Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) (Amendment) Regulations 2013

Lord Ahmad of Wimbledon Excerpts

Thursday 7th February 2013 Grand Committee

Moved By

[Lord Ahmad of Wimbledon]

That the Grand Committee do report to the House that it has considered the Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) (Amendment) Regulations 2013.

Relevant documents: 16th Report from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee

[Lord Ahmad of Wimbledon]

My Lords, the purpose of the regulations is to amend the wording to be used in a council tax referendum question, and make amendments to the ballot paper to reflect the wording agreed with the Electoral Commission.

As noble Lords will be aware, since we took office, the coalition Government have prioritised the protection of council tax payers. Council tax more than doubled between 1997 and 2010, and this Government have worked with local authorities to give council tax payers a break. We have put in place three council tax freeze schemes that have provided real help with the cost of living. The latest scheme potentially represents a real-terms council tax cut of around 2.5% in 2013-14. The Government encourage all authorities to take up the grant that we are offering and freeze their council tax once again.

As we promised in the coalition Programme for Government, we have abolished the old centralised system of council tax capping and established council tax referenda, so that voters could have the final say on any excessive increases. Following the Localism Act, a number of regulations were put in place to set out the processes that local authorities must follow if they set an excessive increase. The most substantive of these regulations are the Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) (Regulations) 2012, which this Committee considered early last year. Both Houses approved the regulations. However, noble Lords will be aware that in preparing those regulations we were unfortunately unable to completely agree the wording of the referendum question with the Electoral Commission in time for the 2012-13 round of council tax setting. The Electoral Commission briefed Members of both Houses on their concerns about this.

During the debate on 14 February 2012, my noble friend Lady Hanham gave an undertaking that the Government would continue to work with the Electoral Commission and come forward with revised wording for the referendum question to be used in 2013-14. The House agreed that the regulations should be approved on this basis to protect council tax payers by not allowing referenda to go unregulated.

It is worth noting that no council tax referenda were held in the financial year 2012-13. Accordingly, no referenda have been held using the wording of the question that we now propose to amend. My honourable friend, the then Parliamentary Under-Secretary of State, Bob Neill, subsequently wrote to Jenny Watson, the chairman of the Electoral Commission, proposing a revised version of the referendum question. The revised version removes the phrase “do you agree”, which the commission had concerns about. The revised question also asks voters if they want their council tax to be at the level that has been set, with a clear indication that a “no” vote will result in a lower amount being set. This change removes any possible ambiguity about a voter’s liability for a council tax bill they have received prior to the referendum being held.

Following discussion, the commission confirmed that it was content with the suggested wording. I would like to place on record my thanks to the Electoral Commission for its highly constructive and timely approach to this work, and its sensitivity to concerns. In signalling its agreement to the revised question, the Electoral Commission repeated wider concerns about the complexity of council tax referenda and the need for government to ensure that timely information is provided to voters who take part in a referendum. We remain content that the multiple provisions relating to the provision of information set out in the lengthy 2012 regulations are sufficient and we are not minded to pursue any changes.

However, we take the commission’s views very seriously and remain in dialogue with it through various cross-Whitehall fora, and will discuss the scope for an appraisal of the voter experience if and when a referendum is triggered. The revised council tax referendum question needs to be in place before the current round of local authority council tax setting is completed. The final referendum threshold will be put to the House for approval alongside the final local government finance settlement on 13 February. All local authorities must have set their council tax by 11 March.

These regulations make a sensible, measured amendment to the question that will be asked in a council tax referendum. They reflect the views of the Electoral Commission and I commend them to the Committee.

--- Later in debate ---

[Lord Tope]

Then it would not be a desert island. Let us move on. I begin by declaring my interest as a councillor in the London Borough of Sutton, where the council has publicly announced that we will be recommending a council tax freeze for yet another year because we are in a position to do so.

The noble Lord, Lord Beecham, said—I think with some regret—that we are where we are. I think it is true to say that as all three speakers thus far in the debate are current or former councillors, we all probably regret that we are where we are. I certainly spent many happy years—I think initially with the Association of Metropolitan Authorities, but certainly with the Local Government Association—listening to Councillor Jeremy Beecham berating successive Governments for capping. I know that it was an enormous disappointment to him, as it was to all councillors, that a Labour Opposition, having been committed to abolishing capping for all its time in opposition, then spent 13 years in government failing to do so. I do not want to get into too much of a semantic argument about whether capping—which is effectively what it is—by the Secretary of State, with a right of appeal to a referendum, is qualitatively better than the situation that pertained before, but at least there is some sort of appeal.

I think that most of us do not expect there to be a referendum. It incurs considerable cost and there is uncertainty about the outcome; or perhaps it will not happen because there is a view that there is too much certainty about the outcome. Nevertheless, that appeal is there. I say to those authorities—probably mostly Labour-controlled now—that if they feel strongly that the cuts they are having to make in the budget are too great, too painful and not in the public interest, perhaps they should consider having the courage to hold a referendum and test the will of the people. It is not a system I like or would want. I would be very pleased to see it go. However, as the noble Lord, Lord Beecham, said, we are where we are. That is what Parliament has legislated for and that opportunity is there. Therefore, if authorities feel strongly that they are in that position, I urge them to trust the people and take the risk—it is a considerable risk—of holding a referendum.

