Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between John Healey and Andrew Gwynne

Wednesday 11th September 2013 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

It is pleasure to follow the hon. Member for Stevenage (Stephen McPartland). He declared himself an optimist about the purposes of this part of the Bill and clause 36 in particular. The problem with the Bill, as well as with this particular provision, is the gap between the declared purposes and the provisions themselves. In clause 36, the problem is that the purposes are not clear at all.

In its confused content and its incompetent and chaotic handling, this whole Bill reminds me of a previous piece of legislation that the Leader of the House introduced—the Health and Social Care Bill. I led the opposition to that Bill. It was a Bill without allies and with a remarkable range of critics that saw Lord Tebbit and the trade unions finding common ground. The Leader of House, when he was Health Secretary, was forced to pause, review and reflect upon that Bill. The same problems with this Bill surely call for the same solution.

Let me now deal specifically with clause 36 and the amendments. My hon. Friend the Member for Nottingham North (Mr Allen), the Chair of the Political and Constitutional Reform Committee, told us that his Committee had considered the White Paper, the forerunner of the Bill, and that there had been no mention of part 3 or of trade unions. He said that, according to his calculations, this part of the Bill—including clause 36—had been published the day before the summer recess, eight working days before we were required to consider it in Committee today, and he rightly pointed out that the task of scrutinising these provisions would therefore fall to the other House.

I am not prepared to accept that, and the Committee should not be prepared to accept it either. It is part of our duty in a Committee stage such as this to exercise scrutiny in the House of Commons, but we have been unable to do so. We have been unable to do so because of the time scale, because of the lack of any wider consultation, and indeed, as we have heard this afternoon, because of the Government’s failure to provide the Committee even with some of the most basic documentation before asking it to consider the Bill. Such a degree of confusion and incompetence on the part of Ministers is unacceptable.

[Andrew Gwynne]

I entirely agree with my right hon. Friend’s critique of the Bill and, in particular, with what he is saying about clause 36, but is not the position even worse than he is suggesting? The Government have failed to explain to the House why the changes are necessary in the first place. We have not got a clue what problem they are trying to solve.

[John Healey]

I shall respond to my hon. Friend’s intervention in a moment. I want my speech to reflect what has been said in the debate so far, and the point that he has made has already begun to emerge during our discussion of clause 36 and the amendments.

Another point has emerged as well, and it constitutes a direct challenge to Ministers. The face of the Bill bears the following declaration from the Leader of the House:

“In my view the provisions of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill are compatible with the Convention rights.”

Members of Parliament and legal experts outside the House have rightly asked whether article 8 of the convention, in particular, is not confounded by the provisions of clause 36. The clause gives the certification officer, or any investigator whom he may appoint, sweeping powers of access to very personal individual information about trade union members, which could contravene article 8 and the right to privacy. As I think the Committee will appreciate, union members are rightly concerned and sensitive about the issue, given the recent history of blacklisting and discrimination on the basis of trade union membership or activity. What I should like the Minister to do when he responds to the debate—

Local Government Finance Bill

Debate between John Healey and Andrew Gwynne

Monday 21st May 2012 Commons Chamber

[John Healey]

The hon. Gentleman must not have been listening carefully, because that is not the case my hon. Friend was making. His point was that providing special protection for pensioners when £500 million is being cut overnight from the available fund means that those people who are not pensioners but who are currently entitled to council tax benefit or council tax support will inevitably be hit harder. Local authorities and charities are making the same case, as did Barnsley Advice Network to me last week when we discussed the potential challenges and problems that people will be forced to face.

[Andrew Gwynne (Denton and Reddish) (Lab)]

I apologise for coming late to the debate. I had a meeting elsewhere in the Palace.

My right hon. Friend is making a pertinent point. Is he aware of the work done by the House of Commons Scrutiny Unit, which has estimated the impact of a 10% cut to council tax benefit, with protection for the over-65s, using DWP figures? It calculates that non-pensioners will face an average cut of 16% in their council tax support.

--- Later in debate ---

[John Healey]

The Minister has just told the House and me that, to run the new scheme from April next year, Rotherham will have available no less funding than it has during this financial year. I will look very carefully at the facts, and, if they match the Minister’s words, I will welcome them; if they do not, I shall demand that he puts the House straight and offers an apology.

