Local Government Finance Bill
Earl of Lytton Excerpts(12 years, 4 months ago)
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The Earl of Lytton
I rise simply to refer to the points that the noble Lord, Lord Jenkin, made. I attended the excellent meeting that he convened with London Councils. Its views on the problems of the lead-in time for dealing with IT have been corroborated by the views of the Institute of Revenues Rating and Valuation. Larger authorities might well have significant IT capability in their own right, but that cannot be said of all authorities, and I think that the noble Lord, Lord Jenkin, was saying that while some authorities are clearly getting on with the work, others will lag behind until a package is available to them. That is where the fear is.
In the period leading up to when an authority has a useable IT system, there is a question of a brief, and possibly of tendering and commissioning. A programme has to be written, or there has at any rate to be some sort of alteration to an existing programme, which has to be tested, and the staff have to be trained. At the moment, we are right on the edge of the summer holiday period when a lot of people are likely to be away and capacity in all areas of commercial endeavour, not least in the IT world, will be challenged. I simply echo what the noble Lord, Lord Jenkin, said and ask the Minister whether any investigation has been done on the realities of preparing the IT, bearing in mind that all local government finance is heavily dependent on it. What reassurances can the Minister give the Committee?
Lord Tope
My Lords, my name originally appeared on Amendments 78 and 79, and I am concerned that it still appears on Amendments 85 and 88A. That was a mistake. To the extent that I may have had a part in that, I apologise to your Lordships. I do not support postponement and had never intended my name to appear on amendments in this group. I want to say why. I am pleased that we are having the debate. This is important, so a debate on the amendments is necessary.
Had the Government been minded in, say, May or April, while the Bill was in the other place, to postpone the implementation day, I would not have been too unhappy. Indeed, I would probably have been happier if they had abandoned this part of the Bill altogether, but that was not to be. I might have been happier for that to happen provided that the £500 million reduction was also going to be postponed. That, of course, was never going to happen—and we knew that. I have therefore always been at best ambivalent about postponement. That was certainly an earlier view generally across local government. I do not for one moment claim to speak for all local government, but that of which I have any knowledge and contact broadly does not support postponement, for some of the reasons that the noble Lord, Lord Jenkin, alluded to when speaking to the amendments in his name.
Let us deal first with the issue of software. Back in February, when the Local Government Chronicle article was written, there was certainly considerable concern, not least among the suppliers, about whether the software could and would be completed in time. We all know that the record on IT systems has not always been perfect. I hope that the Minister, who must be better informed than me, will be able to comment on this, but my understanding—both from my direct knowledge of my own authority and one or two others that I know a bit about, but more particularly through the LGA, which has been in discussions with the software suppliers—is that that concern is considerably less now than it was in February or more recently. As much as anyone is brave enough to be confident before these things are done, there is no longer the level of concern and alarm about the issue that there once was. However, I speak only with limited knowledge and not with any personal authority. I hope that the Minister can assure us on that very particular point.
The other concern, quite rightly, is whether local authorities would have all the information that they needed before preparing and consulting on their draft scheme. I hope, as the noble Lord, Lord McKenzie, said, that the Minister will reassure us about the information that is not yet published. Much of it is already published and more is to be published this week, perhaps even today, but I have not been able to keep up with that. The noble Lord referred to the autumn. Let us say that by the time we return in October, all the necessary information will have been published as completely as it can be before enactment.
In view of that, we once again look at being where we are rather than where we might wish we were. Quite a number of authorities, including my own, have accepted that it is going to happen in April and have drawn up a consultation scheme. My own authority agreed its consultation scheme in June with all-party agreement—which, in my authority’s case, is both-party agreement—and is now out to consultation on that scheme. Later, our neighbouring authority of Kingston did the same and drew up a slightly different scheme, and that scheme is out for consultation.
I know that many other local authorities are in a similar position—we might wish we were not, but we are. The process is now under way. The considerable work under pressure that has been alluded to, quite correctly, is now under way. My personal view, and the impression I have from those with whom I am in touch, is that at this stage we would not welcome postponement. We might have done a month or two ago or even a few months ago, but at this stage we are so far down the road that we need to accept that this is going to happen. There are different views about that, but we are well down the road on it and we need to get on and make the best we can of it.
Local authorities of all political persuasions generally have a very good record of coping with what is often thought to be impossible, or certainly very difficult, whether that is the front-loading of the budget reductions that we have all experienced or the many other difficult measures. The fact that local authorities quite rightly protest when these measures are proposed and implemented, but when the time comes have to buckle down and deliver, does not mean that they were wrong to protest in the first place. It simply means that local government actually has a very good record of achieving these things. I therefore hope that if this is going to happen in April and proceeds with few, if any, problems, it will not be thought by central government that local government is again crying wolf. It is not; local government is actually getting on and delivering in the way that it always has.
Local Government Finance Bill
Earl of Lytton Excerpts(12 years, 4 months ago)
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The Earl of Lytton
“Non-domestic rating, valuation, appeals, etc.
After the coming into force of this Act, any question as to the person or body liable to a charge to council tax or business rates shall be referred to the Valuation Tribunal and may be determined prior to any hearing by agreement with either the Valuation Office Agency or Billing Authority (or both) or (as the case may be) determined as part of any appeal into the level of banding or assessment as if it were an appeal against a non-domestic assessment.”
The Earl of Lytton
My Lords, we come here to a harlequin selection of amendments, which all primarily concern making the rating system—the tax base and the appeal system—better managed and organised. I can certainly relate to the point that was introduced to our deliberations by the amendment of the noble Lord, Lord Jenkin. Billing authorities should have a stake in and an involvement with the rating appeal system. This is the counterpoint to the fact that they are, by any standards, taking on additional duties and obligations in the collection of business rates.
As I have said, valuation is poorly managed and underresourced, which has implications for the durability of local government finance in terms of budgets and predictability. As I have mentioned, the computer systems need updating and unifying, although that point is not covered by an amendment at this juncture. As certain work migrates from the social services appeal tribunal to the valuation tribunal, there will be additional loads to prevent what is coming in from them and the existing backlog overloading the system.
In prefacing the individual amendments, I say that the Valuation Tribunal Service business plan does not adequately address the backlog, which is not entirely the Valuation Tribunal Service’s fault. The parties—there are always two—are frequently not ready to engage in the appeal. Part of the problem is the Valuation Office Agency’s lack of capacity to deal with the matter at that stage. If both parties could be persuaded to get their ducks in a row—for want of a better term—it would improve the whole situation a great deal. The current situation already throws up the problem of a large number of appeals. It is unfair on billing authorities, interferes with predictability and is unfair on ratepayers generally in this context. It will cause a rise in tensions and growing problems if it is not addressed.
There are abuses by the private sector. A number of firms make blanket appeals, which also clog up the system. I impress on the Committee that I do not see these amendments as either pro-business rate payer or pro-government agency or tribunal matters. It is just a question of getting, I hope, a dispassionate view on making the system better.
Some bad practices have crept in in response to those abuses by the private sector. I still think that the level of struck-out cases is of concern. I hope that it is not a caseload management tool as opposed to a realistic attempt to ensure a reasonable level of procedural compliance. This is about confidence and the objectivity with which rating lists and appeal systems are administered by both the Valuation Office Agency and the Valuation Tribunal Service. I regard this very much as a two-way street.
The Earl of Lytton
My Lords, I aggregated these amendments together to try to deal with them as quickly as I could. They cover a number of different areas but I felt that it was right not to seek to group them individually or in smaller groups for the very purpose of discharging that obligation. While understanding what the noble Earl said and standing here chastised as appropriate, I am nearly at the end of what I wanted to say.
This particular amendment seeks to restore objectivity and professionalism—not that these individuals are lacking in professionalism but to make sure that the valuation body commands respect and continues to do so in future. That is quite an important point of principle. I have dealt with the question of falls in value following the antecedent valuation date, which just leaves me to deal with Amendments 70 and 95.
Amendment 70 relates to the way in which the Valuation Office Agency appears to be managing the appeals system. There seems to be an inclination to declare incoming proposals for alteration invalid, but not necessarily straight away. It is important that the validity of an appeal is decided at an early stage, in the same way as if a planning application were submitted that had to be decided upon at that juncture. It should not thereafter be possible for the validity to be impugned. Amendment 95 is linked to Amendment 70 and could be an alternative to it. I am going to sit down. I beg to move.
Lord True
My Lords, the noble Earl has raised a number of issues and I know that my noble friend will respond. That will be important because as business rates take the burden over the coming years these issues will become matters of considerable controversy and potentially democratic controversy. Knowing the noble Earl’s expertise and the courtesy of my noble friend, I am sure that these matters will be discussed further over this summer. I hope that in her response she will not necessarily rule out the idea of at least exploring these proposals. It may be that the Government have the necessary powers that the noble Earl is referring to in Amendment 96 to make adjustments in the system. But if that is not the case, it is a matter that we ought to consider further because this area will bear further examination. Indeed, I referred to an incident in my borough, which demonstrated the problems that can arise.
I am not going to tempt the noble Earl to his feet immediately, but perhaps when he replies to the Minister’s response he will say how he envisages in Amendment 70ZC this concept of a decline in market value being a reason, rather than a proximate event, to occasion appeals and change. I am not absolutely certain as to how he envisages that would be triggered. Would it be triggered by each individual land holder? You could have whole series of appeals in the light of a general trend in market decline. The noble Earl nods, so I think that that is the case. If that doctrine is to be imported into law, for some of the reasons that the noble Earl set out, some mechanism might be needed for collective action in those circumstances, otherwise it could be another reason for a proliferation of appeals that might come out of the works.
I listened with great interest to what the noble Earl said and I hope that we can be assured we will have the flexibility to address some of these issues as they arise over the next few years.
The Earl of Lytton
My Lords, I thank all noble Lords who have spoken to this group of rather technical and impenetrable amendments. I am heartened by the interest that all noble Lords have taken in them. I am afraid that I do not have an answer to the point just raised by the noble Lord, Lord McKenzie, on the central rating list. I just do not know how that applies but I am sure I know a man who does and will endeavour to find an answer.
The noble Lord, Lord True, raised a point about collective action by non-domestic rate payers, so as not to have a plethora of individual cases. There is a tendency to do that anyway because they can, for example, share a surveyor’s or adviser’s fee. There is a valid point—just as with central rating lists, when local authorities might be asked to be grouped together, perhaps ratepayers could be made to group together when they have a common cause. At the moment there is no provision for that to be insisted upon, although it is certainly a point.
The noble Lord, Lord McKenzie, talked about a report on how the system is coping. Indeed that would probably be a helpful outcome of all this and, as the noble Baroness said, there is a lot of dialogue going on and I would not want to underplay that in any way, but perhaps it could be more overt. Part of the message, in so far as there is a message, is not getting through in the way that it might.
Briefly, on the question of petrol filling stations, I will send round a report that I have received from Barber Wadlow, which gives a considerable amount of background information. I have it in electronic form, and will circulate it for the benefit of noble Lords rather than discussing it at this juncture.
On the annual return, an issue raised by the noble Lord, Lord McKenzie, I did use the word “simple” and I hope that it will now allow the box to be ticked with regard to the extent of the premise, never mind issues of valuation. At least that was a common element between the ratepayer and the Valuation Office Agency.
I turn to the points made by the Minister. She condensed this area into four main themes, which was a far more coherent method of answering my rather incoherent raising of these matters than I was able to achieve in doing so. I thank her for that, and particularly for the commitment that she evidently showed towards the critical and pivotal role of the Valuation Office Agency, and for the fact that its resourcing, performance, integrity and impartiality must remain. I know that not many former colleagues of mine are still in post because I have been out for a long time, but many people in that august organisation will very much welcome what the Minister said. I accept that if my proposal stands in the way of reporting to government, it would not be an acceptable outcome. I noted her point about the powers to make regulations, and I am grateful for that. Perhaps that may be a subject for further discussion.
On the question of abuses by agents putting in blanket appeals—and it is a clear abuse—one of the problems is that some of those firms are not recognised members of RICS or the IRRV. That is one of the difficulties about catching up with them. Such firms may employ individuals who are members, but very often the firm itself may not be accredited. Therefore, the opportunities for the professional bodies to bring these people to book are limited. In reality, that is not the subject of one of my amendments, but it was mentioned to me and I am grateful to the noble Baroness for addressing that point. I think the way forward is a further big conversation on this with the noble Baroness and her officials. I hope that I can perhaps get some of the principal professionals along, perhaps to a meeting but at any rate involved in the dialogue which we clearly need. That might help to curtail the amount of paperwork that would otherwise be flying around here, there and everywhere.
These are probing amendments, there to elicit a response. I will certainly think very carefully on what the Minister said and the implications of that. I will not press the amendments at this stage. I just reserve my position: I may need to return to a number of the points later in our proceedings but we will see what the outcome is of our further dialogue outside the formal procedures of the House. With that, I beg leave to withdraw the amendment.
The Earl of Lytton
My Lords, briefly, I stand guilty as charged in the sense that I made my maiden speech in this House during the passage of the Local Government Finance Act 1988, which introduced the poll tax. I said at the time that it was unfair and unlikely to work, but I was a greenhorn and my comments were probably not well informed.
I will follow on from what the noble Lord, Lord Beecham, said. The constraints that will fall on council tax payers, and in particular on those in receipt of relief, will of necessity enable those who are so advised to mount an appeal against their banding. In circumstances where the bandings are 21 years old, there will be every opportunity for a challenge to be successful on account of the age of the tax base. It was for that reason that I tabled my earlier amendment on the transfer of the loan to the valuation tribunal.
Dealing with the personal circumstances of individual claimants who are partly supported by benefits will not be quick. It will not be easy to dispose of such cases in a short time. The risk is that the system will become clogged by appeals that will take an inherently long time to resolve because they will have to delve into the details of individuals’ financial circumstances. We will debate an amendment tabled by the noble Baroness, Lady Hanham, which will probably assist us. None the less, the policy will produce a significant load on the system unless it is better resourced.
I make no comment on whether the process is destined to work. This goes into areas of local government finance that are beyond my ken. However, I warn against the inevitable transfer and the unforeseen consequence of what may happen in the wider domain of appeals.
Lord McKenzie of Luton
My Lords, the amendments in this group seek to include support for council tax as part of the universal credit. We support them all. My noble friend Lady Hollis made a typically powerful presentation, and the amendments were spoken to in a supportive way by almost every noble Lord, including my noble friends Lady Sherlock, Lady Lister and Lord Smith, and the noble Lord, Lord Greaves. The noble Lord, Lord Tope, expressed a degree of equivocation. The noble Lord, Lord True, issued the caveat that we should be careful about amendments that we had yet to debate.