As the noble Lord, Lord Beecham, said, the timescale for being able to do this is incredibly tight and very difficult. I hope that I shall never be in this position but I am very unclear as to what local authorities will be able to do if and when they have a referendum. What are local authorities able to say in putting a case to the electorate on why they are having the referendum and what the arguments are? I am not clear about what role the Government will take. It is too late to say, after the event, that you should not have done this. Before they enter into the referendum, local authorities need clarity on what they are and are not allowed to do. Needless to say, political parties—as distinct from local authorities—are free, within the law, to say what they wish in support of whichever view they want to take on the referendum. We need much greater clarity about what local authorities can do, especially given that the timescale is so short. The wide expectation that there will not actually be any referenda has made people a bit complacent in providing that detail. That is wrong: we need more detail.

Secondly, what would the Government’s role be, should there be such a referendum? I agree with the noble Lord, Lord Beecham, that we are already seeing local authorities of two political persuasions being lambasted by the Secretary of State and Ministers and described as “democracy dodgers” for staying precisely within the law. If we believe in localism, as all of us in this room do, what role is it of the Secretary of State and Ministers to be writing letters to local papers and issuing press releases, attacking a local authority for using its best judgment to determine what should be the council tax increase within the limit set by the Secretary of State and entirely within the law? I ask this question because I worry about whether, should a local authority be brave enough to hold a referendum, the Government would come in on the side of a no vote, or would act—as they should—in a strictly neutral way and say nothing at all.

We have regulations before us today on which the Electoral Commission has said it is entirely happy with the question. I do not think any of us should, or would wish to, argue with that. It has said that the Government have met almost all its recommendations. I hope that when the Minister replies he will tell us about those recommendations that have not yet been met and what the Government propose to do about those.

[Lord Ahmad of Wimbledon]

My Lords, I thank the noble Lord, Lord Beecham, and my noble friend Lord Tope for their contributions to this short debate. I did not expect that we would start talking about time on desert islands with my right honourable friend the Secretary of State. Regardless of the desire to spend such time or not, I shall certainly share those sentiments with him when I next meet him. However, knowing him personally, I can say that his amusing stories provide good entertainment.

My response to the point made by the noble Lord, Lord Beecham, about the Daily Mail and comments allegedly made by the Secretary of State, is the standard adage that you cannot believe everything you read in the newspapers. I thank both noble Lords for their general support of the principle behind what is sought in this. In putting this forward, the Government are clear that it is about giving local people the final say on any excessive council tax increases.

In response to the point made by my noble friend Lord Tope about the outstanding issues with the Electoral Commission, the commission has raised some wider points about voter awareness. He referred to his specific experience of the electorate and I can also refer back to my former experience as a local councillor. We struggled, and not just on this issue, with communication and information sharing. As we go forward, we will work with the Electoral Commission to address these important issues. I reiterate that we take the commission and its views very seriously. We are continuing a constructive dialogue with the commission across all aspects.

The noble Lord, Lord Beecham, raised issues about police and crime commissioners and the principle of precepts. The Government intend to bring forward legislative proposals to ensure that in future excessiveness will be determined with reference to the basic amount of council tax from band D, including all levies. There will be an announcement of that in due course. When I say, including levies, in consideration of any excessiveness that will ensure that all levying bodies are subject to the same financial discipline as other tax-setting bodies. There will be more detail on that.

[Lord Beecham]

In the event that a levying body exceeds the limit, will the cost of the referendum be charged to that body or to the local authority?

[Lord Ahmad of Wimbledon]

If the noble Lord will allow me, I will come back to him on that specific question. Nevertheless, to date there has not been a council tax referendum, and we are confident that the proposed referendum question and the information available to voters will be fit for the purpose intended. However, if and indeed when a referendum is triggered, we will discuss the scope for an appraisal of the voter experience with the commission. That is an important issue. Whenever or if this occasion arises, what we learn from that referendum will set many thoughts in terms of how we move forward.

The council tax freeze scheme in 2013-14 will, one hopes, make it unlikely that there will be any referenda next year. However, if any authorities choose to reject the freeze and go on to set an excessive increase, the revised referendum question will ensure that voters are presented with a clear an unambiguous choice around it. The principles around which any excesses are dealt with are covered, and it is clear that any setting of council tax above the 2% threshold would be subject to a referendum. Those principles are quite clear. If a local authority was to proceed and still take it forward, and perhaps not call the referendum, the Secretary of State would obviously review any future dealings with that local authority as well.

That said, there is general agreement on the principles. It is about giving local people the final say on any excessive council tax increases. That was a promise of the Government and one on which we are delivering. I beg to move.

Motion agreed.