in the Budget, will have a wide-reaching impact on our economy, as well as on our communities across the country.

The Government claim the Bill will leave retail, leisure and hospitality businesses with a lower bill to pay, but this will not be the case for many businesses that our high streets rely on. The anchor stores of our high streets will be hit. I agree with the Government that independent stores are important on our high street, but that does not mean that the larger stores are not. I am worried that the Bill will have the effect of forcing retailers out of their high street locations and instead moving them to out-of-town locations where the value of property is lower. I cannot see how that is going to benefit anyone.

The second part of the Bill removes charitable relief for private schools. My noble friend Lady Barran will speak about this part of the Bill in more detail in her closing speech. This is a mean-spirited attack on private schools, and Clause 5 raises many issues. I am concerned about the exemption only for pupils with EHC plans. We have been clear that taxing education is wrong, but taxing education for children with special educational needs is unconscionable.

The Government may have made an attempt to retain charitable relief for schools that wholly or mainly educate pupils with SEND, but the way that the Bill has been drafted fails to account for special educational needs pupils who do not have an EHC plan. We know it is exceptionally difficult to get one of those plans and it takes a very long time, so many parents choose to send their children to private schools instead. The Bill will place an additional cost on the many parents in that position. Surely that cannot be right. We will bring forward an amendment in Committee to address this clear failure in drafting.

Alongside the issue of SEND education in private schools, I do not think the Government have considered the effect of the Bill on private schools’ engagement with their local communities, which often involves sharing facilities with state schools, summer schools and other community organisations. Many private schools go above and beyond in providing facilities for the other schools in their areas but, with the number of extra costs the Government are piling on them, they will be unable to provide the same level of help. The Bill may have the perverse effect of forcing private schools to reduce that support as they seek to cover the tax bill imposed on them by the Government through lettings at a higher commercial rate. I ask the Minister to confirm whether that has been considered.

In conclusion, the damage that the Bill will wreak on our high streets cannot be ignored, nor can we allow the principle that education should not be taxed to be abandoned without any challenge. We will take a robust approach to the Bill in Committee and hold the Government to account for the negative impacts that these measures will have on our towns, our high street and our educational system.

--- Later in debate ---

[Baroness Taylor of Stevenage (Lab)]

My Lords, with the leave of the House, I rise to close the debate. I thank all noble Lords who have taken part in the debate. The great strength of your Lordships’ House is the hugely knowledgeable and informed debates we have, and this has been a great example, with experience from across sectors such as business, education and many other areas—even veterinary practices—so I am very grateful to noble Lords for their contributions. They have demonstrated their enthusiasm and interest for our high streets, the important role they play in our local communities and the small businesses that are their lifeblood, and for ensuring that all children are able to receive a high-quality education. There is certainly consensus on that, if perhaps not on the means of achieving it, but there is a consensus that every child deserves to have all the opportunities that should be available to them.

I will make a few general comments on remarks made by noble Lords, and then I will attempt to answer most of the questions, but I expect I will run out of time long before I get there. I assure noble Lords that anything I do not get to, I will reply to in writing.

Both the noble Baronesses, Lady Scott and Lady Barran, referred to the overall policy, in relation to some of the really tough decisions we have had to take. I understand that these are tough decisions and why people think they are. However, yet again in this House we have had a bit of a swerve around the reason why those decisions were necessary; it is the inheritance we picked up when we came into government. We have to balance the books and get the fiscal picture straight so that we can deliver the reform to public services that we want to see, and tackle some of the cost of living issues that everybody faces.

I have another general comment on a point raised by a number of noble Lords. The Bill is not intended to achieve the comprehensive reform of business rates that we have set out as our intention. We are working on it and there is a consultation paper out at the moment, and I hope all noble Lords who have contributed this afternoon—and anyone else who has an interest in the business rates system—will make a contribution to the ongoing work on business rates. Having been a councillor for many years and listened to many complaints from both the public and private sectors about how business rates operate, I am in no doubt that we need comprehensive reform.

I hope that has picked up some of the general points and I will turn now to the specific points that noble Lords made.

There were, rightly, a number of questions regarding the impact of the proposed new multipliers. The noble Baronesses, Lady Scott, Lady Pinnock and Lady Barran, and the noble Lords, Lord Fox and Lord de Clifford, all mentioned this issue. As I explained in my opening speech, the actual tax rates to the new multipliers will be set at the 2025 Budget, taking into account the effects of the 2026 business rates revaluation, which we have to do, as well as the broader economic and fiscal context at that time. It is for my right honourable friend the Chancellor to make those decisions at the right time. Tax policy and legislation are not subject to the same requirement for an impact assessment that accompany other non-fiscal policy decisions. Nevertheless, the Treasury is committed to publishing an analysis of the effects of the new multipliers at Budget 2025, taking into account the broader factors that I just mentioned. I hope I set out clearly in my opening speech why we need to take these steps.

On the VOA and its property rateable values, which were mentioned by the noble Baroness, Lady Scott, the noble Lord, Lord Fox, and the noble Earl, Lord Lytton, on 5 February the VOA will publish an ad hoc release relating to properties with a rateable value of over £500,000. That will provide a breakdown by category of property type by local authority for all those properties with a rateable value above and below £500,000, so we will be able to see clearly which properties are impacted by which parts of this reform.

