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

Lord Beecham Excerpts

Thursday 7th February 2013 Grand Committee

[Lord Beecham]

My Lords, I congratulate the Government on accepting the advice of the Electoral Commission. Certainly, it is sensible to adopt the new wording although, as the Minister pointed out, there are other recommendations that the Electoral Commission made concerning how to promote interest in and understanding of the issue should a referendum take place. I note from the Government’s response and the noble Lord’s remarks that the Government will continue to work with the commission—and, I hope, the Local Government Association—about how that might be effected.

The timetable is ridiculously short in most cases between a council’s final budget decision—even after, as is the case in many authorities, months of consultation about their financial situation—and the date on which the referendum has to take place. It is less than two months—normally it is about six weeks—between the final date for making a budget and a referendum. That is a difficult timescale and the Government need to look at how people might best be informed.

However, the principle of a referendum is extremely questionable. The Minister makes a virtue of the fact that the Government have facilitated a council tax freeze. That generosity would be more welcome if it had not been financed by topslicing the local government grant in the first place so that, in effect, money that would have come to local government is still coming but only for this particular purpose. It creates problems for local authorities because while the council tax is frozen, the base revenue budget is also in effect frozen. There is a growing gap between the council’s expenditure and its base budget and, as the noble Lord, Lord Shipley, pointed out in a debate the other week, this can and will ultimately cause greater problems. However, we are where we are.

I would like to ask a question—not about the levying authorities, which were dealt with in the Secretary of State’s Written Statement last week; I understand the position about that even though I do not necessarily go along with the whole argument—in relation to the police commissioners’ right to impose a levy because they, unlike other bodies, are not effectively accountable to local authorities. The regulations will place the precepting authority in the frame, so to speak, of the referendum question and that might be thought to be enough. However, I doubt it will be, because the levy will be collected via the council tax and that needs to be made clear to people. It needs to be made clearer even than perhaps baldly stating in the referendum question that this element, if it is in excess of 2%—I know of at least one police commissioner who is proposing a 3.5% increase in the levy—is not the responsibility of the council that collects the tax and sends out the bills. That matter ought to be addressed in more detail in the course of the review that will, no doubt, go on.

There is more to the recent debate about council tax referenda than these technical matters. Recently the Secretary of State came out with an extraordinary threat to penalise councils which opt to increase council tax below the Government’s imposed limit of 2%, above which a referendum would be required. The Secretary of State has accused councils which refuse to increase council tax by less than 2%—I refer to that document of record, the Daily Mail, for the remarks that he made—as being “democracy dodgers” by creeping under the radar and cheating their taxpayers. Of course, the councils would simply be applying the law and the system he pushed through and, indeed, levying a council tax increase below that which would trigger a referendum.

This is remarkable. My noble friend Lord Smith inquired of me whether the Secretary of State for Transport might say that people caught travelling—it is perhaps timely to mention such matters—at 69 miles an hour should nevertheless be deemed to be breaking the law because it is under the speed limit. What the Secretary of State is saying is that councils which levy council tax increases below 2% are somehow creeping under the radar and cheating their taxpayers. This is an appalling statement. It also ignores the fact that councillors remain accountable for their decisions through the ballot box at local elections. A referendum that he seeks to impose is in his view somehow superior to accountability through the ballot box at local elections. He does more than criticise; he actually threatens to take into account decisions to levy an increase below 2% and effectively claw it back or impose tighter limits next year. Where is the justification for that threat?

I have to point out that the Government have sought no approval for their swingeing increases in VAT or the devastating cuts in council tax benefit, housing benefit and other welfare benefits which hit millions of people and will cost many households a great deal more than a 2% council tax increase, assuming that were being levied. In my authority, which I think is not going to increase the levy, a 2% increase would amount to something like £20 a year for 70% of the households in Newcastle. I repeat that the council is not proposing to levy a 2% increase. That pales into insignificance beside the amounts that those households will lose in the benefits to which I have referred.

Mr Pickles was recently on “Desert Island Discs”. He should have opted to take with him as his book a collection of his own speeches about localism and freedom for local authorities, and a copy of his own Localism Act.

[Lord Tope]

My Lords, I am just reflecting on that last remark. It seems to me to be the ultimate cruelty to be marooned on a desert island with a disc of your own speeches, particularly for Mr Pickles.

[Lord Beecham]

It would be even worse to be marooned with Mr Pickles.

[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.