Including council tax as part of universal credit is not a new position. We argued strenuously during the passage of the Welfare Reform Act that this was where it belonged, and we know that Ministers in the DWP agree. The Government’s arguments in favour of localising council tax support are that it can be varied across the country in accordance with local need; and, because the costs will fall on local councils, there is an incentive to promote employment so that people are floated off benefits. My noble friend Lady Hollis destroyed that argument pretty powerfully. Of course, the Government are pursuing two policies—one of supposed localisation and one of cuts. That is what makes these things particularly challenging. The incentive effect depends on how these cuts are to be applied since means-testing support for council tax more aggressively leads to weaker work incentives than reducing support for all claimants. As the IFS put it:
“Reforms that save the full 10% typically involve reducing support for those currently entitled to maximum CTB—those on the lowest incomes. And those options that do protect the poorest claimants either fail to generate large savings, or significantly weaken work incentives”.
That is why my noble friend Lady Sherlock pointedly asked: how, at one time, do you both help the poor and make people better off in work? That was the commitment made by the Government. How will they do it on this basis? Issues around work incentives for localised schemes are not straightforward and must be considered in the context of universal credit as well.
As my noble friend Lady Hollis made clear, we have supported the concept of universal credit—not every aspect of its proposed implementation, including payment frequency, second earners and wallet-and-purse issues, but the fundamental architecture. It is a structure that, as my noble friend explained, clearly simplifies the benefit system and provides a common taper which, together with income disregards, will make work pay and give clear incentives to work. It encompasses tax credits as well as benefits and is an “in and out of work” benefit. It is the natural home for council tax benefit and it is understood that this was the original intention. However, it would be good to have on the record the point in time at which the Government’s position on this changed and why.
Keeping council tax benefit outside universal credit, with the prospect of dozens if not hundreds of local schemes, undermines that simplification. It potentially undermines the rationalisation of work incentives, with the prospect of overlapping taper rates. These are not just theoretical matters. The Government have promulgated a default scheme that will be imposed on local councils that do not introduce a local scheme by next January. How does this default scheme sit alongside universal credit? In particular, how is universal credit to be treated for the purposes of the default scheme? My noble friend Lady Lister referred to an answer given to my honourable friend Stephen Timms in another place: it is up to local councils to decide how they do this. However, we are dealing here with a scheme that the Government have promulgated and that they will impose on local councils. Therefore, the Government must know how they will treat universal credit in that default scheme—that is the scheme that they are promoting.
At present, tax credits are taken into account as income for council tax benefit. Income-related benefits, such as JSA, IB and ESA, are not and passport individuals on to maximum council tax benefit. Universal credit substitutes for benefits and tax credits, so how will it be treated in the default scheme? Will the Minister also tell us how overlaps in tapers between universal credit and the default scheme are to be avoided, if they are? These are not just points of interest; they are fundamental to the operation of the scheme that the Government will impose in just a few months’ time. The logical route in all this is to follow my noble friend’s prescription and include council tax benefit as part of universal credit from the start. We do not doubt that this is where it will end up eventually.
My noble friend Lady Hollis made the point that the proposition advanced by the Government means that take-up campaigns will be deterred. With a number of noble Lords, she talked about the collection of small amounts and the difficulty that that will create. My noble friend Lord Smith and a number of noble Lords referred back to the poll tax and all that that entailed, particularly the point that young people disappeared from the system. We cannot allow that to happen again. My noble friend and the noble Lord, Lord Greaves, referred to the difficulty in budgeting that the proposed system will bring forward. I understand that there are not many second homes in Wigan and we do not have too many in Luton either.
The Earl of Lytton
“Electronic communication
The Secretary of State shall by regulation provide for the use of electronic means to communicate information regarding the level of a council tax demand.”
The Earl of Lytton
My Lords, I beg for a little light relief in moving this amendment. I assure the Minister that I will not tax his patience by bringing a bit of speed-dating to our deliberations.
My understanding is that regulations currently provide for all information relating to a demand for council tax to be in hard copy. In these electronic times it seems to me that at least some council tax payers would welcome an e-mail version and the provision of certain supporting data on a website, for which a link can be supplied. Speaking for myself, with all manner of legally important documents being served electronically these days, I would welcome the reduction in paperwork. I realise that there may be legal issues relating to electronic service of certain types of document, but where possible and convenient to the council tax payer, I should have thought that an electronic option would be desirable. That is all that my amendment seeks to provide. Coincidentally, it may reduce the weight of postmen’s bags in March. I simply ask that noble Lords indicate their agreement in the customary manner by saying, “Hear, hear!”. I beg to move.
Earl Attlee
My Lords, I thank the noble Earl for the explanation of his amendment. It would require the Secretary of State to create regulations providing for the use of electronic council tax billing. However, billing authorities already have powers under Regulation 2 of the Council Tax (Administration and Enforcement) Regulations 1992 to serve council tax bills electronically, as long as it is by agreement with individual council tax payers. The Government believe that this is a sensible arrangement.
Clause 14 makes provision for the costly supporting information that goes with council tax bills to be provided electronically. However, regulations will state that hard copy must be provided if a bill payer requests it. The Government consulted on this measure and it was strongly supported by respondents. Relieving authorities of the duty to provide the information in hard copy may encourage the take-up of electronic billing, because all parts of the process can be paperless, if the taxpayer so chooses.
However, given that billing authorities already have the powers to send bills electronically, I do not see any need for the amendment and invite the noble Earl to withdraw it.
The Earl of Lytton
My Lords, I thank the Minister for that. I did not know that there was already a power and I am surprised to hear it, given that there appears to be a rather small uptake. I am heartened by what he had to say. I entirely agree with his sentiments. If the powers are there, let them be used, and perhaps his department could encourage greater use of them among billing authorities in the interests of economy and speed. I happily beg leave to withdraw the amendment.
Local Government Finance Bill
Earl of Lytton Excerpts(12 years, 4 months ago)
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The Earl of Lytton
The Earl of Lytton
My Lords, in moving Amendment 18 and speaking to Amendments 28 and 29, my purpose is primarily to flag up an issue of principle. I remind the Committee of my involvement with the first tier of local government, as president of the National Association of Local Councils, the national body representing parish and town councils, and whose assistance in this matter I acknowledge.
My support for the idea of a larger share of business rates going to billing authorities under the business rate retention scheme which we discussed on Tuesday was, I have to admit, not entirely altruistic. It was founded on the belief that too little was being channelled back to the billing authority given the many other claims on the funding stream implicit in that arrangement, certainly if we are to have any real incentive flowing from it. By implication, therefore, little or nothing would be available in practice, even if the principle of my amendments was agreed, to flow to the first tier of local government.
The Bill is—in part, at any rate, or so we are led to believe—about introducing the financial aspects of the Government’s localism agenda, which I support wholeheartedly. It is a process of trickling down powers and responsibilities from central government to local government and from local government to neighbourhoods and parishes. I hope that that is a given—I am glad to see the Minister nodding. At Second Reading, I flagged up an issue concerning a defect in the Bill, namely that the process of financial trickle-down seemed to halt at the principal authority level. There is nothing in the Bill for parish, town and neighbourhood councils. In short, and viewed in very local terms, the financial benefits do not flow to the very local level where the properties on which the tax is raised are actually located and in which locality exists a neighbourhood-based, statutorily constituted and precepting local authority.
I remind the Committee that local initiatives which would raise revenue in business rate terms are not by any means confined to principal authorities. Parish and town councils up and down the country are, and continue to be, involved in schemes to encourage retail, commercial and other value-added activity.
These amendments are framed in what I admit is a deliberately crude fashion with a view to highlighting the complete absence of a local council share in the retained element of the BRRS and to ask why, in the name of all that is called localism, the redistribution of this is limited to major precepting bodies only. Removing the word “major” from various provisions as a qualification to the beneficiary precepting bodies is intended thereby to include local councils which also have a precept in the redistribution benefit.
Before 1989—I think that was the date, but my memory may have failed me—parish and town councils did get such a share, but it was scrapped when the community charge was introduced. While that denial of benefit might have been appropriate at the time, local councils have made enormous advances and shown what they are capable of doing. Indeed, I have a list with me of the very many initiatives up and down the country which all show how much can be achieved with tiny sums of money. I think that the Minister would be amazed at just how much can be done with very little money if the collaborative ethos and common purpose that particularly hallmark neighbourhood and parish initiatives are given a fair chance. However, that cannot be done without any resources at all.
Many of these initiatives are specifically aimed at business activity. The demise in the ability of principal authorities to fund many services, let alone any new initiatives, leave the local council—often a parish or town council with quality council status and a real drive to benefit their community—to pick up the reins. As I have said, this cannot be achieved without some resources. We already know the common practice of principal authorities agreeing to pass services and functions to parishes yet simultaneously claiming that there is no budgetary allocation to pass on to enable those services to be provided in practice.
I do not entirely blame principal authorities. In fact, I have been involved on and off with principal authorities for rather longer than I have been involved with parish and town councils in many respects. Principal authorities have been caught financially between what can only be described as a rock and a hard place. However, at local council level it looks bad and in neighbourhood terms it seems almost like a financial sleight of hand, which is known in the jargon of the sector as double taxation; namely, the service is passed further down the line but none of the resources—which are somewhere implicit because there is a cost element in a principal authority’s budget—get passed on. The closure of public toilets in resort towns that rely heavily on coach loads of day visitors and attempts by the town councils to keep them open is just one exemplar of that situation.
I cannot know what the Minister’s response will be, although I have my suspicions. Probably the least likely outcome is that she will accept the amendment. The question then is: what does she propose? Will there be a line of funding that will benefit the local council sector, and what guarantees can she give that, if that money is made available via a principal authority, it will be passed on?
I am realistic about funding things at neighbourhood and local council level. I accept that the question of how to distribute such a local council share will arise if the principle is accepted, but that is further down the line. Furthermore, I also accept that the last thing that we need is a plethora of very small schemes or even those which are not worth while just because money is available or because it will be lost if it is not spent in a particular financial year. Worthwhile projects, unfortunately, have lead-in periods that do not sit conveniently into a fiscal year template. I am familiar with the undesirable effects of an overrestrictive “use it or lose it” regime.
The Government’s message regarding local government finance is clear: not only is there no new money but there will be a 10% cut. However, if anything is to work at neighbourhood, parish and town council level, there has to be some redistribution of resources, unless the Government are willing to stand accused of some sort of large-scale deception by the very constituents they promised to assist. I hope that that is not the case. However, given that the maximum effect can be achieved with tiny resources and the ability at local council level to leverage a huge amount of voluntary commitment, there is a very good reason to make a modest redistribution. I look forward with interest to the Minister’s response on this matter, which I believe is critical to the objectives of true localism. I beg to move.
Lord McKenzie of Luton
My Lords, this is an intriguing series of amendments, and we have a degree of sympathy with them. The amendments would include parish and town councils within the scope of those for whom billing authorities must share their portion of the business rates. I suspect that the difficulty with this is that other parts of the components of the scheme for business rate retention would have to be applied as well. You could not just make the payment without the other bits and apply it potentially to many thousands of authorities.
Under the current local government arrangements business rates are paid to central government and come back via the formula grant, not, I understand it, to local precepting authorities but to billing major precepting authorities. However, this does not work under the business rate retention scheme. The retained business rates have to be allocated between authorities and the proposed basis is that, with two-tier arrangements, 80% of the business rate would be allocated to district authorities and 20% to major precepting authorities—police and fire and rescue included. As I understand it, the rationale for the 80/20 split is that lower-tier authorities are typically responsible for planning and more able to influence economic development.
The noble Earl might well argue—he touched on this—that the new regime for neighbourhood planning opens up that opportunity more to parish and town councils. Some are already very much involved in a drive to improve the economy of their areas. However, if such councils are not to be encompassed within the tariff top-up arrangements for billing authorities, it would seem to follow that they should have their own calculation. It might not be difficult to establish the business rate base but to derive a funding amount would presumably require some breaking out of the formula grant, and I am not sure how easy that would be to do.
In passing, we should note that there will be a requirement for billing authorities to work with local precepting authorities to address the council tax support funding. If I have read the documentation correctly, it is envisaged that this could well involve a payment from such authorities to town and parish councils.
While I understand where the noble Earl is coming from on this, the practicalities make the amendment difficult to accept. However, I will be interested to hear the Minister’s response. There is the germ of an idea here that needs support.
The Earl of Lytton
My Lords, I shall not profess to any great surprise at what the Minister has just said. Notwithstanding the point made by the noble Lord, Lord McKenzie—that this would have a knock-on effect on other issues—I would have hoped that the principle of making sure that there was an adequate stream of funding somewhere or other would be accepted. I know that in other parts of the Bill there are proposals for a degree of funding, and this will undoubtedly come up at a later stage in our discussions. None the less, the principle of linkage between having a stake in the income and, as it were, presiding over the geographical area in which part of this revenue is drawn seems to be fairly inescapable.
Nor should it be assumed that, for instance, parish and town councils are necessarily small, parochial—with a small “p”—bodies; some town councils around the country have larger budgets than a principal authority. I suppose it is fair to say—and to some extent I say this in the Minister’s defence—that one problem is the huge diversity in the size and complexity of parish and town councils. None the less, if we do not have some sort of aspirational link between the funds generated and what is done at local level, it seems to me that that will be a fundamental failing. Perhaps the review did not look far enough down the trickle-down waterfall to pick up some of the things that concern me.
These were intended as probing amendments. I have made a note of what the noble Baroness has said but I shall reserve my position in seeking leave to withdraw the amendment because this is something to which I may well need to come back at a later stage. With that, I beg leave to withdraw the amendment.
Lord True
I shall be able to join other noble Lords.
As I said when I spoke briefly yesterday on another matter, I do not think that everything has to be prescriptively set out in legislation. I will be listening very carefully to what my noble friend the Minister says about consultation because the points that have been made by other noble Lords are very well made. It is obviously vital, particularly in the first stages of a new process, that a real and meaningful consultation takes place. We will be very interested to hear what my noble friend says about whether or not it is necessary to put this in the Bill.