On work incentives, will not the Secretary of State therefore use his powers under schedule 4 to specify that people in work must, and work incentives will, be protected as he proposes, and has pledged, to use them for pensioners? If that is the case, the Minister’s actions will match his words. If that is not the case, exhortations on the importance of local government schemes reflecting needs and not damaging work incentives will not be worth the paper of the circular on which they are sent out, because there will be no protections guaranteeing the preservation of work incentives until and unless the Secretary of State chooses to use his powers as he has pledged to use them for pensioners.

Until that point, it is reasonable for Opposition Members, who are concerned about the future of this support for council tax payments, to continue to press the Minister and to be concerned that non-pensioners are likely to bear a heavy cut in their current support. Those on low incomes who are not pensioners, but who would get the full council tax benefit under the current system, will, as the Barnsley advice network has told me, have to find 20% of their council tax bill from their basic income, whatever they earn, as councils try to make less go further.

The Minister is old enough, experienced enough and has been involved in local government long enough for this measure to sound a warning to him and his colleagues. This is the return of the poll tax—[Interruption.] There are a few groans from Tory Members, but let us remember that a 20% minimum payment expected of all people, whatever their means, was part of the flaw in, and at the heart of the unfairness of, the community charge a couple of decades ago. In practice, that is what we are building in for non-pensioners: a requirement to cover for themselves, whatever their income, about 20% of the council tax costs in their local area.

Given the way in which the measure will work for many, it is a return of the poll tax: rushed into law and rushed into practice, with a deaf ear to local government, to charities, to experts and to Members, who warn the Government, “You’re pushing too far, too fast with these changes.” I will return in a moment to the amendments on the legislation’s commencement tabled by my right hon. Friend the Member for Greenwich and Woolwich, but first let me do my job and introduce new clause 2 and the amendments that stand in my name.

With new clause 2 and amendment 2, I seek to challenge the Secretary of State’s powers over, and prescription of, the new council tax support schemes. My purpose is this: I believe that the House and local government require a justification for the inclusion in this Bill of such powers of prescription from the centre over the local, otherwise their removal from the Bill is justified. None of the arguments that I have heard from Ministers, on Second Reading, in Committee or today, justifies the extent of the centralised powers vested in the Secretary of State to design and to enforce a particular manner of council tax support scheme.

The Government claim that the reform is a localising one. If it is, they should localise the decisions on the design of, and procedure for preparing, the scheme. They should localise the decisions and let the local authorities that will run the scheme devise them, in the Minister’s words, to suit local circumstances.

[Andrew Gwynne]

My right hon. Friend is absolutely right that any system has to be flexible enough to ensure that, if there are changes in demand locally, the system can catch up with the increase, but is not the concern that the Government’s proposals are completely inflexible, and that any increase in demand will impact on local services?

[John Healey]

My hon. Friend is absolutely right. Any increase in need, demand and, as a consequence, cost will all have to be borne by the local authority—borne by switching funding from other budgets that perhaps support important local services, or borne by cutting back within the council tax support scheme the support that is paid to those who remain eligible.

However, I want to exemplify the challenge that the Minister faces to justify the powers that the Secretary of State is taking in the Bill in order to prescribe from the centre. In paragraph 3(4) of schedule 4, the Secretary of State may make regulations on the procedure for preparing the scheme, including in paragraph 3(5) regulations to

“require the authority to produce documents of a particular description”;

regulations to

“include requirements as to the form and content of documents produced in connection with the preparation of the scheme”;

regulations on the

“requirements…about the manner in which such documents must be published”;

regulations to

“require the authority to make copies of such documents available”

in certain ways, and “to supply” copies of such documents to certain people; and even regulations to prescribe the charges that local councils should make for those documents.

In all honesty, that is the sort of prescription we expect to find in a memorandum from a publications manager to a graphic designer and a press officer, not from central Government to elected local government officials throughout England. If the Minister and the Secretary of State are to have any credibility on the claim that this is a localising move and a localising measure, they should back off and guarantee what they say. If the schemes should be under local control, as the Minister and Secretary of State claim, the Government should give local authorities the powers to control them, not take those powers and exercise them from the centre.