On the issues around the multipliers policy approach, I have heard the message that noble Lords may think this is a blunt tool for dealing with this matter—the noble Baronesses, Lady Scott and Lady Pinnock, the noble Earl, Lord Lytton, and the noble Lord, Lord Jamieson, mentioned this. The permanent tax cut for retail, hospitality and leisure properties, including those on the high street, from 2026-27, will ensure that much-needed certainty and support. That tax cut has to be funded, so we intend to introduce that higher rate on the most valuable properties. The Government’s view is that it is the fairest approach to ask all properties with a rateable value of £500,000 and above to pay a higher tax rate to support the viability of our high streets. It is the fairest way and, as I said in my opening speech, the higher rate will apply to less than 1% of all properties, and we will know which those properties are once the VOA has published its assessment.

The noble Baronesses, Lady Scott and Lady Pinnock, raised the approach being detrimental to anchor stores. I understand the concern around this. Unfortunately, we lost our Marks & Spencer store in Stevenage town centre; luckily, we managed to attract it back, and it is operating there very successfully, and it is much appreciated by our residents.

The Government intend to introduce two permanently lower tax rates for retail, hospitality and leisure properties, which will give certainty. I understand concerns that the higher multiplier may catch some of the largest and most valuable retail businesses. However, we think that the fairest approach is to ask all properties above £500,000 to pay that. This is a property tax, so whether large stores are based on the high street or in retail parks, it will still have the same impact. I remind noble Lords that the upper rate will impact on only 1% of businesses.

Retail, hospitality and leisure relief was extended year by year by previous Governments, but it has been a stopgap measure. The noble Baroness, Lady Scott, and the noble Lords, Lord Fox and Lord Jamieson, raised the issue of our process being a temporary measure. This is a permanent measure which will give certainty to those businesses. Before the intervention we are taking now, retail, hospitality and leisure relief would have ended entirely in April 2025, creating a cliff edge for those businesses. We have decided to offer that 40% discount to retail, hospitality and leisure properties up to a cash cap of £110,000 per business in 2025-26. By extending that retail, hospitality and leisure relief instead of ending it entirely, the Government have, for example, saved the average pub with a rateable value of £16,800 more than £3,300. We are doing our best to support the sector, in spite of the difficult fiscal picture that we see.

On wider business rates reform, raised by the noble Lord, Lord Fox, the noble Baroness, Lady Pinnock, and many other noble Lords, the discussion paper has been published. It builds on our plans announced at the Autumn Budget to support high streets by further highlighting areas for reform, incentivising investment and modernising the system so that it is fit for the 21st century. A number of noble Lords mentioned business rates avoidance. We will shortly publish a consultation on adopting a general anti-avoidance rule for business rates in England.

The noble Lord, Lord Fox, raised the issue of the small business rates relief which is in place to support all of our small businesses. I want to highlight that that provides 100% relief to small businesses which occupy only one property with a rateable value of £12,000. A taper of relief down from 100% is available to such ratepayers with rateable values up to £15,000. That scheme ensures that over a third of all properties, or about 700,000 ratepayers, are not paying any business rates at all. The Government have no plan to remove small business rates relief, which is permanent and set down in legislation.

The noble Earl, Lord Lytton, raised the issue of business rates being too high overall and I understand those concerns. We all know only too well that economic and fiscal stability is critical to business confidence. At the Budget, the small business multiplier for properties with a rateable value under £51,000 was frozen at 49.9p, meaning that, together with the small business rates relief, over 1 million properties will be protected from a 1.6% inflationary increase.

The Budget honours the manifesto commitment not to raise corporation tax. The UK has the lowest corporation tax in the G7, the joint most generous plant and machinery capital allowances in the OECD, and the joint highest uncapped headline rate of R&D tax relief in the G7 for large companies. I will come on to the noble Earl’s other points later, but I thank him, as usual, for his expertise, which we experienced during the levelling-up Bill and have once again had the benefit of this afternoon.

Supporting the high street and the broader government approach was mentioned by a number of noble Lords, including the noble Baroness, Lady Scott, and the noble Lord, Lord Fox. We are committed to rejuvenating our high streets and town centres. The measures in this Bill to introduce permanently lower tax rates for RHL properties will help, but they are only part of our work. In December, we introduced the high street rental auctions, a new power which allows local authorities to auction off the lease of persistently vacant commercial units. The new regulations will make town centre tenancies more accessible and affordable for businesses and community groups, while helping to tackle the vacancy rates on our high streets.

In addition, through the English devolution Bill we will introduce a new strong right to buy for valued community assets, such as shops, pubs and community spaces. That community right to buy will give local people the power to purchase community assets that go up for sale, helping to keep assets in the hands of the community. I have seen the great benefit of this in the Station Pub, in Knebworth, which the community has taken over and made a great success of. Like the pub mentioned by the noble Lord, Lord Waldegrave, it is a great place, and if noble Lords are ever in that area, they should visit. The Government continue to invest in a number of initiatives to boost town and city centres, including our high street accelerators. As part of our plan for change, we are working hard to support our high streets, and the measures in the Bill are part of that.