I would like to refer to two amendments specifically. I will not follow the comments made by my noble friend Lord Shipley, but the points he made about “general nature” in Amendment 34, tabled by the noble Lord, Lord Smith of Leigh, were well made and I agree with him. Amendment 25, also tabled by the noble Lord, Lord Smith of Leigh, which inserts,
“no later than the end of November each year”,
is also interesting. I have no doubt that officials in the department will say it is very unwise to put something such as this in the Bill because you never know what is going to happen, et cetera. But everybody in local government is aware that these things seem to be creeping later and later. It was always November, and you knew what was going to happen; then it was December. Now we are facing a whole range of legislation, specifically this one, with very short timescales, which we discussed at Second Reading.
I know that it is not only my noble friend’s department that is involved in these discussions, but some earnest by the Government to inform local government rather earlier than has become the norm would be highly desirable. Even if my noble friend cannot accept Amendment 25, I hope she will accept that many in local government would like to know where they stand a little earlier in the financial year than has been the case all too frequently in recent years.
The Earl of Lytton
My Lords, I follow what the noble Lord, Lord True, has said. I have been involved on and off for many years with various organisations that are reliant on sums of money coming from local government, and if local government is pushed to the wire in terms of setting its budgets, this has a knock-on effect in every allocation it might make to any other body. I am not involved with any organisations that receive money by way of grant at the moment, but in the past I have attended meetings at which finance officers and chief executives of these small bodies have been absolutely tearing their hair out because they do not know where they stand; they do not know whether they are going to have the budgetary allocation to enable them to keep core staff, and so on.
Leaving these things to run until a very late stage is pernicious because the downstream effects are incalculable and affect employment and the viability of schemes. So I would like to reinforce what the noble Lord, Lord True, has said about that: there needs to be a better lead-in period to deal with these things and it should not be left to the last minute on the basis that it does not matter. It matters very much and I wish to impress that on the Minister.
The Earl of Lytton
My Lords, I shall speak very briefly on Amendment 26. I am sure that the noble Lord, Lord McKenzie, would not thank me for sitting silently when the matter revolves around the question of non-domestic rating. There are two words in the clause that the proposal seeks to amend. One is “diligently” and the other is “payable”. A great deal hinges on those two words.
I previously explained at Second Reading and in comments made in the debate on the Queen’s Speech that there is a problem with the management of the tax base, which is implicit in the bundle of rateable values that afford the basis on which this particular bit of local government finance arises. I would have to say that diligence may be there in abundance, but efficacy is not. Later on—although I suspect not today—we will come to amendments that I have tabled where I set about trying to deal with some of the shortcomings implicit in the present system.
There is no unwillingness to implement a proper and fair system at all levels of central government, government agency and local authority. But if the system is underfunded and suffers from a lack of degree of care and maintenance input, problems will arise. What may be diligence to one body of people may look like neglect to others. I am particularly concerned that if the term “payable” means what would otherwise have accrued to the billing authority in this sense but does not for whatever reason, that represents the horns of a dilemma, bearing in mind that, as the noble Lord, Lord McKenzie, said, the billing authority has no responsibility for the maintenance of the tax base. In other words, it has no stake. Some of my amendments try to address that. As matters stand, the billing authority has no role in the accuracy of the list or indeed whether something is in the list as a non-domestic hereditament or not.
It concerns me that, if the Government’s own Valuation Office Agency cannot catch up with this, to try to make that somehow by implication the responsibility of the billing authority must be wrong in the absence of additional resources in which to achieve it. Clearly, there are no additional resources because we are talking about a 10% cut. If it came to be interpreted by the courts, although I am no lawyer, I fear that the words “diligently” and “payable” may have the sort of meaning that I rather fear and the noble Lord, Lord McKenzie, fears might be attributable to them.
It could put the billing authority in an extremely difficult situation and could have knock-on effects throughout a large number of billing authorities with the potential for what I can only describe as a large degree of mayhem in local government accounting for any given year until it works through the system. I support the principle of what has been said.
Baroness Hanham
I thank the noble Lord, Lord McKenzie, for moving the amendment and I hope that I can reply to most of the points that have been raised. Amendment 26 seeks to remove the obligation on local authorities to act diligently, which are the words that have been questioned regarding the collection of the non-domestic rating income due to it under Sections 43 and 45 of the Local Government Finance Act 1988.
This section focuses on the need to establish the payment that will have to be made by the billing authority to the Secretary of State in respect of the central share that is due. It is obviously important that there is a clear understanding of what is meant by non-domestic rating income in this context, and this paragraph confirms that the Secretary of State will introduce regulations that provide that clarification.
In preparing those regulations, we are clear that the Secretary of State should be taking into account not just the income that the billing authority receives, but the amount that it would be reasonable to expect any authority to collect if it acted diligently. That is the amount that is due to it, and if it does not get that and its collection rate is below 100%, it is still being assessed on the former amount. This is not a new concept. The principle of diligence is well established, as the noble Lord, Lord McKenzie, intimated, in the 1988 Local Government Finance Act in its treatment of a billing authority’s contribution to the business rates pool; for example, Part 2 of Schedule 8.
Local government is therefore familiar with the principle of due diligence as part of its responsibilities for collecting non-domestic rating income. It would send a rather unfortunate signal if we were to suggest a lessening of the responsibilities of local authorities to ensure that the business rates that are due to them are actually paid. I think that most local authorities understand and make enormous efforts to ensure that they get the maximum amount of business rating that they possibly can. I certainly remember being challenged when we got up to 97%; now we want to get to 100%.
Amendment 27 relates to the regulations that will be introduced to establish the administrative arrangements to be put in place for processing payments of the central share. We are clear that we intend to be as accurate as possible in making the calculations for the amount of the central share. However, it is obviously prudent to ensure that mechanisms are put in place to deal with those scenarios where it is subsequently determined that the payments to the central share that have been handed over by billing authorities are either lower or higher than those required. Paragraph 7(2)(b) of Schedule 1 makes it clear that the regulations to be introduced by the Secretary of State on the administration of central share payments may make provision to deal with under or overcontributions. Having reflected on that paragraph, and the proposed amendment, it is not clear to me in what way the proposed amendment will improve the clarity of the intention of that paragraph.
Amendment 30 would prevent the Secretary of State including, within regulations governing the calculation of payments to be made by billing authorities to major precepting authorities, adjustments to reflect either costs that fall on billing authorities or different circumstances that will need to be reflected in any payment schedule; for example, we envisage that, in defining non-domestic rating income, the regulations will make an adjustment for the cost of collecting the business rates income. Otherwise, there is an obvious undesired outcome that the billing authority has to absorb the cost of that administration alone. Similarly, the definition of income will reflect specific circumstances where the rates collected may be apportioned slightly differently; for example, as we confirmed in our statements of intent, it is our intention that all the business rates income from new renewable energy projects will be retained by the planning authority. The regulations would enable the relevant adjustments to be made to reflect such circumstances.
Amendment 31 relates to the circumstances that might apply following an audit of a billing authority’s calculations for the purposes of making payments to its major precepting authorities. We hope that there will be few, if any, occasions, where the audit of a billing authority’s calculations and information certified by the audit did not match what was supplied to the major precepting authority. However, there might be occasions when this is the case. Paragraph 9 confirms that regulations may make provision for the use of the certified information in relation to payments to the major precepting authority. Use of certified information in this way would mirror the arrangements set out in paragraph 40(6), which provides that the Secretary of State should be able to rely on certified information and existing non-domestic rating pooling.
Transparency over the funding to be available, and the basis of the calculations used to determine that funding, will clearly be important to everyone to establish confidence. This section sets out that the regulations may include provisions to establish what might happen where there is a mismatch between the information supplied and the certified information produced by the audit. In such a scenario, we envisage that all parties would want to understand the nature of the difference and how the certified information and calculations might be used to correct, where necessary, any mismatch. In my view, the regulations are absolutely the right place to provide that additional clarity on the use of the certified calculation or information.
Amendment 39, tabled by the noble Lord, Lord Smith, and spoken to in his absence by the noble Lord, Lord McKenzie, would replace the current flexibility in the Bill and instead require payments from central government to local government to be made in just two instalments. I hope that I am able to reassure noble Lords that it is our intention, subject to consultation with local government, to spread payments in respect of the rates retention scheme, both to and from local authorities, over the course of a year. We intend to do this by setting up a schedule of payments over the year. We will consult on the number of instalments over which the payment should be made. However, we believe, at this stage, that the two payments envisaged in this amendment would be too restrictive under these circumstances. I ask the noble Lord, with this explanation in mind, to withdraw the amendment.
The noble Lord, Lord McKenzie, asked about mandatory payments. I understand that will be outside the central charge. I may need to write to the noble Lord, but mandatory payments are clearly important as they cannot be ducked. I understand the question of sports and leisure clubs is still under discussion, and perhaps we may be able to deal with that at a later stage.
The Earl of Lytton
My Lords, can the Minister clarify something further for me following what I said a short while ago? Let us imagine the situation of a popular coastal town, in which there are a large number of properties that may be used seasonally for holiday purposes. Many will in fact be people’s second homes and may even get a reduction when assessed for council tax because they are second homes. Because of the seasonal nature, it is difficult to track whether these are going to fall above or below what I believe is the 140-day threshold of occupation for holiday purposes. I have to say that I am not sure whether that is for general tax purposes rather than local tax, but the question then is what their whole or main use is. In theory, if one is using the property year-round for holiday lettings, that is clearly a change of use, but there is no requirement to go for planning consent and it probably does not require any building regulations control. There may be some issues to do with health and safety, but how would the billing authority know what stock lay out there and what it was used for?
I appreciate that the Minister may need to come back on this, but in such a situation, how would a billing authority know whether it was behaving “diligently” or whether it was supposed to go around tracking down who all these people are? When I did an investigation last year into holiday homes, I found that a very large number of what I understood to be holiday homes, which were clearly being advertised as such through letting agencies, were in fact subject to a council tax assessment. If we are not careful, we will be putting an absolutely impossible burden on the billing authority, if “diligently” causes it to fall foul of something that is going to be extremely difficult for it to catch up on.
Lord True
Along with the noble Earl, I do not expect my noble friend to answer this point now. The issue of “diligently” is, in law, an important one given that we are framing a new approach. We need to understand how that will be assessed, particularly if it also comes up with reference to the relationship between local authorities and precepting authorities. It cannot be a subjective test. The Secretary of State will not say, “I don’t think they’re doing a good job but those people are”. Secretaries of State have never acted like that in the history of local government, have they?
Lord McKenzie of Luton
My Lords, as we have heard, Amendment 35 requires that any review of tariffs and top-ups must be undertaken in conjunction with any revaluation of rateable values. As I understand it, that is broadly the intent of the Government. However, it would seem that locking into this approach effectively gives fixed reset periods. One of the problems with this, as the Government have identified, is that the further in advance a reset period is known, the more possible it becomes for local authorities to plan on that basis and potentially manage growth and investment in their areas to achieve maximum gains from the reset process. This could result in perverse outcomes as local authorities seek to defer growth in their local areas in the year before a reset is due. It also produces a rigidity in the system and an ability to have regard to how resources in the system are aligned to changing levels of underlying need.
In their response to the resource consultation, the Government have said that it is proposed to adjust each authority’s tariff or top-up following revaluation to ensure as far as possible that their income from business rates retention will be unaffected by the valuation. However, I am not sure whether that necessarily amounts to a full resetting involving the recalibration of the baseline; it seems to be a different process. Perhaps we can have some clarification on this. Indeed, I am not sure that it would be possible to use the formulation to set the baseline at the point of a revaluation because the business rate base would be the historic one, not the updated one. I would be grateful for some clarity as to what is involved in an adjusting of tariffs and top-ups that is not the full reset—I can see from the Box behind the Minister that that probably is the position. Of course, having regard to changes in relative needs in resources is absolutely key, and we support that.
It is a difficult balance between preserving the flexibility of earlier resets so that you can respond more quickly to changes in needs and resources and seeking the benefits of a practical update that perhaps has the benefit of a longer-term incentive. On balance, we would argue for the flexibility to be able to respond more readily, particularly given some of the data about how quickly the council tax base can change over time.
The Earl of Lytton
My Lords, I support the principle of what the noble Lord, Lord Tope, said in moving the amendment because we are in circumstances of unparalleled turmoil in the non-domestic sector. The present—2010—local rating lists are based on an antecedent date of 2008. It will not escape the Committee that that coincides with the peak of the market before much of the fallout of the financial situation had filtered its way though. One of the effects of that has been to produce some significant shifts in the way in which land use is now looked at. It will also be apparent to many noble Lords that there has been a growing level of conversions of properties that were once commercial into residential. This is, for many reasons, to do with the problems of building on greenfield sites, issues concerning the interim arrangements regarding the national planning policy framework and the removal—effectively the abolition—of the strategic planning system when the coalition came into being. I do not apportion any blame. We are where we are.
It is quite clear that a lot of businesses are paying rates on the basis of transitional relief escalation based on 2008 levels of value and are increasingly of the view that they are unsustainable. I have previously pointed out that on a like-for-like basis, non-domestic ratepayers appear to be paying more pro rata for their floor space than residential property owners pay under council tax for equivalent space. That may not be the case in central London—I have to defer to the noble Lord, Lord True, and others with greater knowledge of that—but in the rural shires, that certainly seems to be the situation. This fuels all sorts of things. If something is used for a commercial purpose, it fuels a lack of willingness to make any sort of declaration because people do not want it to go that way. One might say that there is no incentive on a billing authority to point something up as a non-domestic hereditament in circumstances where it gets 50% clawback. If it were under council tax, it would have got the lot, but I leave that for the time being because that is not the thrust of what I wish to say.
Next year we will have another antecedent valuation date for the 2015 valuation. The likelihood is that outside central London large numbers of values will fall. The transitional relief for substantial movement may well kick in, so as they have been counting up year on year towards 2015, after 2015 they may well be counting back down again. I have great concern about the reset not being until 2020 because the turmoil visited upon all sectors, residential and non-domestic, public sector and private sector alike, is making for great uncertainty and a great deal of unpredictability. It seems to me that by 2020, seven years down the road, assuming this comes into force in 2013, it will be so far out of date that something needs to be done about it before that time. I know that the Institute of Revenues Rating and Valuation, of which I am a member, is equally concerned about the long-term effects, given the problems with the arrangements for the reset and valuation being so out of kilter in their degree of modernity.
This is a science. One has to try to work out how many financial criteria dance on the head of one pin, and I might not be the best person to describe this in detail, but I foresee a problem and I would like to hear what the Minister has to say about it.
