Local Government Finance Bill

Debate between Earl of Lytton and Lord Brooke of Sutton Mandeville

Tuesday 3rd July 2012 Grand Committee

[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.

Localism Bill

Debate between Earl of Lytton and Lord Brooke of Sutton Mandeville

Tuesday 5th July 2011 Lords Chamber

[The Earl of Lytton]

My Lords, I need to declare my interest which I have not previously declared—there has been no need to do so until this part of the Bill—as a landowner and a practising chartered surveyor as well as my interest in local councils.

I need to bring a technical aspect to bear here. However, before I do so, I should like to comment on something said by the noble Baroness, Lady Hanham, in her introductory remarks. The provisions of the Bill go well beyond what might be described as the recovery of assets that were in, but have passed out of, community use. As regards some of the things about which the noble Lord, Lord Cameron of Dillington, is concerned, a much wider aspect seems to be appearing.

In my professional life I have prepared lots of lists of property assets. I worked for nearly seven years in the public sector and during that time dealt with a lot of things for local authorities, health trusts and government departments, so I know something about preparing lists. I suggest that the proposed list is very far from being a free bet. The process would involve drawing up, managing, publishing, and possibly providing free of charge, a list of indeterminate size and complexity. Why is that the case? It is because regulation cannot foretell what propositions will come forward as a result of the Bill’s provisions.

The obligation is subject to what the Secretary of State may decide following consultation. It is perhaps a pity that the Government have not yet published their response to the results of the consultation on their paper entitled, Proposals to Introduce a Community Right to Buy—Assets of Community Value. In due deference to the noble Baroness on the opposition Benches, the right to buy was not a term that she coined, it was in the consultation document, as I perceive it. I look forward to that response informing the Report stage of the Bill. I hope that I will receive a reassurance from the Minister that it will be forthcoming before that stage so that we all have time to consider it.

I go back to the list. There will be rules about content, additions, deletions and modifications. The list will have to delve into issues of ownership, some of them quite detailed and probably some that are commercially sensitive and may even be confidential. The list will have to be maintained alongside another “not in” list of failed nominations. All I would say at this juncture is that even on a conservative basis this will be a resource-hungry exercise for local authorities.

[Lord Brooke of Sutton Mandeville]

My Lords, like my noble friend Lord Hodgson, this is my maiden speech on the Bill. I intend it to be generic rather than go into detail and I hope, therefore, to be brief. I regret the hour at which we are holding this debate, although my noble friend the Minister showed admirable initiative in opening it with the statement that she did. It is a pity that the noble Lord, Lord Cameron of Dillington, did not have the opportunity to paint the larger landscape before we started getting into the detail.

I am speaking in particular to Amendment 136ZD, in the names of my noble friends Lord Gardiner of Kimble and Lord Cathcart, to which the former spoke a little while ago. I express my admiration for their exercise in clarification. The instincts that underlie generosity to one’s community are the big society writ early. I was a London inner-city Member of Parliament for nearly a quarter of a century, and London is nothing if it is not a collection of villages where the instincts of the big society apply. I have in a recent debate identified in my own constituency Pimlico and Soho as model inner-city communities, if in different modes. I have, however, had an address in Wiltshire for half my life and these characteristics of the big society or, as Burke might put it, the small platoon society, are perhaps evidenced even more vividly in the countryside because of the way everyone knows everyone else and where the roots of families are at least as deep as those of parallel families in the cities, if not more so.

I pay warm tribute to those who give of their substance in rural areas and demonstrate their recognition of local need and to the imaginativeness of their responses. My one plea to my noble friend the Minister is that that generosity of spirit should not be unduly curtailed by the letter of the law, which can turn the landscape into briars and brambles which deter rather than welcome sensible development. I, in turn, have welcomed the amendment as being an insurance policy to support one’s desire to be helpful to the community rather than to ring one’s assets around with defences against hazard.

I end with the amendment of my noble friend Lord Hodgson and support his Amendment 136, though by placing it in line 19 of page 61, it means it offers late rather than early assistance in illuminating the first four lines of that page. It is the opposite of the example once set by a Polish Bishop who was visiting a parish in his diocese, an episode that could be helpful to many a parliamentarian. When greeted by the curate, the Bishop said, “When I visit parishes in my diocese, I am accustomed to be greeted by the sound of bells, and that has not happened today”. The curate said, “My lord, there are three reasons. The first is there are no bells”. “Pray go no further,” said the Bishop. Although my noble friend Lord Hodgson has placed his amendment quite far down on page 61, I still think it is an extremely valuable contribution to the Bill.