I thank all noble Lords for their comments on private schools, and in particular on special educational needs. The noble Baroness, Lady Scott, and other noble Lords mentioned pupils who do not have an ECHP. I used to be the education spokesperson at Hertfordshire, so I am very familiar with the sometimes lengthy delays in obtaining EHCPs. The approach adopted in the Bill has sought to ensure that the impact on pupils with the most acute special educational needs is minimised.

The Government are aware that some parents may make a choice for their child to attend private school, but this is a choice, like that made by any parent using the private sector. For most pupils with a special educational need, support is provided within a mainstream state school, and all children of compulsory school age are entitled to a state-funded school place if they need one. We support local authorities to ensure that every local area has sufficient school places for children who need them, and that appropriate SEND support is available, if needed. I recognise the issues around obtaining an EHCP. I am concerned by what the noble Baroness, Lady Scott, said about stigma around obtaining an EHCP, and I will discuss that with my noble friend the Education Minister.

The noble Lord, Lord de Clifford, spoke about what will happen to pupils with an ECHP when a school loses its charitable relief. Business rates are a tax on property; it is not possible to differentiate at the individual pupil level. Where a private school has only a few pupils with EHCPs, it will lose its eligibility for charitable rates relief. However, where a private school has been named on a pupil’s EHCP, the local authority funds the pupil’s place. Therefore, in the event that a private school loses eligibility and chooses to pass through some of that additional cost to fees, these pupils and their families will remain unaffected. In private schools, including private special schools, just 5.7% of pupils have an EHCP, predominantly in private special schools, and 97% of such pupils have their place at a private school funded by their local authority. I hope that helps clarify that point.

The Government are committed to reforming our SEND provision overall to improve outcomes and return the system to financial sustainability. We have provided a £1 billion uplift in high-needs funding for the next financial year. We know that that will not solve all the problems, but it will make a start. As part of our plan for change, we want to make sure that we are doing our very best to provide those opportunities that SEND children need, as with all children. This Bill is part of the process of driving that forward.

The noble Lord, Lord Jamieson, spoke about SEND and the state sector, and said that this approach will increase costs. We are absolutely committed to improving inclusivity and expertise in mainstream state schools, restoring parents’ trust so that their children will get the support they need to flourish. If an EHCP assessment concludes that a child can be supported only in a private school, the local authority will fund that place.

The noble Lord, Lord Lexden, whose great knowledge on this subject I respect, spoke about the Government not caring about pupils in private schools. The Government believe in parental choice, but we are determined to fulfil the aspiration of every parent to get the best education for their child. To eliminate barriers to opportunity, we need to concentrate on the broader picture and the state sector, where most of our children—93%—are educated.

Ending the tax breaks on business rates—and VAT—for private schools is a tough but necessary decision. We need to secure vital additional funding to help deliver those commitments to education and young people. As I said, there is a consensus on what we need to do, but perhaps not on the means of getting there.

The noble Lord, Lord Lexden, also mentioned the impact on faith schools. Again, the Government value parental choice but all children of compulsory school age are entitled to a state-funded school place if they need one, and schools are required to follow the Equality Act and requirements relating to British values. We expect them to foster and promote an environment that encourages respect and tolerance of children and families of all faiths. The Government have listened carefully to arguments on this matter and have decided that a carve-out for faith schools cannot be justified. However, children can attend faith schools and have their faith respected in the state sector.

The noble Lord, Lord Lexden, referred to private school closures. We expect those numbers to remain relatively low and they will be influenced by various factors, not just the removal of VAT and business rate tax breaks. Parents can seek places in other private schools or find a state school place through their local authority. There has been a traditional number of around 50 private schools closing each year, including independent special schools, but we must also note that private schools have continued to open, even after the Government announced that they would end tax breaks for private schools. The register of independent schools shows that 77 independent schools have opened between January and October 2024.

The noble Lord, Lord Lexden, felt that the timing of this was poor. Ending tax breaks on VAT and business rates for private schools is—I will say again—a tough but necessary decision, and we have had to take some measures to fill the gap in the budgets. Delaying implementation of the business rates policy would forgo around £140 million a year that is intended to fund the Government’s investment in state education and young people.

[Baroness Scott of Bybrook (Con)]

But if I remember rightly, the decision about the taxation of independent schools was made well before the Chancellor got into place and saw anything in the books.

[Baroness Taylor of Stevenage (Lab)]

Knowing the Chancellor as I do, I am sure she was extremely well prepared for taking on the commitment and had some idea of what was going on well before she came into office. I am sure that that was her being well prepared.

The noble Baroness, Lady Scott, and the noble Lords, Lord Waldegrave and Lord Maude, raised the impact on charitable activity if schools stopped or reduced their activity. They will continue to operate as charities and there will be no other tax changes specific to their charitable status.

I see I am running out of time, so I will close. I have a number of other points, including on several points of detail made by the noble Earl, Lord Lytton.

Future Homes Standard

Baroness Scott of Bybrook Excerpts

Wednesday 29th January 2025 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

The noble Lord makes some very important points. I have a lot of sympathy with what he says about how we take this forward. I think I was very clear in what I said: the intention of our Government is to make sure that there will be no further retrofitting needed when new homes are built. They will be built to the standard we set as soon as that standard comes into being. The discussions I have had with the construction industry lead me to believe that it is waiting for that standard and will be ready for it as soon as we are able to set it. I hope that will be the case. I will take the other ideas the noble Lord put forward back to my department.