Lord True
My Lords, briefly, I support what has been said by my noble friends. I understand why my noble friend and her colleagues in the Treasury have put forward this proposal but, without repeating points that I made at Second Reading, the acceptance by many authorities of the transfer from one system to another is an acquired acceptance of accumulated unfairnesses—as some would call them—of all varieties. I hope that my noble friend will consider favourably some of the points that have been made by my noble friends, such as this factor and the kind of turbulence and uncertainty that the noble Earl has just been referring to—and I gave the example of the extraordinary movement in our business rate revenue of about 11% between the last two years—the fact that, in the future, we cannot foresee it and that we are going way beyond the public spending survey period.
Baroness Donaghy
May I ask for further clarification? The Minister indicated that the appeals losses would be included in the initial tariffs and top-ups. Obviously, one accepts, as she said, that you cannot give an accurate figure for something that will happen in the future. However, there must be some basis on which the assessment will be made. Will it be based on an average across the country of previous appeals under another system—a completely different system? Will it be based on a figure plucked from the air, or the rate of inflation? There has to be some understanding of how that assessment will be approached—some framework—even though, as we all know, you cannot forecast the future.
The Earl of Lytton
My Lords, before the Minister responds to that, we are in danger of losing sight of some of the basic geometry of what has happened here, which was alluded to by the noble Lord, Lord True. He talked about an event that caused the complete recalculation of a large part of the rate base for his authority. I have explained before that it customarily takes about two years from when you lodge an appeal against a non-domestic assessment before the valuation officer has the time to start discussions. That is not the time that it takes to get to the tribunal; that is the time in which you might get a substantive response. The time that it takes to get to an appeal may depend on various other things, including whether it is grouped with certain like matters.
Baroness Hanham
My Lords, we are in danger of amending the amended. These clauses were amended in the other place as a result of some of the concerns there. These amendments would reverse changes to the way that the Government distributes surplus levy income that were made in the other place. I recognise the noble Lord’s intentions in tabling these amendments—indeed they reflect much of the Government’s proposed process for distributing the levy surplus when we first introduced the Bill in the other place. However, as the Bill was amended to meet concerns raised there, I cannot accept these amendments. We have said that any surplus levy income that is not needed to fund the safety net will be distributed back to local authorities. We will not simply hold larger and larger surpluses.
Amendments 47 and 48 propose that the Secretary of State should consult with relevant authorities in advance of determining how much levy surplus should be distributed back to local authorities and set out the basis of distribution of levy surplus in the annual local government finance report. Although I sympathise with the intentions behind these amendments, setting out the distribution of any levy surplus through the local government finance report rather than through regulations is not the best approach. In fact, there are unintended consequences of this approach, in particular for the timings of payments to distribute the levy surplus.
When the Bill was discussed in Committee in the other place, concern was raised that the proposed process for distributing surplus levy was a bit long-winded. Setting out the basis of distribution through the local government finance report would mean that even when the Government had taken a decision to distribute some or all of any surplus back to local government, authorities would have to wait six months to a year before they saw the money. As a result of that, the Government agreed to look into speeding up the distribution and therefore amended the Bill—which is how it stands now—so that the process for distributing levy surplus, and the basis of that distribution, could be set out in regulations, ensuring that the payments can be made immediately after the decision to make them is taken.
Furthermore, to provide appropriate parliamentary oversight, the Government ensured the regulations would be subject to the affirmative procedure and hence subject to the approval of both Houses of Parliament. Regulations will need to be in place well in advance of any levy surplus being distributed, so authorities will have the certainty that the noble Lord is seeking. Once the regulations are in place, they will have this certainty each and every year until and unless they are revoked.
Amendment 49 requires the Secretary of State to report to Parliament the reasons why any remaining balance of the levy account has not been redistributed within three years. Again, although I recognise the intention behind this amendment, I do not believe it to be necessary. I reiterate that it has always been the Government’s default position not to hold back excessive amounts of surplus levy. The levy account will also operate with a high degree of transparency—the payments made both to and from this account will be easy to identify, as will the overall balance. Furthermore, the Comptroller and Auditor-General will report on the account and lay this report before Parliament in the same way as he currently does in the report entitled Pooling of Non-Domestic Rates and Redistribution to Local Authorities in England. This will provide Parliament with adequate opportunity to raise the issue of the levy balance, if required, through the normal processes.
On the basis of these arguments and the fact that this has already been amended, I hope that noble Lords will not press their amendments.
The Earl of Lytton
My Lords, apart from the redistribution of this levy to local authorities, it remains the case that it is funded by what is paid by businesses on their non-domestic premises. I simply wish to have an assurance from the Minister that under no circumstances could this be used or treated as any sort of contingency fund to overcome inherent deficiencies and time lags in the system. As I have previously pointed out in the context of this Bill, non-domestic ratepayers are getting a bit of a raw deal in terms of what they pay per square foot by comparison to other contributors to local government finances. Their values are based on 2008 antecedent valuation date figures, for which they are paying ever more through the processes of transition, in circumstances where their own economic situation is increasingly challenged. Furthermore, I believe that the Valuation Office Agency has admitted that there is an element in the national non-domestic multiplier for losses and adjustments resulting from appeals.
Lord Jenkin of Roding
My Lords, I shall add a word or two on this, about which I spoke briefly at Second Reading. I agree entirely with the arguments that have been put forward so far. The speech of the noble Lord, Lord Best, was extremely clear and he made his point with great force.
We have been here before. I introduced in the House of Lords a Private Member’s Bill on business improvement districts, or BIDs. That was based on a precedent from the United States, as is TIF. We got it right though the House of Lords but the previous Government found no time for it in the Commons, so it failed. Two years later, a Bill was introduced by the Government, which the noble Lord, Lord Rooker, presented with enormous pride, saying, “Look at what we’re doing”. It was my Bill, almost word for word, but the noble Lord, Lord Rooker, whom I have known for some time and for whom I have great regard, did not acknowledge that fact at all. I took the view that I was not prepared to make a fuss. The fact is that I was pleased to see BIDs reach the statute book, and they have been quite effective so far, so one has seen this happen.
I have some sympathy for my noble friend at the Dispatch Box, but of course the person who ought to be answering these arguments is my right honourable friend the Chief Secretary to the Treasury, Danny Alexander. That is part of our system. I have been the Chief Secretary so I know and understand the system, which is extraordinarily advantageous to Treasury Ministers. They make the operational department answer all the arguments that are put up. The most we can expect from my noble friend on this is if she says that she is impressed by the strength of the arguments and that she will prevail upon her Secretary of State to have another go at the Treasury. The fact that the Treasury is proposing to treat this simply as an addition to the borrowing requirement in the year in which it is spent is, as the noble Lord, Lord Best, and others have made clear, to ignore totally the reality of what a TIF is. It is not just spending in the year; it uses the prospective revenue from additional business rate income in order to raise a loan which can then be used for infrastructure projects. Many examples could be given, such as money being spent on a housing estate, roads and so on.
That is what everyone expected would happen. When we heard the announcement back in 2010 by the Deputy Prime Minister, enormous hopes were raised. I would suggest that the Chief Secretary to the Treasury might be invited to answer why those hopes have not been met. As I say, I have some sympathy for my noble friend because there is nothing she can do about it except to go back to the Secretary of State and have another go by bearding the Treasury and saying, “Look, this is not a tenable argument. It has to be made to work”.
After all, the Government have made a great song and dance about how one of the ways we can secure economic growth is by investing in our infrastructure. Some very large schemes have been put forward on that basis in the hope that they will be funded by the private sector or even from inward investment. A few hours ago I was discussing foreign direct investment in the Chamber, and this is the same issue. If one can borrow money in order to be able to develop infrastructure in this country, one is creating jobs and building in growth, which is what we all want to see. What is in the Bill—simply having TIF 1 and TIF 2—is what I would say advisedly is simply a form of emasculation. I quoted at Second Reading the view of one of the local authority associations. It has looked at this carefully and does not think it adds anything that will be of any use to anybody. It pains me to have to say this to my noble friend, but I would ask her to go back to the department to say, “We cannot defend this. The arguments are overwhelming and we must look at it again”. Otherwise I suspect that we shall be asking the House to accept amendments on Report perhaps along the lines of those put forward by my noble friend Lord Tope and the noble Baroness, Lady Kramer, tabled today. Again, I feel very strongly about this and share their views absolutely, so I hope that my noble friend may be able to respond.
The Earl of Lytton
My Lords, unlike my noble friend Lord Best and the noble Baroness, Lady Kramer, I am not an expert on TIF, but I can relate to this process, having been involved with development schemes in one form or another. I understand the principle behind this and I strongly support it. I feel like something of a spoilsport in view of what has been said because I have just one slight concern. In normal circumstances if one was looking forward to steady and progressive growth, one would say, “Let’s do it”. However, the information that I have had has indicated that one or two municipalities in the United States have suffered from solvency problems after getting themselves involved in these things because of a larger-scale downturn that was beyond their or probably anybody else’s control. I could understand a Treasury reticence about opening what it might see as a floodgate if it felt that we were in sufficiently uncertain times—and I believe that we are in quite uncertain times—and that, as a long-term punt, it could not foresee a guarantee of growth that would pay that back.
There are many instances right across London. I go back to the early days, when Canary Wharf was being developed. One of the problems that it hit was that, at that time, it could not finance the Jubilee line extension. In effect, it caused the developer to become insolvent. If you imagine that being done on a municipal scale, then obviously it is a very significant issue. The guarantees are not built in. I do not think that any of us would want to find that municipalities involved in TIF schemes would become insolvent. I am sure that there must be safeguards.
Baroness Kramer
I will just add a word because the points that the noble Earl, Lord Lytton, makes are important. One reason why we framed Amendment 53 as we did is so that the Treasury can take a look at projects. In the United States no federal approval takes place—essentially, it is the state that decides off its own bat. In the UK, we are saying to the Treasury, “We are not going to just say to local authorities, ‘Do as you will’”. The Treasury has the opportunity to come in and take a serious look and will give permission, but on a project-by-project basis.
I was on the board of Transport for London after the Jubilee line was completed. The point the noble Earl makes is the reverse one, and the Jubilee line is an ideal example. Even with overruns, the Government put in something like £3.5 billion to build it and developers walked off with something in excess of £30 billion in profit because of the increased values around the various stations, extra rents, land prices and whatever else. At least now, with the opportunity to capture increased business rates, we can get some of that money in to create the project in the first place.
In effect, what happened in London was that the money did not circulate back and the whole Jubilee line project was delayed for years until the Government thought that they could find capacity within the public accounts. It would have happened immediately, and been of great benefit to this country, if people had been looking at TIF financing structures. That is one of the reasons why they are so valuable.
The Earl of Lytton
My Lords, that was what I was trying to say in terms of the Jubilee line, so I am sorry if I gave a false impression. These things are vitally important to leverage in that sort of level of finance. My only concerns are the times we live in. If one is dealing with a development appraisal in conventional valuation terms, the process contains a high number of price-sensitive variables, so much so that my professional body, the Royal Institution of Chartered Surveyors, does not really advise using that sort of development appraisal, or residual valuation, approach for producing what it calls a regulated purpose valuation because of the inherent number of price-sensitive variables. I do not want to pour cold water on things—I simply wanted to point out that TIF is a tremendously good idea but we must make sure that the circumstances are ones in which it can robustly survive.
Lord Beecham
My Lords, having spent some considerable time searching through the Bill to find where TIF was, I have to congratulate the noble Baroness on discovering it. It is a bit like Higgs boson. The physicist who discovered the Higgs boson will no doubt get the Nobel Prize for Physics. Perhaps we should nominate the noble Baroness for the Nobel Prize for political metaphysics.
Local Government Finance Bill
Earl of Lytton Excerpts(12 years, 4 months ago)
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Lord Jenkin of Roding
I am grateful to the noble Lord for giving me an opportunity to explain. I referred a few moments ago to the number of amendments tabled on the first part of the Bill that would make quite substantial changes, particularly about the division between the central and local shares of business rates revenue. That would be a change that, if my noble friend Lady Hanham could persuade her colleagues that it might be accepted, would go a long way towards meeting the concerns not only of London Councils but of the Local Government Association and local authorities generally, which are anxious to see a faster process of the localisation of business rates revenue. I will no doubt have an opportunity to talk about this a little later, but I do not think that the questions of timing and of the changes that we are proposing are in any way inconsistent. As my noble friend Lord Tope said, there would be some regret if this were to be delayed. I think that both he and I were making that point. Perhaps that is a way of explaining to and satisfying the noble Lord, Lord McKenzie, that there is no inconsistency in what we were arguing.
The Earl of Lytton
My Lords, the noble Lord, Lord Beecham, made a perfectly correct reference to some comments that I put to him. Indeed, I have made comments in the context of this Bill before. Before I go any further, I ought to declare various interests: as a practising chartered surveyor, a member of the Rating Surveyors’ Association and a member of the Institute of Revenues, Rating and Valuation, which explains my interest in the valuation aspects of business rates.
There is a growing issue that creates a greater than usual level of uncertainty with regard to the yield of business rates. I referred previously to the number of outstanding non-domestic rating appeals. I believe that the current total is around 144,000 or 146,000. Even if you get rid of the repetitious ones, the true total probably sits at around slightly more than that—so, 80,000 or 90,000 appeals. Some of these go back to the 2005 rating list.
Business rate payers are getting increasingly concerned that access to justice is effectively being denied to them. A typical lead-in period from the time when an appeal is lodged to the time when the Valuation Office Agency is able to make any sort of substantive comment, I am advised, is in the order of two years—and that is not to the time when it actually gets before the valuation tribunal, when the valuation officer can actually open his book and address the issue. I do not blame the Valuation Office Agency for that. I think that the Committee should be aware that this is fundamentally to do with the agency being starved of the necessary resources. It is being starved of the personnel and starved of the resources to upgrade its computer technology; its computers do not interleave with the valuation tribunal’s computers, and so on and so forth.
Businessmen are particularly concerned because the non-domestic multiplier—that is, the multiplier that is applied to the rateable value in order to provide, as it were, the gross amount of the rates payable before transitional relief and other things—contains an element for potential losses to the tax base arising from successful appeals. So businesses up and down the country are bearing the cost of this contingent risk factor which is implicit in the fact that we are dealing with a system that is lacking in the necessary resources.