Amendment 1, which is also in my name, is in the same vein although more moderate, because it seeks simply to require the Secretary of State to consult before making any changes to the requirements that he chooses to impose nationally on local schemes. As the Bill stands, there is not even any obligation to consult local government on the requirements that central Government impose.

Paragraphs (8) and (9) of schedule 4 make it clear that the Secretary of State may make regulations to require any matter to be included in the design of a local scheme; may prescribe any class of person to be included in the scheme; may prescribe the reductions that cover any class in any area; and, to reinforce my earlier point, may prescribe the way in which the provisions are made. That completely undermines not only the constant mantra of Ministers across the range of their departmental responsibilities but the specific pledge that they made in their response to the consultation, where, on page 2, they said that this is

“a policy of decentralisation that will give local authorities increased financial freedoms”.

--- Later in debate ---

[Andrew Gwynne]

It is not yet clear how local authorities’ needs will be assessed for the purpose of determining the proportion of the business rate that they will retain. We need to see the bigger picture, not least because services and needs vary widely, as does the ability to generate income locally.

[John Healey]

My hon. Friend, who has experience of local government, has put his finger on the button. What worries me is that the Bill gives the Secretary of State power to set the central and local shares—in other words, to determine the division of the business rates take—in each and every year, indefinitely. I am not talking just about what will happen next year and the year after that, or about what will happen until the end of the current spending review period. From year to year, local government simply will not know where it stands until the Secretary of State makes the decision. The central and local shares could vary, and central Government could decide to take a greater share.

The Government’s top-slicing of at least 50% of the business rates revenue and 50% of the business rates growth above the baseline will reduce the incentives for local authorities to support growth, which were meant to be part of the design of the system. It will also reduce the certainty that would enable authorities to plan their finances on more than a year-by-year basis, and reduce the Government’s own ability to claim that this is a localising reform. I am sure that we will hear from the Minister—and I have heard this before—that the Government have declared their intention of returning the revenues in the central share to local government; but, as has been pointed out by my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), we have been given no details, and we do not know what purposes or constraints that may entail.

--- Later in debate ---

[John Healey]

My hon. Friend may well be right, and his Select Committee will doubtless keep a close eye on the matter. I hope that the Minister will give us some answers tonight, but I am sure that, if he does not, Ministers in the other place will be pressed on the point.

The other gaping hole in the Bill is the absence of any specific measure that would tell us when and how the Government would deal with the reset in the future. The two options that they presented in their statement of intent last week could lead to fundamentally different outcomes. There could be a full reset, whereby all the business rate growth up to the point of the reset was redistributed—meaning, in effect, that the baseline of the whole system would be reset by means of the new, and total, business rates pot—or there could be a partial reset, meaning that business growth would be retained at local level, and just the initial baseline would be reset. That represents a very wide range of possibilities for local authorities. If the Minister wants authorities to be able to plan for the future on the basis of the new system, he must provide them with some of the answers to such questions, sooner rather than later.

[Andrew Gwynne]

Getting the reset procedure right is important not least because the initial baseline is so unfair. It locks in unfair local government settlements and in-year cuts. It is crucially important for local government to be certain that the reset procedure will work in the future, because otherwise the gaps will continue to widen.

[John Healey]

Indeed. I have my misgivings about whether any approach to the reset procedure can make the system fair after more than a few years. Indeed, I am still to be convinced that the system can be reset in a fair and proper way. But, Mr Deputy Speaker, I digress beyond the scope of the amendments that I tabled.

Let me now turn to amendment 63. During earlier debates on the Bill in the Chamber, I argued that this was an unsuitable system for long-term Government funding. Ultimately, business rates yield is too volatile, and it is too volatile on a year-by-year basis. Let me give three examples, a couple of which will be close to home for those on both Front Benches.