[Baroness Scott of Bybrook (Con)]

My Lords, it was my understanding that this Government had said that rented properties must achieve at least an EPC rating of C by 2030, but I thank the Minister for correcting me on this. However, many listed properties cannot achieve this without substantial investment, which many private landlords simply cannot afford. This will only push more landlords to sell up, further restricting an already strained rental market. What assessment have His Majesty’s Government made on the impact of these new requirements and the impact they will have on the number of rental properties available?

[Baroness Taylor of Stevenage (Lab)]

Just to clarify, we are in consultation at the moment on the new EPC framework, which will require all properties to have an EPC registration of C. I will report to the House later on that issue. In relation to historic buildings, I have met the Historic Houses association and visited at least one historic property to try to discover for myself what the real issues are. There is further work to be done on that, but I am aware of all the issues related to the retrofitting of historic properties.

Political Parties: Donations from Abroad

Baroness Scott of Bybrook Excerpts

Wednesday 22nd January 2025 Lords Chamber

[Lord Khan of Burnley (Lab)]

My noble friend makes an excellent point. She is correct that overseas voters have the right to participate in UK parliamentary elections, and this includes the right to donate to parties or candidates they support. However, foreign money is not permitted, and it is a criminal offence to facilitate an impermissible donation. Those rules apply to voters abroad as well.

[Baroness Scott of Bybrook (Con)]

My Lords, a Question was asked on this matter on the 15 January 2025, answered by the noble Baroness, Lady Taylor of Stevenage. Can the Minister provide the House with more detail on His Majesty’s Government’s review of all matters relating to electoral donations? In particular, can he confirm that it will address the matter of public bodies disclosing information to political parties, and tell the House when we can expect the review to conclude?

[Lord Khan of Burnley (Lab)]

The noble Baroness mentioned a similar Question that was previously asked. When it comes to foreign influence, additional controls are being implemented through the foreign influence registration scheme, which will require those being directed by a foreign power to carry out, or arrange for others to carry out, political influence activities to register with the scheme. I will take her concern forward and ensure that, when we have our wider consultation and bring forward proposals, which are not yet finalised, we will look at this in legislation and policy.

Local Government Reorganisation

Baroness Scott of Bybrook Excerpts

Thursday 16th January 2025 Lords Chamber

[Baroness Scott of Bybrook (Con)]

My Lords, what local residents want from their local council are good quality services at a reasonable cost, however it is organised. When the Conservatives took control of Harlow Council in 2021, they cut council tax, and have kept it frozen ever since. Under this Government’s new local government funding formula, Harlow will lose approximately 30% of its grant funding next year. Why is the Government’s new formula punishing councils that are keeping taxes down and providing better value for money for taxpayers in their area?

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

I find it astonishing to hear the party opposite challenging us on funding issues in local government, when it has punished the whole of local government for 14 years in this respect. I agree with the noble Baroness about what the public want from their local government services. They are not worried about the overheads of additional councils; they want to see good public services at local level and good value for money. That is what the devolution and local government reorganisation programme is all about.

The review of the funding formula will happen as we go into the spending review in the spring, and is there to make sure that funding is directed where the need is greatest. That will be what we set out to do. It is what we said we would do in our manifesto, and we will continue to do so. Let us not take any lessons in that from the party that has starved local government and brought it to its knees over 14 years.

Political Parties: Funding

Baroness Scott of Bybrook Excerpts

Wednesday 15th January 2025 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

I take it that that was a question about a cap on donations. That is not a current priority for the Government, but strengthening the rules around donations really is. Political parties play a vital role in our democracy, and it is important that they are able to fundraise effectively and communicate with the electorate as a very important part of our process. By law, it is the responsibility of political parties to take all reasonable steps to verify their donors and whether they are permissible. We will take necessary steps to ensure that those requirements are tightened and stuck to.

[Baroness Scott of Bybrook (Con)]

My Lords, during the Lords stages of the National Security Bill, the last Conservative Government and Conservative Ministers pledged to enhance data-sharing powers to allow public bodies to share data with political parties. That is what we need; it is not about the honest ones who come through but knowing who is coming through a tenuous route, so that political parties are assisted in their due diligence. Can the Minister tell me the status of those plans to provide more information to political parties?

[Baroness Taylor of Stevenage (Lab)]

As I explained in my earlier Answer, we are reviewing all matters related to electoral donations. Those will be taken into account as we go through the process of developing any new legislation, including the issue raised by the noble Baroness.

Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025

Baroness Scott of Bybrook Excerpts

Monday 13th January 2025 Grand Committee

I give this SI my general support, with a few caveats.

[Baroness Scott of Bybrook (Con)]

My Lords, this SI is a key step in advancing the devolution agenda, continuing the work set out in the Levelling-up and Regeneration Act 2023 under the previous Conservative Government. As we have heard, it extends the borrowing power to the York and North Yorkshire Combined Authority, the North East Mayoral Combined Authority and the East Midlands Combined County Authority, empowering them to invest in critical areas, such as housing, regeneration, transport, education and health. This is part of a broader effort to decentralise power from Westminster and empower local authorities to shape their own futures, which His Majesty’s Official Opposition support.