My point in raising this on Second Reading was to outline that this is the nature of the animal that is about to be bestowed—or, rather, its risks are about to be bestowed—on to billing authorities. I think that this needs to be addressed. I do not know how this relates to whether the Bill should be brought into force in 2013 or subsequently—I make no comment about that. I just say that there is an in-principle issue about the maintenance and management of the tax base that, if you do not get it right, will be in the nature of passing the buck, an issue that the noble Lord, Lord Beecham, raised on Second Reading. This is a risk factor. I think that it would be entirely wrong, although— I declare another interest as president of the National Association of Local Councils—that does not make me unaware of the risks that are being imposed on the principal authorities, which are represented here by their president, my noble friend Lord Best. I think that it is right that, when we are dealing with these matters of principle, we actually address them at this stage. This is part of the tapestry—the backdrop—over which an awful lot of the other bits that we discuss will have to be viewed.
Baroness Hanham
My Lords, I thank everybody who has contributed. I particularly thank my noble friends Lord Tope and Lord Jenkin, who have broadly said what I will say. I do not think that local government really wants us not to proceed at this stage. This has been in the offing for some time; people are well aware of what is coming about and there have been many discussions with them. Therefore, the suggestion that local government will not be able to implement the rates retention system from 2013 is not correct. Local government will have all the information that it needs to implement the rates and retention scheme effectively, before it has to do so. We will be publishing draft regulations before Report in October. Other information in terms of consultation of the technical detail of the scheme is going to be available over the summer and there will be draft secondary legislation in the autumn before the draft local government finance report is due. Therefore, by autumn, all the information necessary for the implementation of the business rates scheme will be out, even if some of it is in draft. Other information will then be available tying in to the local government finance report, which has to be laid, as it is part of the whole system.
The noble Earl, Lord Lytton, has raised a question that I hope we may defer, because he has tabled a major amendment about it for later in the debate. Indeed, some of the points raised by the noble Lord, Lord McKenzie, are also the subject of amendments. We might have a better opportunity to discuss them later. While I understand the noble Earl’s views that this is, or should be, part and parcel of the scheme, we think that that could and should be dealt with separately. As I said, we will come to points on appeals later on, but in setting up the retentions system we will make an adjustment to reflect the cost to local government of outstanding and future appeals, so there will be some amelioration.
We have worked pretty collaboratively with local government throughout the development of these proposals. In March 2011, we published the terms of reference of the local government resource review and in doing so we clearly set out the aims and the scope of our proposed reforms, as well as the timetable for implementation. We have since consulted local government on numerous occasions. In July 2011, we published a consultation on the design of the rates retention scheme and, in August 2011, we published a further eight technical papers to provide more details on these proposals.
We have listened to what local government has said. This was evident in our response to the consultation published in December 2011 and, indeed, that consultation continues today. The Bill that we are debating is the product of this attentive engagement and consultation. It has, of course, received pretty considerable scrutiny—perhaps unlike the Localism Bill—in the other place and there has been a gap since then for people to think about it and to ask for any information that they do not have.
We will continue to work with local government as we proceed. First, there is our working group made up of local government representatives, including the LGA, which is contributing to the policy and technical debate for the information that will be coming out shortly. There is a further consultation later this month on the technical details underpinning the scheme. There is plenty going on still to shape the legislation going forward.
In terms of our approach to the implementation, we believe firmly that the existing timetable should be adhered to. Before the new rates retention scheme is introduced in April 2013, local authorities will be consulted on their baseline funding before the end of this year, and after a debate in the other place they will receive their final settlement in early 2013. That follows the normal practice that has existed for years. I can remember discussions on local government finance taking place: we always thought that it was a bit tight, but it has always been at the end of the year, sometimes in December. That will be there. This means that the timescale for agreeing baseline funding in advance of April 2013 will be the same as happens currently for the first year of a multi-year settlement. Local authorities will be able to use that information to inform their local budget setting in a timely manner, as they always have done.
I strongly believe that we should be able to implement the rates retention scheme from 1 April and that it is desirable to do so, because local government is expecting it. Moreover, the Bill contains provisions to amend the date of introduction to a subsequent financial year should this be absolutely necessary, although I do not think that noble Lords should hang on to the coat-tails of that. It seems inevitable that such a clause would be included in legislation; there often are clauses in case the absolutely extreme happens. I do not expect the extreme to happen over business rates; I expect them to be implemented by 2013 for all the reasons that I have given noble Lords about the consultation, the discussions and the information that has been presented. Broadly, unless there are major changes to the draft regulations—and I suspect that, even if there were changes, we would be able to cope with them—we will be able to proceed as I propose and get there satisfactorily by the beginning of the next financial year.
For all those reasons, I reject the amendments. I am conscious that I have not commented on the intervention of the noble Lord, Lord Smith, but perhaps I can pick up those points later.
Lord Brooke of Sutton Mandeville
I will accept the reverence. My noble kinsman was, like my noble friend, Chief Secretary to the Treasury. In fact, he was the first, so he was allowed by Harold Macmillan to invent the title. In those days, the UGC of semi-beloved memory was a Treasury function for which my noble kinsman was responsible. Two decades later, I became Higher Education Minister. When I entered office, the hand of the Treasury was still in evidence in relation to higher education institutions, particularly in relation to the disposal of assets. If a higher education institution disposed of an asset, it had to hand back to the Treasury the entire financial fruit of its decision to so dispose. I was Higher Education Minister for two and a half years. About halfway through that period I persuaded the Treasury that its policy was not conducive to higher education institutions disposing of assets and it allowed higher education institutions to retain 50% of the assets they sold—a percentage that is germane to today’s debate. Before I left office the Treasury had come round—although it did not execute it until just after I left office—to letting higher education institutions have the whole lot. I say this simply to encourage not only the rest of the Grand Committee but even conceivably the Minister that it may be possible that concessions may be made at some stage in the future.
The Earl of Lytton
My Lords, I apologise to the Minister. I would like to follow the point raised by the noble Lord, Lord Jenkin of Roding. Not being a financial expert, but with my experience of the local government finance system, I liken this to that time-honoured competition that used to appear in some newspapers, the spot-the-ball competition, which I am afraid rather dates me. I refer to where the money goes and all these labyrinthine methods of checks, balances, benefits, credits and grants for this, that and the other.
However, I would like to concentrate on the question of the 50% share of the business rates under the business rate retention scheme. I say that as a veteran of development schemes of one sort or another by virtue of my profession. By the time there has been a redistribution to various other precepting bodies, a 50% take of the business rate is hugely unlikely to be any real incentive to a billing authority in terms of encouraging the growth in the tax base. Ultimately, it is the growth in the tax base that is the key to this. Unless the rate of tax per property band or per square foot of business space goes up, with all the consequences in terms of public opinion that that might involve, we have to grow the base. The other thing that will come up later is the question of making the system fundamentally more efficient, on which I have various amendments later on.
The development process represents a great number of hazards in terms of the finance of organising it and, particularly until recently, the growth of the front-loading of all manner of planning applications with a plethora of things related to sustainability and compliance with planning. Local electorates, furthermore, bearing in mind that they tend to be council taxpayers, often view large-scale development, particularly commercial development, in a negative light. So there is a downside to the whole process. A series of political risks has to be underwritten by this, and that requires a careful balance of what the yield will be before one can expect a billing authority to embark on this road with regard to so little a sum as 50%. That has to be reviewed, particularly because I understand that 50% would also apply to new space that comes on stream, so there will be no gain there either unless you happen to be in a son-of-enterprise-zone area, in which case a different set of rules will happen.
One particular question was put to me by the chief executive of the Institute of Revenues Rating and Valuation, a body of which I am a member. I am not expecting an answer to this, but it is worth pointing out at this juncture. The current council tax benefit scheme is financed by the Department for Work and Pensions by way of the subsidy paid to the billing authority. The current amount that I have been given for England is £4.3 billion. That might be for England and Wales and if I have not got the sums quite right, I apologise to the Grand Committee.
Under the new local support for council tax—the LSCT scheme set out in the Bill—the grant for this new scheme is to be paid out of the central share of business rates and the amount is to be the same £4.3 billion less 10%, because we know that the whole process will be scaled back by that amount. If one is doing a spot-the-ball competition, the question is whether and, if so, how will the Department for Work and Pensions reimburse the Department for Communities and Local Government the £4.3 billion—minus the 10% of course—which is being financed by the business rate? I should say straightaway that I do not expect an immediate answer from the Minister.
Lord Beecham
My Lords, not having had at the forefront, or indeed at the back, of my mind details of Schedule 8 to the Local Government Finance Act 1988—or indeed Schedule 7, if that be the correct schedule—I am obliged to the noble Lord, Lord Best, for having explained what was to me, frankly, an unintelligible amendment, but it is entirely intelligible now. I find myself in the odd position of already having spoken to it, in a sense, because I addressed some of the same issues and used some of the same terms as the noble Lord, Lord Best, when I spoke to an earlier amendment. I share the concern about the temptation to incentivise what the noble Lord described as new rateable floor space rather than enhanced rateable values. To that extent, I support the thrust of his argument.
However, I am less convinced about some of the other aspects. For example, massive taxpayer investment in Crossrail will presumably generate increased rateable values in the authorities in London that it will serve. Many of them are quite deprived authorities, so in one sense that is a good thing. On the other hand, that was not a decision of those authorities; the decision was taken by central government, funded by all taxpayers, including those in equally deprived parts of the country such as the one in which I live. The London chamber, to which I and the noble Lord referred, was right to say that authorities should be rewarded and incentivised for the decisions that they take. It is not necessarily appropriate that they should benefit significantly from an increase in business rate generated by taxpayers in the way that, for example, Crossrail might be argued to have induced. Presumably, it will take some time for that to happen.
I am also slightly concerned about the basis on which the claim is made that effectively we should be looking at a rise in rental values. I am not an expert in the property market but at the moment I anticipate that, although there are some exceptions, there is no great buoyancy in the commercial property sector. Many of us see empty shops, offices and factories. In my city of Newcastle we have seen the closure of one significant employer in a very modern factory in one part of the city, and we are seeing the almost certain closure of engineering works in an enterprise zone, for which the noble Lord, Lord Jenkin, was originally responsible—I give him credit for that. It was formerly Vickers and is now BAE. It will close with the loss of many jobs and the site will come on to the market. To put it mildly, I think that the anticipation that rental values will rise in the foreseeable future is incredible. It does not seem to me to be a firm basis on which to base these calculations.
Therefore, there is something in this argument—particularly the points that the London chamber raised—about trying to connect the reward to the positive actions of an authority. The converse is that an authority should not be penalised for things beyond its control when the rateable value falls, either because of general economic effects or because of an impact on general levels, leading no doubt to appeals against valuations. I have no doubt that the noble Earl, Lord Lytton, would be able to elucidate on the kinds of effects that might develop.
Therefore, the Committee needs to look at how we can tie the incentivisation to the actions of the local authority in the broad sense that the London chamber and the noble Lord and I referred to earlier—with investment in infrastructure and particularly skills and training, as well as, depending on the circumstances, community safety or other features in the local economy—rather than rely on the actions of the national Government or their agencies. The Highways Agency can transform a situation in certain areas, just as Crossrail might have done, and perhaps other bodies would have the same function or effect.
I take it that the amendment is from the Local Government Association, from which we have heard so much this afternoon. Some of us should go back to the LGA to explore this issue in greater depth to see whether we can come up with something more related to the activities of its members. I should be interested to hear the views of the Minister. I do not know whether the noble Earl, Lord Lytton, proposes to speak on this part, but it would be very interesting to hear his comments on these points, which relate very much to his professional expertise.
The Earl of Lytton
My Lords, with that invitation I had better rise to my feet. First I should declare an interest that I have not declared previously and probably should have done—that I have a small involvement with a local chamber of commerce, although I do not know that it especially informs this bit of the debate.
The noble Lord, Lord Best, mentioned a very important factor—that the constant incremental renewal and upgrading of our infrastructure and townscapes, as I believe he was chiefly referring to, is directly related to concepts of added value and therefore has wider application. The confidence to invest in such schemes is clearly dependent on certainty of outcomes. I said previously, on Second Reading, that I was concerned at the lack of certainty of outcomes. Like all uncertainty, it adds to risk and is a highly corrosive factor in getting good levels of net present value, to use valuer-speak.
The Bill’s laudable intentions are to a large degree overshadowed by some very difficult times, with the possible exception of central London. That colours everything, including the way in which these schemes can be financed independently and the sort of risks that you can afford to take with taxpayers’ money, if you are not financing them through conventional means. That obviously applies to central government just as it does to billing authorities and local authorities. My concern is about the migration of commercial floor space to other uses; I refer in particular to losses to residential uses. That may be the only certain outcome that delivers a sufficient return on capital invested to justify the financing. We live in the real world where finance is very difficult. Even if you have retained finance because you are a larger company, unless you can make a robust case to your finance director and the other key decision-makers, it is not going to go ahead. Things which are slow and drawn out and which have long timescales all add to the risk, even if there are no other issues.
I know that the coalition has tried to make sure that the planning process is simplified. None the less, as I mentioned on the earlier group of amendments, there are sufficient uncertainties with all the boxes that developers have to tick. Many of these boxes have to be ticked up front and much of the ticking process costs real money up front. That is the problem that the real commercial world faces. I do not see how the classic role of government, which is to intervene in circumstances of market failure, can be shifted from central government, effectively backed by the political backcloth with central government resources and finance. I do not think that you can move that intervention to overcome market failure to a local government scenario. It will not work. The whole thing is too complicated, the finance is too tight, and matters are too uncertain.
The noble Lord, Lord Beecham, referred to Crossrail, and of course there are other large infrastructure schemes across the country on a wider scale. One thinks of HS2, the high-speed rail system. Many of these create blight. Although in the long term they are considered to bring benefit, they create short to medium-term blight of the most acute nature—in other words, people are unable to sell their properties and business premises are unlettable and so on. This, too, has a highly corrosive effect but, as I see it, it is not in the gift of local government to deal with these large-scale issues of blight.
The real question goes back to what the noble Lord, Lord Best, was asking: how do we deal with the necessary incremental improvements to and upgrading of our infrastructure without this driver of a commercial outturn? In a sense, the commercial outturn is there because value and satisfaction are added. More trade may be brought to an area. For instance, if it is a seaside town the number of beds let per annum in lodging houses and hotels may increase. There can be all sorts of things that go with that. However, it is a slow and diffuse process, and that means that the benefit is not sufficiently directly connected to the investment for the authority to claw that back. It is not a bankable benefit in the authority’s hands, and that is where the disconnect arises.