In Warrington the business rates yield has dropped by £10 million over the last 10 years, from £53 million to just £43 million. In Sunderland there was a £17 million drop between 2010 and 2011, and in the year before that there had been a £12 million rise. I can tell the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), that in the middle of 2005-06, the business rates income in his borough of Bromley halved. In two of the last four years, the changes—up and down, and up and down again—have amounted to more than 10%. The funding stream is inherently volatile, and, in my view, is inherently unsuitable as a basis for the funding of essential local government services.

The main purpose of amendment 63, however, is to draw attention to concern about the volatility caused by appeals. I believe that areas in which there is a particular concentration of a single or consistent business type are particularly vulnerable to a big impact from them. The hon. Member for Cities of London and Westminster (Mark Field), who has just left the Chamber, may recall that in 2007-08 a full 20% of the business rates yield of the City of London was lost as a result of successful backdated appeals. So the appeals add another important, volatile element to the system of business rates.

Those appeals are made against decisions by the Valuation Office Agency, not local authorities. The system is managed by the VOA and tribunals, not the local authority, and it brings benefits to the companies that are successful, not the local authorities. We must ensure that the impacts of appeals do not affect the funding base of the local authorities; we must not expose authorities to vagaries in the system and to the impact of appeals, when they cannot predict them, control the risk of them or benefit from them. Actually, neither can they benefit from business rate increases through revaluation, at least while the Government put in place transition relief.

I tabled amendment 63 because the Government are creating a one-way bet, in which the Chancellor wins each way and the councils lose each time. If the appeals are won by the company, the local authority has to manage the volatility and has to bear the loss up to the level of the safety net threshold—which, according to the statement of intent in the Government’s publications of Thursday last week, is likely to be somewhere between 7.5% and 10%. Amendment 63 is an attempt to make sure that once the calculations and the thresholds are determined, safety net payments take full account of rating appeals. Linked to that, I hope the Government will accept the case for fully compensating local authorities from the levy pot for the impact of any successful business appeals—over which they have no control, and which they cannot predict.

New clause 11 is relatively modest, and I hope the Minister will accept it in principle, if not in practice at this stage. The power for setting and changing business rates policy—business rate reliefs, which are mandatory, as well as the payment schedules for business rates and the transition periods for business rate increases—will continue to rest with the Secretary of State and the national Government. Currently, any national business rate policy changes have no direct impact on local authority finances or local authority budgets. In future they will, however. They will not be local government decisions, but they will create consequences that local government will have to deal with. If the Government decide to change the rate or the type of mandatory rate reliefs, or to allow the deferral of part of the change in business rate bills, that will have a direct impact on that year’s yield in the area concerned, and therefore on the local authority’s funding. Local authorities will be hit by the consequences of decisions that they did not make and that they cannot control. That is unfair and unreasonable.

It may surprise some Members to learn that the Federation of Small Businesses has also made that argument. It said in response to the consultation of October 2011 that

“the FSB is concerned that the incentive system could actually deter local authorities from promoting and utilising the reliefs available to small businesses such as small business rate relief, rural rate relief and hardship relief…It would mean that a local authority would lose out on income if it increased the proportion of businesses that received rate relief or would make money if the number of businesses able to get reliefs fell.”

I am sure the Minister does not want to design into the new system perverse incentives that will hit small firms in that way.

As currently proposed, the new system will be bad for local authorities, and could be bad for local small and medium-sized firms. My new clause requires that, at the very least, the Secretary of State must consult the parties that would be affected by changes in national business rates policy before making such decisions. Under the new system, the stakes for councils will be higher, so the guarantee to consult them before any changes are made is the minimum that Ministers should promise.

Local Government Finance Bill

Debate between John Healey and Andrew Gwynne

Wednesday 18th January 2012 Commons Chamber

[John Healey]

The hon. Gentleman is right—there will be resets—but we do not know after what period or on what basis, so there is no guarantee that the accounting of need in the current system, which will be frozen at the point when the new system starts, will be reflected in a formula for, assessment of, or decisions on resetting. He might want to pursue that point with his hon. Friend the Minister.

[Andrew Gwynne]

My right hon. Friend makes an excellent point, but does he share my concern that, if, as is suggested, the reset period is set at 10 years, the gap between the poorest and the most affluent authorities will widen and the disparities will worsen in that period? Does that not reinforce his argument that need must be a fundamental part of the overall formula, as does the capacity to raise additional income using the council tax and the council tax base?