In terms of economic development and regeneration, the regulations grant the EMCCA the general power of competence to support local businesses, tourism and other sectors. This is a notable shift, allowing the EMCCA and its constituent councils to carry out more comprehensive projects, including potentially accessing grants from central government, but we must ensure that, while these powers enable growth and development, there is robust accountability in place to ensure that resources are used effectively and in the best interests of those local communities.

A public consultation was conducted regarding the proposed changes, particularly focusing on the economic development and regeneration powers of the EMCCA. While the feedback was largely positive, with no significant objections, it is important to note that support for these new powers was not overwhelming. The absence of major concerns from stakeholders, including the House of Lords Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments, suggests broad acceptance, although this should not be construed as unanimous approval.

I have a number of questions for the Minister. While the regulations aim to empower local authorities, several questions need to be answered to ensure these powers are used effectively and responsibly. On effective devolution, the work of the Levelling-up and Regeneration Act promoted decentralisation, but how much autonomy will local authorities truly have under these regulations and at what point will central government oversight become excessive? On oversight, without a statutory review clause noted, how will the Government ensure accountability for these new borrowing powers? Are there safeguards in place to ensure that borrowing is managed prudently? Finally, on regional equity, could the new powers create disparities in regional development, potentially leaving smaller regions behind? How will the Government ensure that these powers, to be granted to certain areas, do not exclude or disproportionately benefit specific regions at the expense of others?

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank both noble Baronesses for their participation and broad support for this SI. I will address some of the questions raised. The noble Baroness, Lady Pinnock, asked about the powers of mayors; I simply point to the success of existing mayoralties, delivering real things for their communities that have made a huge difference—in transport, skills and, in some places, health economies—in the areas where people live. Of course, you can only really do that if you are part of the community that you are representing, and the Government’s push for devolution is to help those local areas with skin in the game to have the powers and funding they need to drive their areas forward, particularly for growth but also for the conditions for the people in their areas.

We now have the Council of the Nations and Regions, which is a very important body for driving forward growth in our regions and nations. It is very important that every part of the UK has a seat around that table. That was the thinking behind the English devolution White Paper—it is still out for consultation, so we will see what comes back from that.

On capital borrowing, it will be the responsibility of mayors to drive growth in their areas, but I realise that borrowing will have to be paid back. Debt caps have been agreed with the Treasury. There has been an extensive process to agree them, and it has been done on the basis of what is affordable for those areas within their current envelopes.

The noble Baroness spoke about powers in relation to housing and planning. The English devolution White Paper set out strategic and investment powers, and possibly development corporations that mayors will have powers over. Planning powers on a day-to-day basis will stay with the constituent local authorities, which is right and proper because they are the people on the ground.

The noble Baroness also spoke about local government funding. The last person in the world who would underestimate issues in local government funding is me. I lived with them on a daily basis for many years. There have been substantial steps forward in funding for local government. In spite of a very difficult financial settlement this year, our Secretary of State has achieved significant additional funding for local government. Off the top of my head, I think the figure is £3.7 billion altogether for local government, and I am sure that officials will wave at me if I am wrong. We know that will not solve all the problems. We have to increase growth in the country to improve that situation more substantially. I have just been given a great big written note which I am supposed to read, while I talk at the same time, but that is not possible, so I will answer off the top of my head and, if I do not answer all noble Lords’ questions, I will respond later in writing.

On the Levelling-up and Regeneration Act and non-constituent members, the noble Baroness is quite right that we had substantial debates about them during the passage of the Bill. For one type of authority, there are not voting rights, but for the other type of authority, there are voting rights. As we move into the full picture of devolution, there will be further consideration of that. It is right that in mayoral combined authorities the upper tiers will take the decisions. How they decide to involve their constituent members will be broadly up to them. I have heard some really creative ideas, such as having key committees chaired by the constituent councils. As we move into a picture where we have all unitary authorities, I think we will continue to look at that and review it.

I thank the noble Baroness, Lady Scott. The three of us are part of the LURB club who sat through many hours debating the Bill. I agree with her about what a key step this is and that the East Midlands Combined County Authority will need to undertake the more comprehensive projects that were set out in its devolution agreement, and it needs these powers to do that. Of course we need robust accountability for all of them.

There was some consideration of consultation, but extensive consultation had already taken place on this so, having looked extensively at what had been done before, it was felt that there was no need for further consultation. I take the noble Baroness’s point that support was not overwhelming, but there was enough support for us to feel comfortable that we could go ahead.

The question about autonomy is important. The way that we have set out the picture in the English devolution White Paper is that, the more established an authority becomes, the more autonomy it will have. It is perhaps the opposite way from what the noble Baroness suggested. Central government oversight will not overwhelm those authorities once they are established. Look at some of our more established mayoral authorities: Greater Manchester is always the standard example and it has extensive powers and funding to lead the way for growth, transport, skills and so on. We want to see that with the more established authorities. The more established they are, the more they prove themselves in terms of accountability of all kinds, especially financial, and the more powers they will get.