It may be that this whole consideration goes much wider than the context of the Bill. However, we are transferring duties and powers and supposedly finance streams to local government, and I think that it is right to consider this issue in its wider context. At the beginning of this afternoon’s proceedings, I mentioned that it is part of the backcloth in which we operate. I certainly hope that the Minister will be able to give some comfort that the cause and effect—in other words, the risks and costs of investment and the returns that can be gained from it—will be better looked at and better managed, even if they cannot be dealt with through the business rate retention scheme. There need to be other ways in which this issue is dealt with; otherwise, we will see areas going into wholesale decline with a considerable loss in values and, with that, risks to the loan books of the mortgage sources that have lent against those investments, as well as risks to the whole financial structure. We do not need to do that. Once we start going down that road, huge perils lie there. We really need to make this constant investment in order to make sure that that does not happen. We have to move forward; there is no stand-still position.
Baroness Hanham
In either case, I understand that the local authority would get the benefit of the rate and the growth.
The Earl of Lytton
My Lords, I am thinking about the current process of recording hereditaments, as they are known, in the local rating lists. I call to mind that as a result of the riots last year, one or more commercial premises were totally destroyed. As I understand it, there is a vacant site awaiting redevelopment that is described as a shop and premises, and it is in the list at £1. The Prime Minister had in fact said in the wake of the riots that properties with damage would be taken out of assessment altogether. Now, there is a little wrinkle here. If a site remains in the assessment, effectively as a cleared site, but is still called a shop and premises or a department store and premises, or whatever it was, at a £1 rateable value then it is still in the list. When it comes back into the list again as a refurbished property, it will be at whatever the level is of the new premises. If it was a redevelopment process—not riot damage or anything like that—in which the local authority was a key player, the question is whether it stands to be disenfranchised because the hereditament has not been taken out of the list altogether and is not therefore really a new entry in the list. It is a revaluation of an existing one.
This might be looking for trouble where there is none, but I want to be very careful. As I made clear both in the debate on the Queen’s Speech and at Second Reading of this Bill, there are a number of little wrinkles creeping in because of the way in which Treasury policy now appears to influence the work of the Valuation Office Agency in handling the entries in the valuation list. I want to be absolutely sure that by dint of this business of not taking things out of assessment when in fact they probably should be, we are not going to find that we have disenfranchised the authority from that gain in rateable value, which is undoubtedly the work of its own hands.
Protection of Freedoms Bill
Earl of Lytton Excerpts(12 years, 11 months ago)
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Baroness Grey-Thompson
I want briefly to support Amendment 42. I mentioned even more briefly at Second Reading that I am particularly keen on eradicating blue badge abuse. I thank the noble Baroness, Lady Hayter, for tabling the amendment, because it highlights where my concern most closely fits. I declare an interest, in that I have a blue badge. I support legal clamping but would like to stop illegal operators.
This is a personal view, but there are two groups of abusers. First, there are those people who steal or buy blue badges, which is an increasing market and can be very profitable. In some areas, it has been shown to have increased sevenfold to tenfold in recent years. Also in this group are those who borrow their grandmother's badge and see it as a right to use the family badge. The worst offenders are those who take grandma out and leave her in the car. We have laws for not leaving dogs in cars, but sadly not for grandmothers. When she was younger, my daughter and I used to play a game at the local shopping centre, which was “Count the grandma”.
In the second group, there are those who do not have a blue badge and who may be stopping for five minutes, while popping into a shop or picking up family, who blatantly abuse the system and stare out those who possess blue badges legally. Perhaps there is occasionally a good reason for stopping in those spaces, but I am passionate about blue badge abuse—not just for the abuse in itself but because I believe it shows a wider indication of attitude towards disabled people. I believe it is important to crack down on this. At a time when the media portrayal of disabled people is perhaps at its worst, the Glasgow Media Unit recently looked at some comparative data of media portrayal of disabled people from 2005-06 and 2010-11, which showed that the portrayal was significantly worse than at any time in the past 10 to 15 years. Recent articles have shown disabled people as benefit scroungers and workshy.
I spend a lot of time driving around the country and what I see, too often, is disabled people with hidden impairments being verbally abused because the system is not fully understood. It is only a few steps later that we see why some people think it perfectly acceptable to abuse the system rather than understand the reason for it. There is shocking abuse around the country. I see people who suddenly develop an incredible change of gait when they see me getting out of my car with my wheelchair, or whose limps mysteriously disappear as they walk around the corner. I do not mean to make light of this but it is really important.
It is not just about being close to the shops or the supermarkets—some supermarkets have tried very hard to combat this—but about being closer to work. It is about integrating disabled people in society and having a wide enough space to get a chair in and out of a car. It may be about getting your wheelchair and a child in and out of the car. I have lost count of the number of times I have had to give my car keys to complete strangers and ask them to pull my car out of a space, when someone has just parked across the yellow hash lines between spaces. Wherever I go, at any time of day or night and pretty much every day of the week, I see people abusing blue badge parking spaces. While I do not generally agree with increasing powers, I believe that we need to do more to protect disabled people who have parked legally. I believe in clamping for blue badge abuse, and perhaps we could do even more to protect parking for disabled people.
The Earl of Lytton
My Lords, I have an interest to declare: by virtue of my profession, I am a manager of commercial property. I well remember, not very long ago, a tenant of one of my clients explaining, in the context of a rear service yard behind some shops, how perilous it would be for the continuation of that facility were she not able to involve a clamping firm to deal with serial offenders, because that is what we need. I am grateful to the noble Baroness, Lady Hayter, for raising this because I was unable to be present for Second Reading of this important Bill and therefore this is the first occasion I have had to comment on this matter.
The Government’s intentions certainly need clarification here. The Minister’s clear statement at Second Reading about there being no option but to ban clampers overlooks the need, as other noble Lords have mentioned, to have a workable system to discourage the abuses. I will not follow the noble Baroness, Lady Grey-Thompson, about the number of apparently able-bodied people who I have seen leaping out of cars with blue badges, other than to draw the Committee’s attention to there being, I am told, quite a flourishing market in stolen and counterfeit blue badges themselves. Apart from that, we have a system where serial abusers of parking facilities are putting their cars where they should not and serial malefactors, in terms of clampers, follow on to make life disproportionately unpleasant for people who have sometimes inadvertently parked in the wrong place for a short period.
Localism Bill
Earl of Lytton Excerpts(13 years, 1 month ago)
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Lord Lucas
My Lords, in former times it was the custom of some generals after a victory to allow a limited period for rape and pillage before good order was restored. The thought has been raised in this House and outside that this is what the Government intend with this Bill. Along with my noble friend Lord Cormack, I find myself worried. I do not understand how this transition is to be managed: how we are to get from a position where there are not valid local plans in a large number of local authorities to the position where there are, without there being a succession of undesirable planning permissions given. The core of this Bill is to allow localities to determine what happens in their areas. It would be most unfortunate if we had a period where an awful lot of bad will was created by the exact opposite happening, just because some superior authority had failed to get the ducks in a row.
The Earl of Lytton
My Lords, I rise briefly first to declare an interest as a practising chartered surveyor and as someone who is involved with planning, although I am not a chartered town planner.
There seems to me to be three particular issues here. One of them, as has already been touched on by the noble Lord, Lord Cormack, is the corpus of knowledge that is currently involved in the planning system. If we uproot that, we will cause delay, doubt, risk and uncertainty. There are economic implications, so we must try to avoid that. We have seen some of the public pronouncements that are based on questions of doubt about what is intended here. A great deal of clarification is needed.
Secondly, the noble Lord, Lord Howarth of Newport, referred to the effect on economic growth. Yes, planning is a huge driver of economic growth in so many ways. While I would not wish to suggest that it is the be-all and end-all of economic growth, it is clearly something that is tangible that the general public can relate to. We must not lose sight of the fact that it is going to be one of the significant factors, if for instance what we are told about the lack of completions on housing is true.
My last point is to do with neighbourhood plans. I must declare another interest here as the president of the National Association of Local Councils, whose member parish and town councils may be those very bodies that are having to draw up a neighbourhood plan. A neighbourhood plan has to be in conformity with the principal authority’s local plan, and if the principal authority’s local plan is not in place, or is in disarray or is out of date, then we have a problem. This has a knock-on effect. I ask the Minister to give the House some reassurance that there is going to be some sort of seamless transition that will take place. I do not wish to add to what has already been said about the timescale over which that is to be done; and there may be different timescales for different bits for all I know, but the transition does have to be, to some degree, seamless. With regard to my first point about the economics of doubt, it is very important that we get this right.
Lord McKenzie of Luton
My Lords, like all noble Lords who have spoken in this debate today, we support the need for transitional provisions that have clarity as to their meaning as well as a reasonable timescale that reflects the capacity both of local planning authorities and of the inspectorate. Like the noble Lord, Lord Greaves, I believe that this is probably the most serious issue left unresolved from Part 5 of the Bill. We hope that we will get a clear message from the Minister today. We added our name to the original amendment of the noble Lord, Lord Best, which bit the dust by being pre-empted, and we support the thrust of the amendments of the noble Lords, Lord Best and Lord Greaves.
It is imperative that we avoid a lacuna, with the prospect of all or most local plans being absent, silent or indeterminate or having policies that are out of date under the current NPPF formulation. Under the presumption in favour of development, this would lead to an emphasis on approving development proposals unless the adverse impacts of development would significantly and demonstrably outweigh the benefits when assessed against the framework policies. I assert that 50-odd pages of framework cannot be an effective substitute for all the local plans and the thousands of pages of guidance that currently exist.
Lord Greaves
My Lords, it has been drawn to my attention that there is a typo in my proposed new Section 80A(3). It refers to subsection (2)(a) instead of (2)(b). The misprint will be obvious to anybody reading it. I am sure that it was my fingers that got it wrong and not the Public Bill Office.
The amendment tackles the problem of the democratic deficit and creates the opportunity for more democratic legitimacy in unparished areas where neighbourhood areas and neighbourhood forums may be set up. It does this by amending the Town and Country Planning Act 1990, covered by Schedule 9 to this Bill, which then affects the sections of the Local Government and Public Involvement in Health Act 2007 that cover community governance reviews. It is slightly complicated, but I think that what is set out is clear.
I remind noble Lords that in parished areas, the body that will be responsible for neighbourhood planning—for the creation of a neighbourhood plan or of neighbourhood development orders—is the parish council. In unparished areas, the local planning authority can, on request, designate a neighbourhood area; and no fewer than 21 people in that area can be designated as a neighbourhood forum. Clearly in that situation there is a democratic deficit in the formation and accountability of the neighbourhood forum compared with parished areas where there is an elected local authority—the parish council—responsible for carrying out the work.
This is a modest proposal. It does not force anything on anybody. It seeks to give a neighbourhood forum—where it exists and is recognised by the local planning authority for the purposes of neighbourhood planning, and where it believes that it would be advantageous to convert into an elected parish council—an easier and quicker means of doing that than exists at the moment. The Government recognise the problem. After the summer the Minister wrote a number of letters to various Members of the House setting out the views of the Government on this. I want to quote from the letter to my noble friend Lord Shipley, because when I was digging this out I could not find the letter to me, which I think includes the same stuff. My noble friend Lord Shipley apologises for not being present at this debate on a topic which he has raised repeatedly. He has had to go to another gathering in order to make a speech.
The Minister wrote to my noble friend as follows:
“In these neighbourhood areas, we have sought to recognise the democratic legitimacy of parish councils by ensuring that, within an area that includes any part of a parished area, only the parish council has a mandate to undertake a neighbourhood plan. We would therefore encourage communities to use the opportunity of preparing a neighbourhood plan to consider whether they wanted to apply to become a parish, town or community council—with the extra powers and responsibilities that brings”.
Community councils, of course, are parish councils in Wales. The letter continues:
“However, we do not want to force communities to become parish or community councils before they undertake neighbourhood planning—hence our neighbourhood forum provisions”.
The problem with the way that the Government want to go ahead on this is that where a neighbourhood forum and a neighbourhood wish to consider setting up a parish council, the process under a community governance review—under the Local Government and Public Involvement in Health Act 2007—is fairly cumbersome. More to the point, the principal local authority—the district or unitary council responsible for the community governance review—can put a stop to it if it wants to do so. In the best of all worlds, it will not be carrying out local community governance reviews very frequently. It may say, “Well, we have just done one and we are not going to do another for five years”, or something like that, or it may, as has happened with a number of local authorities, simply be hostile to the idea.
This amendment puts forward a means by which a neighbourhood forum can require a community governance review covering just its area, which has to take place fairly quickly. It also provides for a presumption that, unless there are some very good reasons, it will be approved. That is the purpose of this amendment. What I would really like to come out of this debate today is for the Government to tell us how they intend to tackle this problem, which they have recognised, and how they will make sure that there are more community governance reviews for more parish and town councils, particularly in urban areas where they do not exist at the moment, and where local people, through the neighbourhood forum, actually want them. They should not be compulsory by any means, but there should be a means by which a lot more could be created. I beg to move.
The Earl of Lytton
My Lords, I support the principle behind the amendment of the noble Lord, Lord Greaves. I cannot speak to the wording, even less to the typos I am afraid, but noble Lords will of course know of my interest in parish and town councils. At present a parish council is the only community-based organisation that combines a democratic base, truly local roots and a statutory status. So it has a special cachet from that point of view, and indeed many communities aspire to that status. Crucially it is independent of other local government bodies in having its own power to precept, and that of course gives it a financial independence as well.
The noble Lord, Lord Greaves, has touched on this, and it is certainly no reflection on the borough—which I think has an exemplary record towards communities in its area—of the noble Lord, Lord True, who I see is no longer in his place, but some local authorities have been obstructive to the formation of new parish and town councils, and I do not think that there is any point in overlooking that. That has happened on occasions despite an authentic and well-argued local desire having been put forward.
I would put one caveat in here and that is that the geographical template for new parishes in unparished areas needs to be a reasonably good fit. I am concerned not so much about the precise geography as about the cohesion and the identity which is to some extent reflected, as it must be, in geography. Size is clearly not the main issue because, up and down the country, we have very large and very small parish and town councils. One feature that they benefit from is that they serve the needs of the community and have grown up to reflect that community, whether large or small, over very many years.
I welcome the sentiment behind this amendment, which I see as a way of effectively creating, to some extent, the possibility of a fast-track route to parish and town council creation. It enables neighbourhood forums that wish to to migrate to the statutory basis where they can join and become one of the family of democratic structures that form the first tier of local government. I welcome the principle behind this amendment and I hope that the Minister will be able to give a positive response.