[John Healey]

My hon. Friend is right—I am about to make a similar point on relatively affluent areas becoming relatively more affluent under the proposed system.

The Government’s declared intention is for a 10-year gap between resets. I have my doubts about whether a reset after that period will be capable of restoring a proper reflection of need or a proper fairness in the system. We will speak later to amendments that would create much shorter reset periods, but they would not change fundamentally how the system will work to build in an advantage for already affluent areas with a higher business base. That advantage will just get bigger over the period between resets.

--- Later in debate ---

[John Healey]

My hon. Friend is really saying that we have not had a council tax revaluation. The problem he describes is a problem for any Government, but Governments will experience a similar problem with business rates as a result of the Bill.

[Andrew Gwynne]

My right hon. Friend rightly talks of the unfairness of the possible reset in 10 years’ time exacerbating the problems for local authorities, particularly those such as mine, which need the ability to raise income locally and for acute local needs, such as those in Tameside and the Reddish part of Stockport, to be reflected.

In fact, is it not worse than that for such areas? There is almost a double whammy. For those authorities, we must not only get the reset procedure right, but set the initial baseline correctly. All of that is based on the unfair funding settlements and cuts to local authorities such as Tameside and Stockport, but if we get the procedure and the baseline wrong, 10 years down the line, the real unfairness will set in.

[John Healey]

My hon. Friend makes a powerful point. It is certainly clear from how the cuts to local government have fallen in this Government’s first two years that certain areas, including his and mine, have borne a much greater burden than others.

The other part of the double whammy, to use my hon. Friend’s expression, is designed into the system, and it should give the Committee cause for concern. It is that the local distribution of the business rates is very uneven. For instance, Kensington and Chelsea has a much smaller population than Rotherham or Barnsley—I represent part of both those boroughs—but raises five times as much in business rates as Barnsley and three and a half times as much as Rotherham.

The opportunities to grow the business base are also uneven. I have looked back at the latest gross value added statistics published by the Office for National Statistics just before Christmas. Last year’s figures showed a difference of more than 3% between growth in London and that in Lincolnshire, Cornwall or Merseyside. In other words, it is clear that from year one the gap between affluent and less affluent areas will grow. The business rates base, and therefore income for councils, will grow faster in some areas than others, as it has in the past.

Even if there were the same rate of growth in all areas, the relative size of the business base income, which is higher for some councils than others, would mean a greater actual cash income for some councils. The top-up and tariff system that the Government are designing will reduce, but not remove, that disparity. If it did remove it, it would remove the incentive element that they want to build into the system.

Having been a local government Minister for two years, introduced the first ever three-year settlement for local government and altered the formula to better reflect needs and resources, I know that there are always winners and losers from any change. The whole House knows that. However, the councils that have a big business rates base, a strong council tax take and high levels of growth will be win-win-win councils, and those that do not will find that they are lose-lose-lose councils. That is the unfairness that is built into the design of the new system. It will increase divisions and tensions in our country.

[John Healey]

The extent to which it is a step in the right direction remains to be seen. There is an element of its direction that is right, which is the desire to see greater incentives for local councils to support the growth of their business base, and greater rewards for doing so. How those incentives will work is weak and potentially perverse, but the principle is nevertheless in the right direction. The potential practical problems that we are beginning to tease out are part of the debate that we need to have.

[Andrew Gwynne]

My right hon. Friend is being incredibly generous in giving way. Is there not another problem that has not been properly addressed in the legislation? It takes no account of the complexities of sub-regional economies. For example, many of my constituents in Tameside and Stockport work in the city of Manchester or other local authorities. The scope for economic development in Greater Manchester is concentrated in the city centre, around Manchester airport, Trafford park, the Trafford centre, the media city and Salford quays, and not necessarily in Tameside or Stockport to the same extent. Although there are facilities for pooling business rates where local authorities agree, if they do not agree, will not authorities such as mine be disadvantaged?

[John Healey]

They will indeed. As my hon. Friend states, there is a double disadvantage to areas such as his. He paints that picture and concern very vividly.