On accountability and safeguards for borrowing, that is why debt caps have been set with the Treasury. They have been looked at very carefully. The White Paper also sets out a wider process of accountability which may, depending on what comes back from the consultation, include something like local public accounts committees to have oversight at local level of what is going on within mayoral combined authorities.

I hope that answers all the questions but, if not, I will go through Hansard and make sure that we respond.

[Baroness Scott of Bybrook (Con)]

I asked how we would ensure regional equity.

National Insurance: Employer Contributions

Baroness Scott of Bybrook Excerpts

Thursday 9th January 2025 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

I have heard a great deal from that side of the House about NICs. If we had not had to fill a £22 billion black hole, we would not have had to do it in the first place. None of us on this side of the House would have made that choice unless we had to. We recognise the need to protect small businesses and charities, which is why we have more than doubled the employment allowance to £10,500 and expanded it to all eligible employers. The OBR expects 250,000 employers to gain from the changes to the employment allowance and 840,000 to see no change at all. That is more than half of all businesses, including charities.

[Baroness Scott of Bybrook (Con)]

Is the Minister aware that the OBR has said recently that it assumes that most of the Government’s increases in national insurance costs will be passed directly on to workers and consumers? Do this Government still claim to serve the working people of this country, or will they now come clean and admit that they are raising taxes on ordinary working people?

[Baroness Taylor of Stevenage (Lab)]

The denial of responsibility from that side of the House is quite astonishing. Public services were broken by neglect from the party opposite for 14 years. I am surprised that they do not see the irony in complaining about the measures we are having to take to sort out that mess, including our commitment to an additional £680 million for social care, further funding for local government and a real-terms boost for local government funding. I would rather hear some other ideas from that side of the House than complaints about what we are doing.

National Policy Planning Framework: Housing

Baroness Scott of Bybrook Excerpts

Monday 6th January 2025 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

The right reverend Prelate raises a very interesting point about space standards. Coming from a new town, I remember the standards that were introduced when my town was built. On the issues around the National Planning Policy Framework and the social aspects of it, as the Planning Inspectorate goes through the process of assessing local plans—it is important to remember that fewer local authorities do not have them than those that do—it takes account of the social aspects of the plans as well as of the straightforward housing numbers. That is part of the work of my department, and we will be looking at that closely. The social aspects of the planning framework are equally as important as the technical aspects.

[Baroness Scott of Bybrook (Con)]

My Lords, first, I offer our condolences from these Benches to the friends and family of Baroness Randerson. She will be very much missed in this House.

Affordable homes should be built where they are most needed, meaning near jobs and existing infrastructure such as public transport networks, schools and doctors. With that in mind, can the Minister tell us why London’s mandatory housing target has decreased while some rural constituencies have seen increases in hundreds of per cent? Will the Government reconsider their targets to build more affordable homes in London, where there is the highest need for them?

[Baroness Taylor of Stevenage (Lab)]

The new methodology has been carefully considered. It strikes a balance between meeting the scale of need right across the country and focusing additional growth on places facing the biggest affordability pressures by more than doubling the affordability multiplier, which is in the method. It produces a figure for London of nearly 88,000—more than double recent delivery—and London has the biggest proposed percentage increase against existing delivery of any region in the country by a significant margin.

English Devolution

Baroness Scott of Bybrook Excerpts

Thursday 19th December 2024 Lords Chamber

[Baroness Scott of Bybrook (Con)]

My Lords, this White Paper will take away powers from local communities and risks making local government less responsive to the needs of local taxpayers. As my honourable friend in the other place rightly said:

“This is not bottom-up local leadership, but top-down templates for local government”.—[Official Report, Commons, 16/12/24; col. 38.]


In government, we supported joint working between local councils, which included some unitary restructuring as well as district mergers, but Conservative Ministers were clear that any unitary restructuring had to be locally led and have local support. It was not a condition of devolution deals.

If I may, I would like to raise some of the most pressing concerns of my noble friends on these Benches. Unitary restructuring does not necessarily result in better value for money for local residents, and alignment of council taxes across different councils has generally been upwards. Creating an additional mayoral tier above local authorities also risks wasting any savings achieved through unitarisation.

This has been proven in Labour-run mayoral regions, where we have seen eye-watering mayoral precepts imposed on residents. Ken Livingstone and Sadiq Khan massively hiked their council tax precepts in London, now topping £471 per band D household in London under Sadiq Khan. Only Conservative mayors such as Boris Johnson have cut council tax precepts; Andy Street and Ben Houchen—now my noble friend Lord Houchen—charged nothing at all. Can the Minister give the House an assurance that the Government’s plans to change the structure of local government will deliver better services without imposing significantly higher council tax on local residents?

We expect Labour to invite proposals from councils for local government restructuring. The first wave of this restructuring would then result in county council elections in May 2025 in those chosen areas being cancelled. Does the Minister agree that no council should be bullied or blackmailed into local government restructuring?

The Government’s true attitude to devolution is clear from their approach to housing delivery. Their introduction of the concept of grey-belt land explicitly removes the green-belt requirement to safeguard the countryside from encroachment. When their assisting in urban regeneration by encouraging the recycling of derelict and other urban land is considered alongside the imposition of mandatory housing targets, it is increasingly clear that the Government intend to concrete over as much of the countryside as they can, while cutting building targets in cities.