Lord Beecham
My Lords, I am pleased to see that the noble Lord, Lord Newton, takes the same attitude to temptation as St Augustine did to chastity. There is another line about temptation that we might want to consider:
“The last temptation is the greatest treason:
To do the right deed for the wrong reason”.
It seems that this amendment is in fact the other way round: it is doing the wrong thing for the right reason, potentially.
I noticed the typing error that the noble Lord, Lord Greaves, referred to in subsection (2)(a), but I think there may be another typographical error, or perhaps an error in drafting. Subsection (5) says:
“A community governance review … shall have a presumption that a new parish will be created”—
and I will come back to that point. Subsection (6) goes on to say:
“The provisions of this apply only insofar as they do not prevent action being taken on the request made under this section”.
It is not clear to me what that means. Does it mean the provisions of the previous subsection, or does it mean the provisions of the whole clause? I am at a loss to understand what that implies.
However, I agree very strongly with the noble Lord, Lord Newton, that there is no case for there to be a presumption that a new parish should be created on the simple fact that a request has been made by a neighbourhood forum that might constitute 21 people, of whom a majority of 11 against 10 would therefore trigger not only the whole process but a presumption as to its outcome. It seems a ridiculous proposition given that we are presumably talking about areas of several hundred people, if not thousands of people, possibly, in an area the size of an urban ward or a significant rural community.
The clause also requires the commencement of a review within three months. That might be all right if there was to be one review, but supposing there was a rash of applications from these neighbourhood forums, is a local authority obliged to commence reviews on all of them in that timescale? It does not seem at all realistic. There certainly should be a method of facilitating a legitimate demand—or a widespread demand, let us not prejudge the issue—for the creation of parish councils or town councils. They have a perfectly proper place in our system of local government and that should be facilitated, but this clause really goes much too far in that direction.
Nor is it the case that, once created, all of these bodies are trouble-free. Your Lordships will be aware, from the debate about the standards boards and the need for codes, that most of the complaints that arose under the existing procedure actually came from parish councils. The noble Lord, Lord Shipley, who is not in his place at the moment, will no doubt have told your Lordships of the case in Newcastle where a council inherited three parishes on local government reorganisation, and one inner-city area opted for a parish council. That particular grouping did not seem to perform very effectively, to the extent that Councillor Shipley’s colleagues in his political group decided that they would go in and in effect take it over, which they did—by perfectly legitimate democratic means, I should say. These places are not without their problems, although they can certainly contribute to an enriched local democracy.
However, there is one other issue in which, again, the drafting is perhaps defective—certainly it raises an issue—and that is subsection (2), which says:
“A request may be made to create a new parish council for … the area of the neighbourhood area together with the area of an adjacent parish council”.
Is it not conceivable that there may be more than one existing parish council? Certainly there are contiguous parish councils in my authority; there will be in other authorities, particularly urban authorities, I suspect. You may well find a community between the two wishing to align with both rather than one, and creating an entirely new structure. For a variety of reasons, I suspect I may find myself—unusually—agreeing with the Minister when she replies and, I hope, says that she may want to take this away and look at it, but that she cannot agree the amendment as it stands. Certainly that would be my position.
The Earl of Lytton
Before the noble Lord sits down, perhaps I may ask him if he would comment on the fact that although it is true that parish and town councils provide a disproportionate amount of the subject matter for standards committees, it is also true that because there is no other body of a sort which has recourse to a committee dealing with standards, there is no other basis to judge whether that statistic is large or small, or whether it is characteristic of dealing with community affairs. What I am trying to get at is that it is perhaps not a specific criticism of parish councils as a construct.
Baroness Hanham
My Lords, I am going to leap in because I think, with the greatest respect, that the noble Earl is out of order. On Report, we normally get the Minister to wind up after the Opposition. But I hear what he says.
The amendment has its faults, and the noble Lord, Lord Greaves, has already recognised that. But having said that, we are not unhappy about the principle of neighbourhood forums investigating opportunities to create town or parish councils for their area, and we accept that that gives greater democratic legitimacy. The noble Lord is also correct that there were a great many standards inquiries on parishes, but we also accept that they have responsibilities, duties, income and powers that would bring benefit to these neighbourhood proposals.
This is why we have already committed, in the Open Public Services White Paper, to look and see how to make it easier for neighbourhood forums and others to have a parish or town council for their area. In doing so we are looking at streamlining the community governance review process, to which the noble Lord, Lord Greaves, referred in rather uncomplimentary terms, but we need to strike the right balance so that neighbourhood forums or communities that want a parish council can get one relatively quickly. The noble Lord, Lord Greaves, was correct that this is not a speedy process at the moment, but if we speed up the process there will have to be safeguards to ensure that parish areas reflect community identity and interests.
The listening phase—which I have written down here, by which I assume consultation is meant—on the Open Public Services White Paper has just finished, and we are looking at cross-government implementation plans being announced in November. Building stronger neighbourhoods, including making it easier for people to set up parish councils, will be a priority for us in those plans.
While I do not want to pre-empt this work that has got to be done, I can reassure the noble Lord, Lord Greaves, that we will consider the issues raised in this amendment in conjunction with that. I hope that, as I said, that process will not be terribly long in coming to conclusions. I hope that with those reassurances, the noble Lord is willing to withdraw his amendment.
The Earl of Lytton
My Lords, I rise to plead guilty as charged I am afraid. I am indeed a professional practitioner in matters of party walls, and I am indeed the chairman of the professional panel set up by the Royal Institution of Chartered Surveyors on boundaries and party wall issues, which was responsible for the recent guidance note to which the noble Baroness, Lady Gardner, and the noble Lord, Lord Jenkin, referred.
I am also a paid-up member and a former national council chairman of something that is known as the Pyramus and Thisbe Club—that delightfully named organisation which is peopled by specialists who have a particular interest in party wall matters. Noble Lords will realise straight away that it is named after Shakespeare’s characters in “A Midsummer Night’s Dream” who whispered, conversed and conducted their courtship through a chink in a party wall. I have to say that most of the things that go on through chinks in party walls are anything other than courtship, as we have already heard. A further charge to add to the sheet is—
Lord Jenkin of Roding
There is, I believe, a committee of surveyors called the Pyramus and Thisbe group which draws its name entirely from what the noble Earl has just referred to.
The Earl of Lytton
Yes, indeed. It is actually called the Pyramus and Thisbe Club, and it has London and regional representation. It expanded quite considerably after the Party Wall etc. Act 1996 became law. Noble Lords—and certainly the noble Baroness, Lady Gardner—will remember that I took that Bill through its stages in this House in a previous parliamentary incarnation. I make no apology for saying that I have always thought that Section 10 of that Act—which is the dispute resolution process—was a model for our time. It is a form of alternative dispute resolution, and I thought it was well worth applying to a much larger range of inter-neighbour issues, as opposed to people having to go through the courts.
Let us leave aside for one minute the point that the noble Lord, Lord Jenkin, mentioned about the state of the housing market and the huge pressures that that brings to bear on scarce urban space, about which I will make a comment later. Many of the things that noble Lords have referred to are, of course, true. Subterranean development can have very significant implications for neighbouring properties both during the course of construction and in the subsequent effects, often several years later. The planning and building regulations regime provides only a partial protection. Sometimes it provides none, and the common law gives rise to actions often only once damage has become apparent, sometimes long after the original developer has gone from the scene.
I turn to the question of whether the Party Wall etc. Act 1996 can be usefully amended. At this juncture I would say that that legislation is, of course, very narrowly framed. It came out of the old London Building Acts, which had broadly similar provisions. That legislation risked being abolished under the terms of the repeal of the London Building Acts with the abolition of the GLC. It was saved from that in no small part by the prompting from the noble Lord, Lord Lucas. I am very grateful to him. From his knowledge and experience at the time, he was one of the mainsprings for making sure that that legislation was preserved. I pay him tribute for that. But widening its scope would have to be considered very carefully. It is a very finely drafted construct. There are many professional and technical understandings that are interwoven right the way through the Act. To amend one particular bit through an amendment to this Localism Bill would, I am afraid, have other consequences that might be less desirable—possibly the law of unforeseen consequences. That said, I would welcome the opportunity to see whether that Act can be amended to deal with this issue.
On security for expenses, we have this issue with the technically challenging nature of very deep excavations. They often create larger risks than those just arising from works for which notice would have to be served under the party wall provisions. So there is an issue about how you extend that scope, and make sure that it remains cohesive. There must be very few surveyors involved in this area of work who have not come across a building site where the contractor or the developer—or sometimes both—have gone bust, possibly leaving a building site with a large hole in the ground, and creating huge ongoing liabilities for adjoining properties. Enabling a default mechanism where this can be addressed is in the public interest. But then comes the question: if you are going to empower something to be done about it, how do you pay for it? This brings into question the matter of an insurance-backed warranty of some sort.
Again, this is a very difficult area. It depends how the provision is constructed, how it is worded, and how it benefits other people, who are not necessarily identified from inception as being beneficiaries of this. Overseas-based developers, non-resident owners and possibly eastern European builders do go to make a bit of a heady mix in the more valuable and economically important parts of our inner cities. Clearly these matters need to be dealt with by technicians who are competent and know what they are doing, know what they are looking at, can identify issues of boundaries and know something about construction. However, there is no generally applicable or enforceable code of practice for this type of development. The noble Lord, Lord Jenkin, referred to Camden. The London Borough of Camden probably has the most competent of all the codes of practice that I have seen.
However, the whole process is permissive at the moment. It is actually dogged by having poor enforcement procedures. It needs to have something better than it has. It operates by a process of consensus. With those who wish to play fast and loose with the system, often the consensus does not exist. That is a criticism of the whole process.
Localism Bill
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The Earl of Lytton
I support the noble Baroness, Lady Byford. I, too, am a member of the Country Landowners’ Association and a landowner. Briefly, we need to ensure that there is an authentic local view at work here. We need a reasonable level of general support to be established and demonstrated, and we need a coherent and reasoned justification for things to be included as “commons”. We do not need national agendas, narrow sectoral bases of arguments, frivolous or vexatious grounds, or to give succour to a no-development ethos. As the noble Baroness rightly pointed out, this is currently capable of being a free bet. That cannot be allowed to continue. There are clearly well-documented instances of abuse of process and therefore I support her in the amendment.
Lord Lucas
My amendment seeks to remedy this difficulty by allowing neighbourhood plans to rule out the creation of village greens that the neighbourhood plan does not recognise.
Localism Bill
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Lord Greaves
My Lords, this simple amendment would allow a referendum to take place in the area of a parish council which did not coincide with ward boundaries of either the county council electoral divisions or a district or borough ward. This amendment is not about a parish council conducting a referendum or about the existing provision for parish polls. There is an amendment about those matters later on. It suggests that there may well be circumstances—in my view, there are lots of circumstances—where, if there are to be local referendums, a parish is the appropriate area for the referendum to take place.
There are many examples of where parishes are grouped together to form ward boundaries for principal councils yet those parishes are often more natural communities than are the wards themselves. That is why parishes are as they are, whereas wards are arbitrary and have to be within a certain size. Therefore, very often, wards do not reflect one natural community. They might reflect a series of natural communities or slice communities in two—that very often happens.
Where parishes consist of a village or a small town it is often the case that they are the appropriate unit to hold a referendum if that is what people want and that provision exists. By definition, parishes will consist of one or more polling districts, which exist in order to be able to hold parish council elections. I therefore suggest that even if the referendum applies to a principal council, at whatever level, it ought to be possible to call a referendum within a parish area, rather than what may be a much more cumbersome and inappropriate ward boundary area. I beg to move.
Earl of Lytton
My Lords, the noble Lord, Lord Greaves, will doubtless have expected that the words “parish council” might cause this particular old pike to rise from the depths. I see where he is coming from, although I initially felt that this could loosely be reclassified as “Son of Clause 56 stand part”. I appreciate that he has made a distinction which prevents me from pressing that in particular. I will leave most of my comments for the question on Clause 56, because there is a generic process about parishes and how they fit into the thing.
I am a little concerned about inserting the principle regarding parish into something that relates to principal authorities. I question whether it rightly sits there, bearing in mind that the Bill proposes that the Secretary of State can make a separate set of provisions for parish councils. It seems to me that there are very good reasons for that, because we have to be rather careful about what template we are using for the purposes of referendums, so I question whether the insertion of the reference to a parish here is the right one, unless the intention is to eliminate Clause 56 altogether.
Lord True
My Lords, on this point there is of course a fundamental difference between how parishes are viewed inside and outside urban areas. I understand all the misgivings as far as rural parishes are concerned and do not wish to follow along that line, but it would perhaps not be wise to add my noble friend's suggestion to the Bill. I point out that in the recent referendum in my own authority which I referred to, the area chosen for it was in fact the boundary of a parish because that ran across more than one ward. It is not right to write that into statute but it reinforces the point that I and other noble Lords made earlier: that some power to enable local authorities to define an area, which might or might not be a parish, would be a useful broad, localist and permissive power. I would not favour writing it into the Bill in this way but it may be one of the instruments and measures that a local authority ought to be allowed to choose other than a ward.
Baroness Valentine
I declare an interest as chief executive of London First, which includes businesses that may be affected by the provisions in this Bill.
I support these amendments as I consider them to be in the spirit of the Bill. The noble Lord, Lord Jenkin, gives a useful example in Gatwick Airport, but there is a wide range of third parties that may be affected by any referendum. When decisions are being taken, those impacted by them should be notified and consulted openly. It is right that local authorities consult those potentially affected about whether it is appropriate to hold a referendum at all, as well notifying them if it were to happen and consulting on what steps are taken afterwards. Referenda should be a positive tool and, to that end, they should be well considered and thoughtfully implemented if they are to have the best possible impact on communities. I hope the Minister agrees.
The Earl of Lytton
My Lords, I had not expected to speak on this amendment, but I think the noble Lord, Lord Jenkin, raises a very valid point. I live within what is known as the Gatwick Diamond economic area, so I know very well what he is referring to. I know of situations where, for instance, residential development takes place near to industrial premises through normal course of development and re-use. Gatwick Diamond, along with many other areas, is now a 24/7 operation. It is near enough to coastal ports for large lorries to be coming along and near enough to all sorts of aviation-related and other downstream industries.
Local residents may not much like 44-tonne lorries coming along in the wee small hours of the morning. I can quite see that, but it is not fanciful at all to suppose that they might not wish to procure a cessation via triggering a referendum with a view to protecting what they see as their interests. Nor is it a planning-only issue because it may relate to a whole raft of regulatory functions for which local authorities and other bodies have responsibility. While I cannot vouch that the wording that the noble Lord, Lord Jenkin, uses is cohesive, I think there needs to be some regard for the economic consequences of what is being sought by a referendum. It seems that a referendum can be formulated on quite a narrow premise. If that is the case, it is quite possible for it to concern things of a much broader spectrum. It is worthy of consideration by the Minister.
Lord Beecham
Does the noble Lord not agree that in matters of the significance and complexity to which he and the noble Lord, Lord Jenkin, have referred, a referendum is probably the least effective way, in terms of time, of drawing the matter to the attention of the local authority? There are ways of doing that through petitions or by addressing local councillors through the local media that would be much quicker and more likely to have an effect than the necessarily rather cumbersome processes that would be involved in a referendum. In those circumstances, therefore, is there perhaps less urgency and potency in the noble Lord’s amendment than might otherwise have been the case?
The Earl of Lytton
In response to the very wise comments of the noble Lord, Lord Beecham, it may well be a cumbersome way of doing it but the point is that we do not yet know what the precise trigger is going to be, or the subject matter. The provisions of the Bill cover a very large spectrum of possibilities and we are effectively empowering the Secretary of State to make orders. It is legitimate to lay down a marker as to what the parameters might be—I suspect that is all the noble Lord, Lord Jenkin, is doing at the moment—and just to sound a word of warning. It is timely in that context.
Lord McKenzie of Luton
I am going to speak in support of what my noble friend Lord Beecham said. It is the mention of airports that I cannot resist, of course, because we have one in Luton. I know how important it is to the local community and what a generator of jobs it is. In many ways, airports are the organisations least likely to need the measure that the noble Lord proposes because they have consultative committees anyway so there is automatically a wide engagement with the community. The principle of somebody who is potentially on the receiving end of a referendum or a petition knowing about that and the local authority having to make a decision to engage with them seems to be entirely reasonable. What we are balking at is that the specific amendment is a little too prescriptive and takes us too far down an unfortunate path. However, we are all well aware of the challenges that airports in particular face.
Lord Lucas
My Lords, the Minister has got ahead of us on this with Amendment 128E being debated rather earlier today, but I do not see that Amendment 128E covers the cases that interest me. Perhaps, if I am wrong about that, my noble friend can explain. I am principally interested in the way in which allowing planning matters in under a referendum would make a mess of the provisions for neighbourhood planning. We have extensive provision there for referenda and there should not be a cross-cutting system which allows that process, which is difficult and expensive enough to organise anyway, to be upset by people running competing referendums, or in other ways trying to upset the decision once it has been made.
My noble friend’s amendment looks at the granting of planning permission. I am much more interested in the creation of a neighbourhood plan. Subsection (4)(b) of the government amendment refers to,
“a statutory right of appeal in respect of the substance of the matter or decision”,
on the part of persons adversely affected. In other words, it is saying that this provision does not apply if there is no third-party right of appeal, which I think there is not in a lot of planning permissions. I view the scope of subsection (4) of Amendment 128E as being very limited compared with the sort of exclusions that I would like to see. As all planning is dealt with very satisfactorily in the neighbourhood planning section, it should not be allowed in the local referendum section in any form. I beg to move.
The Earl of Lytton
My Lords, as I explained to the Minister earlier today, I think that Amendment 128E has largely covered my amendment. However, like all amendments, there was a supplementary purpose lurking behind it, which was to try to probe the wider interaction between the facility of referendums generally, especially in their cumulative effect—the noble Lord, Lord Beecham, who is not in his place at the moment, touched on that a few minutes ago—and the wider family of the statutory functions of local authorities. It is instructive to note Amendment 128C relating to transport.
I have lost count of the number of times that the burdens on local authorities on the one hand and the need to get at the authentic voice of people on the other have been referred to in this part of the Bill. We are considering the effects for a democratically elected representative body whose functions might not work terribly well, or be effectively discharged, if a referendum is imposed. The Bill cannot be all things to all men. We have to have a balance between vox populi on the one hand and the effective administration of local government on the other. That balance needs to be explained.
I hope that the Minister will be able to elaborate on some of these points, but I certainly think that there is an issue here, which was touched on in earlier debates in Committee. We need to be clear to what extent people within a community should engage with the representative and democratic processes of those who are set up to represent those community interests as opposed to reaching for some bypassing measure in the form of a referendum.
Lord Best
My Lords, Amendment 128B is in my name. I do not think that we have given the Government enough credit for the amendment that we heard of earlier today, because that seemed to me to satisfy, if not entirely—I want to dwell on that—a good deal of the misgivings that we have had about referendums applying to the world of planning. We now have an amendment that will mean that planning applications are taken out of the reach of petitions and referendums. That is an enormous difference from where we were yesterday. I want to place on record my appreciation to the Government for taking that forward. It means that another laboriously prepared speech of mine is now redundant, but the amendment is extremely welcome.
Our hesitations about where we have got to are as follows. We understand that discretion is there for local authorities not to go ahead with referendums if there is a statutory process that gives members of the public opportunities to make representations and a statutory right of appeal or of investigation through a review. However, although that clearly applies to individual planning applications—great stuff—does that apply to all of the processes of preparing local development plans? I think that it must cover the preparation of the local development frameworks. If it did not cover the local authority preparing its local development plan, that would be disastrous. Throughout local government, we are already way behind in getting those local development frameworks undertaken. The abolition of regional spatial strategies means that we will be in limbo if local authorities do not have their own local development plans. We must get on with that. It would be incredibly difficult for the Government to pursue their growth agenda and do the good things that they want to do in terms of the development of renewable energy and the development of new homes if the threat of referendums was hanging over the creation of local development plans.
Beyond that, there are supplementary planning documents. They may not have the full panoply of examination in public and independent inspection in all cases. For removal of doubt, it would be better to have an amendment such as that in my name or in the name of the noble Lord, Lord Lucas, that takes the whole of the planning scene out of the referendum process. If we cannot, can we at least have firm reassurance that the process of producing local development plans, with the supplementary elements that go with them—the whole of that process—will be excluded by this excellent amendment?
Lord Greaves
My Lords, the purpose of this stand part debate and of Amendment 129F is to have an exploratory discussion to probe the Government about their intentions with regard to parishes. Is what is in the Bill to be taken at face value in that the Government realise that they have to think about how referendums will interact with parish and town councils, and inevitably therefore consider the relationship between the existing legislation for parish polls and the new provisions for referendums, which are altogether more complex and involved?
The provisions for parish polls are really very simple. A very small number of people can turn up to a parish meeting—what used to be called the ratepayers’ meeting when people paid rates—and requisition a parish poll. The parish poll is a referendum of all the local government electors in the parish, but it is often on a fairly small scale. Sometimes it is not. Sometimes it is run as a normal election, with all the polling stations open, except that the polling hours are from 4 pm to, I think, 9 pm—the noble Earl, Lord Lytton, will correct me if that is wrong—so there are restricted polling hours.
Lord Greaves
It is something like that. I do not think that it was extended to 10 pm; it might be only until 8 pm; I am not sure.
In my experience of parish polls, there is sometimes agreement between the council concerned and the district council or borough council, which has to organise the polls from its normal election process, not to have all the polling stations open. I am aware of a smallish town which has six or seven polling stations. They have a parish poll and they opened only one of the polling stations in the town centre on the grounds that it did not cost them as much. That flexibility is available, and it is an altogether simpler process. Of course, it is open to abuse because of the small number of people who can requisition a parish poll. Even if the Government are keeping provision for parish polls, I would think that, as part of the review, they will consider how the referendum provisions will impact on parishes.
There are now a lot more much bigger parishes than there ever used to be. A lot of places which, before 1974, were urban districts or small boroughs, have now become town councils. If you have an electorate of 18,000 or 22,000, or even more, having 10 people able to turn up at a parish meeting and only a small number of those being able to requisition a poll is nonsense. The parish poll provision is there for small, rural parishes, and the world is, in many places, not like that any more.
Have the Government any firm plans for what they will do or is it all provision in case they want to do something in the future? If they have firm plans, can they tell us what they will be before Report? The Bill’s provision about possible central government funding for referendums in parishes, organised by parish councils, is interesting, but I cannot believe that it is serious. It would leave it open for referendums to be organised in parishes on a large scale without any financial implication locally. The more that we discuss this in Committee, the more I come to the view that the number of referendums which will take place is probably a great deal less than some of us feared when we started looking at this, simply because of the financial problems.
We saw in the AV referendum that the no campaign campaigned heavily on the cost of the referendum itself—as though that was a logical reason to vote no, although the spending was already taking place. That was a very effective way of campaigning, and I am coming to the view that local referendums will meet a huge amount of opposition simply on the basis of cost. When people go around trying to organise them, once the cost and the implications for the council budget are revealed, a lot of them will not go ahead.
That is just musing about the future. The more that the Government can tell us about their proposals for parishes now, the better. I make it absolutely clear that I am in no circumstances trying to abolish parish polls. I am probing the Government's intentions.
The Earl of Lytton
My Lords, I welcome the amendment in so far as it opens up an opportunity to make a contribution on this point. I fundamentally support the Bill’s provisions to provide for the Secretary of State to make specific provision for parish council referendums. There are many reasons for that, of which I am sure the noble Lord, Lord Greaves, will be aware. I am sorry that I cannot elaborate on the question of the times of day and the hours when certain things relating to parish polls might take place. I am afraid that I am only the humble president of the National Association of Local Councils and not a fully paid-up clerk of one of the more go-getting parish councils. Noble Lords will have to suffer second best on this occasion.
As I said on Second Reading, parish councils are not a homogenous institution. They are so highly variable in size and many other ways that it is difficult to think of a standardised approach. I suspect that this is very much work in progress in terms of discussions going on with the department on how to deal with this rather difficult issue because of the problem of trying to make one size fit all. Not only are there differences in size of electorate but their budgets, capacity, degree of training and even their expertise differ widely, even within a particular size category.
My purpose was to flag up some of the things that the Secretary of State might need to consider. As I say, I am aware of ongoing discussions and I certainly do not want to be in any way prescriptive. In the parish council, being the smallest unit of local government, there must be a proper balance between engagement with representative democracy and the referendum facility. That is likely to be exacerbated in future because, as localism brings the involvement of parish councils with a larger range of things that may have been dealt with traditionally by principal authorities, the opportunities for things to be called into question will inevitably increase. We must have robust systems to guard against that. It is also the case that that can add to the risk of people wanting to reach for the referendum solution. It is beginning to look like a question of how many bites of this not very large cherry in some places is to be provided for the public.
I will not labour the point about the engagement with the democratic and representative function of parish councils. The burdens of referendums on parish councils are by and large disproportionately high. I mentioned that in a previous Committee sitting and gave an example. Currently, the trigger for a parish poll under paragraph 18 of Schedule 12 to the Local Government Act 1972 is by common consent too low. But that is no argument for removing it altogether. I was very pleased to hear the noble Lord, Lord Greaves, say that that was not his intention. I look forward to something better than that provision in the Local Government Act coming forward at a later stage, but I do not know whether discussions will have proceeded that far ahead. There is a need to prevent the parish being hijacked by the referendum provision. To that end triggers must be in some way relevant to the issue and possibly to the parish size. I cannot go further than that because we are dealing with tiny parish councils on the one hand and some very large town councils on the other, some of which have budgets that would exceed principal authority sizes.
There has to be a genuine local interest. I was very pleased when, some time ago, one of the smaller political movements tried to hijack the process for national political aims. I seem to recall it was something to do with the European Union and it was ruled out of order. Quite right too, because what should a small parish be doing with something concerning the European Union? Small parishes in particular are vulnerable, if we are not careful, to these sorts of pressures.
In addition, there needs to be protection for referendums cutting across other issues that have to be dealt with—the other powers and functions. I mentioned this earlier in connection with principal authorities. The same thing needs to be built in; not necessarily on exactly the same model, but in essence something similar. There needs to be a cost benefit out of all this, not for it to be completely disproportionate in the manner that I explained when I addressed this issue at our last Committee sitting.
Lord Taylor of Holbeach
My Lords, this is an important area. The Bill that addresses localism must indeed address the issue of parish councils, the most local form of government. In providing for referendums in this Bill, the Government have said that they will be consulting about the way they take place. I am grateful for the contribution of the noble Earl, Lord Lytton; and perhaps I can make amends to my noble friend Lord Cathcart for my dismissive ways with his previous contributions on this subject.
I value the contributions made by both noble Earls because I consider parish councils to be important. My noble friend Lord Greaves has an amendment in this group, Amendment 129F, which we can consider at the same time. It relates to parishes where electors have long enjoyed the power to demand a local referendum or parish poll under the Local Government Act 1972. It removes the power of local government electors to demand a parish poll. However, as my noble friend says, he has no intention of anticipating that this amendment might achieve that objective until replacement facilities are in place.
We know that a poll must be organised if the chairman consents, or if it is demanded by 10 or one-third of the electors present at the meeting, whichever is the lesser figure. So the triggers for parish polls can be quite small. None the less, I understand the concerns expressed about the varying size of parishes and this is a matter that will be considered by the review that the Secretary of State has put in train. This, along with whether parish provisions apply to parish meetings as well as parish councils, are all part and parcel of the mix. We will see if there is pressure to bring this in and if it is possible within the review that the Bill provides.
I agree that the current parish poll rules need reform, but accepting the amendment moved by the noble Lord, Lord Greaves, would remove the provisions without replacing them with anything. We want a modernised and proportionate referendum regime for the parish sector and we propose to create this with regulations under Clause 56, which empowers the Secretary of State to apply the scheme to parish councils with such modifications as may be necessary. The effect of the clause would be to allow the replacement of the existing archaic parish poll regime with a modernised local referendum regime tailored to the particular circumstances of parish councils. While we seek to retain this important element of direct democracy that has been enjoyed for years by voters in parish areas, we want to modernise the existing regime and make it fit for purpose in the modern world.
Before making any regulations, we will consult widely on the reforms that people want. We will consult on whether all or some of the referendum provisions in the Bill should apply and on whether the ability of electors to demand a poll at a parish meeting should be retained; and, if it is, on what the threshold should be. Decisions on the appropriate modernised regime for parishes will be taken following the consultation, and subsequent regulations will be subject to affirmative resolution, giving noble Lords the opportunity to ensure that the replacement regime is better than the existing provisions. I hope that the assurances I have given will allow noble Lords to accept that Clause 56 should form part of the Bill.