Despite these changes to the planning rules and the Government’s intention to deliver 1.5 million homes, the Government have cut new housing needs targets in areas where new homes are needed—minus 11% in London, minus 38% in Birmingham and minus 55% in Coventry—while increasing the targets in areas where the housing need is clearly less acute: it is 106% in the New Forest, 199% in North Yorkshire and 487% in Westmorland and Furness. These mandatory targets are just one example of the Government’s centralisation of control over local authorities and reduction of the power of local leaders, who know their communities’ needs best. Can the Minister tell this House why a Labour Government have cut housing targets in Labour-run London, Birmingham and Coventry while imposing higher housing needs assessments on the Conservative-run councils in the New Forest and North Yorkshire, as well as in the Liberal Democrat-controlled Westmorland and Furness?

This announcement could have been so much more. It could have been a chance to rethink from scratch the duties, responsibilities and funding of local government, and to ensure that its form follows its function. Before I sit down, I have a few final questions. Can the Minister reassure this House that local authorities will be fully consulted and given time to consider the Government’s plans fully before making any decisions about their future? Can she confirm whether local authorities will have genuine choice on restructuring? Most importantly, will local residents themselves be consulted directly before any decisions on restructuring are taken forward?

In order to ensure electoral equality across the country, will His Majesty’s Government also look at the representation per capita in London and in some of the other metropolitan councils? That is really important to ensure that every person in this country gets equal representation.

Finally, I understand that local councils have been asked to submit their expressions of interest by 10 January. Can the Minister confirm that councils will then have more time—the time that they need—to consider their further steps?

[Lord Wallace of Saltaire (LD)]

My Lords, I note that the Statement says:

“We will deliver a new constitutional settlement for England”.


That is a very ambitious claim. What we have in the White Paper is a great disappointment by comparison. There is a deep confusion between what is “local” and what is “regional”, which are used interchangeably and loosely throughout the White Paper. We are promised “regional Mayors” who will, we are told, also be “vital local leaders”. They will take part in the Council of the Nations and Regions alongside Scottish, Welsh and Northern Ireland Ministers; they will also sit on a separate Mayoral Council with the Deputy Prime Minister. There is no link with Parliament here, I note, nor any link to Gordon Brown’s proposal to reform the Lords as a second Chamber to give us a role in representing the nations and regions in UK-wide debates. This looks to the Liberal Democrats like a plan designed in the Treasury both to save money, by shrinking local democratic institutions, and to convert elected mayors into agents of central government, spending funds that they hope to obtain by negotiations with the Treasury—the integrated settlements—without taking into account the importance of embedding democratic government in local and regional networks.

Chapter 4.1 of the White Paper begins:

“England is made up of thousands of communities—towns, cities and villages”.


It then proposes to squeeze those thousands of local communities into somewhere between 30 and 40 combined authorities, with fewer than 100 unitary authorities beneath them, each containing between 500,000 and 1 million people. That is not a unitary system; it is a new two-tier system in which strategic decisions will be taken by the upper mayoral tier—in effect, by one elected person. Local democracy rests on the relationship between voters in their communities and the councillors who represent them. It is the bedrock of democratic politics and of political parties, which draw their campaigners, their members and, often, their recruits into national politics from these local activities. But here is a proposal to cut further the number of elections and elected councillors and to remove them to a much greater distance from those they try to represent, with 15,000 voters or more in each ward.

England’s voters tell pollsters that they deeply mistrust Westminster politics and trust their local representatives more. This measure risks deepening public mistrust of democracy further and weakening political parties; it asks voters to identify with one elected mayor overseeing some millions of people and quite possibly elected on little over a quarter of the votes cast. I remind the Minister that, in July’s election, five parties won more than 10% of the national vote in England. First past the post risks producing some remarkably unrepresentative mayors elected on perhaps 27% or 28% of the vote.

We will need to strengthen the really local tier—the town and parish councils—to compensate for this shift of power upward. I could not find any discussion of parish and town councils in the White Paper. Did I miss some passing references? No other democratic state in Europe, North America or Australasia has such a thin framework of local and regional government. England will remain the most highly centralised state in the democratic world.

Chapter 4 declares:

“There is clearly an appetite for reorganisation in parts of England”.


We are given no evidence of such an appetite among the public. We have had multiple reorganisations in the past 50 years. Now we are going to have another one, which will cost additional money—as all reorganisations do—and disrupt services during the transition. Has the Treasury budgeted for the costs of transition? It then goes on to propose that there should be new rules on remote attendance and proxy voting for councillors at meetings. This is not surprising, given the size of some of our new councils. In the new North Yorkshire Council, it takes some councillors 90 minutes or more to drive to council meetings, so remote attendance and proxy voting are necessary. That is not local government or local democracy, however.

Lastly, in chapter 5 we are told:

“Established Mayoral Strategic Authorities will be held to account for the outcomes associated with their Integrated Settlement”


by “reporting to central government”. That is mayors acting as agents of central government, not responding to local and regional issues. The Government seem to want to rush through this reorganisation without waiting for local consultation or the agreement of other parties. This is not the best way to deliver a long-lasting constitutional settlement for England at a time when trust in our local democracy is lower than it has been for a very long time.

Voter Identification (Amendment of List of Specified Documents) Regulations 2024

Baroness Scott of Bybrook Excerpts

Thursday 28th November 2024 Grand Committee

[Baroness Scott of Bybrook (Con)]

My Lords, I thank the Minister for bringing these regulations before the Committee. As we have heard from my noble friends Lord Mott and Lord Hayward, the timeliness of these changes is welcome. My noble friend Lord Hayward is right: it would be preferable to have any other changes come to us all at one time. I would also like to hear the Minister’s views on the possible changes to the May 2025 elections.

To go back to the SI, we on these Benches welcome the inclusion of the Armed Forces veteran card for use as voter ID. This is a sensible policy that allows our veterans to use a well-respected form of ID to exercise their democratic rights. I note that these regulations also allow for the national entitlement card issued by local authorities in Scotland to be used as voter ID. I also noted all the relevant changes to the forms required and the small changes outlined by the Minister.

These Benches’ primary concern is that the integrity of the ballot box is maintained. I therefore again seek the Minister’s assurance that this integrity will be paramount in any future changes that the Government may make.

[Lord Khan of Burnley (Lab)]

I thank noble Lords for their valuable contributions to this debate. I will respond to some of the points raised.

I thank first the noble Lord, Lord Mott, for his support for these regulations. I will tackle the issue he raised about additional documents being added to the list, as he asked for more clarification. On the subject of accepted documents at polling stations, I recognise that there have been calls from the public and noble Lords to include various additional forms of documents since the original voter ID rules came into effect. The noble Lord, Lord Rennard, also touched on this. We are pleased to bring forward this legislation to include the veteran card on the list of accepted documents, as this has been frequently called for since the card was fully launched.

I understand that many people would like further forms of identification to be added to the list. As I mentioned, we are continuing to review the voter ID policy. If further changes to the list of accepted documents are found to be necessary or appropriate, we will bring forward proposals in due course. I look forward to discussing them with noble Lords at that time. I make that point in particular. I have had really healthy discussions with all noble Lords who have spoken and want to ensure that I continue to have that conversation with them.

Many noble Lords touched on the theme of increasing democratic participation, as did the noble Baroness on the Benches opposite. The Government are committed to encouraging democratic engagement among all electors, including young people. We will help to encourage the engagement of young people by legislating to give 16 and 17 year-olds the right to vote in all elections.

The Government are carefully assessing the postal voting process as part of our wider review of electoral conduct and the registration processes. We have begun work on this and will work closely with stakeholders from across the sector to gather their feedback, analysis and ideas. The Electoral Commission has published its final report on the general election. We will carefully consider its findings and recommendations. Once we have completed our review, we will bring forward firm proposals for changes and improvements to our electoral system. I look forward to discussing this with noble Lords in due course. On the point about when the review will end, we expect to have a report on it in spring 2025.

The noble Lord, Lord Hayward, raised a number of important issues on Electoral Commission reports and our report in particular. I thank the Electoral Commission for its ongoing research into the running of our elections, and for its feedback and advice on potential areas of improvement. The commission published its interim report on the 2024 general election in September, focusing on the impact of the voter ID policy. Officials are already considering its recommendations. Two weeks ago, the commission published its full report on that election. This draws on the full suite of evidence and data, including surveys of candidates, returning officers and polling station staff, and feedback from charities and civil society organisations.

We will be carefully reviewing the commission’s findings and recommendations from both reports, and providing a formal response to both reports in due course. We are very cognisant of the need to ensure that the foundations of our electoral system are robust and secure, which the noble Baroness, Lady Scott, asked about, as we introduce further reforms to the way in which elections are run.

We are undertaking a strategic review of electoral registration, conduct and funding processes, looking at the biggest challenges and the pain points in the current system. We are working in partnership with the elections sector to understand how we can address these challenges in a practical and pragmatic manner. I will provide noble Lords with an update on the Government’s overall strategic approach to elections and electoral registration, including the outcomes of this review, in due course.

[Baroness Scott of Bybrook (Con)]

Should I assume, since the Minister is saying that we will have nothing from the review until next spring, that there will be no further changes for the May 2025 elections?

[Lord Khan of Burnley (Lab)]

I am sorry for any miscommunication, but what we are saying is that we want to get everything ready for the May 2025 elections. The focus is on getting the review and I am sorry if I confused noble Lords on that point. It depends what comes out of the review: depending on what it tells us, we can act on that. That is our focus.

The noble Lord. Lord Hayward, talked about the IFF research and the point that the Minister in the Commons made on this. The Elections Act 2022 included a requirement for the Secretary of State to publish an evaluation of the implementation and impact of the voter ID policy on the first local and the first two UK general elections after the Act came into force. We have therefore contracted IFF Research, an independent research organisation, to conduct a comprehensive evaluation of the July 2024 general election—we would have waited much longer for an evaluation of two general elections. It is essential that we understand how the policy has operated in practice, what has gone well and where there are any areas for improvement in the future. We expect that report summarising the work on the voter ID policy in the spring of 2025.