Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority (Election of Mayor) Order 2016

Lord Beecham Excerpts

Tuesday 12th July 2016 Grand Committee

[Lord Shipley (LD)]

My Lords, I thank the Minister for introducing this order. As she rightly pointed out, this is one of the stages in the establishment of mayoral combined authorities.

First, will the Minister confirm that, once this order is agreed by Parliament, there will be a mayoral election on 4 May 2017? I ask because, as the Minister herself said, paragraph 7.8 of the Explanatory Memorandum states that:

“The Government will seek Parliament’s approval later in 2016 to further secondary legislation necessary to devolve the powers and budgets to the Combined Authority, as agreed in devolution deal”.

Can she confirm that there will be a mayoral election even if there is no agreement on the content of the devolution deal? It presupposes, first, that later this year the authorities making up the combined authority will finally agree with the Government and that there will be no changes by the establishment of a new Government, and, secondly, that Parliament itself will agree to the orders. I would like clarification on that.

The Minister will recall that, in our debates during the passage of the Cities and Local Government Devolution Bill, a great deal was said about the scrutiny and audit arrangements. Those grew in importance between Committee and Report and between Report and Third Reading. It was generally agreed that the arrangements initially proposed in the Bill were inadequate and some improvements were made. I draw the Minister’s attention to the report of the Public Accounts Committee of the House of Commons, Cities and Local Growth, published on 1 July, just a few days ago. In the summary, on page 3, it states that:

“There has been insufficient consideration by central government of local scrutiny arrangements of accountability to the taxpayer and of the capacity and capability needs of local and central government as a result of devolution”.

I also subscribe to that view. Is it possible for the Government to set out the reply they will make to the Public Accounts Committee alongside the next stage of parliamentary approval of the detailed arrangements of powers and resources for both mayoral combined authorities? Recommendation 8 of the Public Accounts Committee says, very specifically, that:

“Government should set out by November 2016 its plans for how it will ensure that local scrutiny of devolved functions and funding will be both robust and well supported”.

I would like to think that, when we get to the next stage of considering the arrangements for these combined authorities, we will have a response to this very specific point which the committee raised.

The Minister will recall that, during the passage of the Bill, I and my colleagues made a number of comments about the scale of responsibilities for an elected mayor within a mayoral combined authority. It is a big geographical area and it is a wide set of responsibilities. We queried the capacity of an individual person to do so much across all the areas that the Minister has described; in this case, it is transport, strategic planning, adult skills, employment support, business support, a business rate retention pilot, joint working with Her Majesty’s Government on children’s services, health, housing and justice. That is a very wide range of tasks for one person to be formally responsible for, even though the combined authority as a whole will have some shared responsibilities. Is the Minister confident about the structure being set up, not least because of the concerns of the Public Accounts Committee? It has identified a range of issues that in most cases we considered during the passage of the Bill some months ago, and the problems and the questions have not gone away.

I welcome the Tees Valley Combined Authority (Election of Mayor) Order and I congratulate Tees Valley on getting on with the process of devolving power to its mayoral combined authority, and in particular for overtaking the North East Combined Authority, which seems to have suspended discussions with the Government pending the election of the new Prime Minister. That is now going to be sooner than perhaps the authority had anticipated. I noted in the Minister’s introduction, unless I misheard her, that a number of further orders for areas such as South Yorkshire and the West Midlands are said to be forthcoming, but I do not recall any mention of the North East Combined Authority in that list. Assuming that I heard her correctly, can she clarify what the position is given that the order has been placed before Parliament for consideration? Is it delayed, over what timescale is it delayed, and is there still any potential, given the legal requirements, to hold a mayoral election in May if it is delayed much longer?

I have raised a number of issues for the Minister to respond to. Devolution is a positive thing, but she will understand that throughout this process we have expressed a whole range of doubts about the structures which are being established and the democratic accountability that lies within the process.

[Lord Beecham (Lab)]

I would like to inform the noble Lord, and possibly the Minister, about the situation with regard to the North East Combined Authority. It was originally thought that we would be taking that either this week or next week, but now it will be taken in September. It is not quite ready, as it happens, so next week would be difficult. My understanding is that it will be taken in September during the two weeks that we are back.

[Lord Shipley]

I thank the noble Lord for that clarification. I hope that we will have a chance to consider the plans for the North East Combined Authority in the House of Lords.

--- Later in debate ---

[Lord Beecham]

My Lords, we are in the slightly unusual position of having no fewer than seven former council leaders gathered together here, including the noble Baroness the Minister. I do not know what the collective noun for such a group would be. Perhaps I may suggest a redundancy of council leaders, because—let us face it—most of us, or most of our successors, are finding their position extremely limited these days.

We are engaged in something of an experiment. It is an interesting experiment, as most of us have acknowledged, with considerable potential but with certain concerns which have already been voiced both in this debate and on previous occasions. The issues are very broad, but they cannot be addressed simply by the imposition of a mayoral system. Many of us feel that there should have been a local decision to adopt that system. The noble Lord, Lord Shipley, and I were on opposite sides of a referendum in Newcastle for having an elected mayor for the city. His successor was the Liberal Group Leader on Newcastle City Council who I formed an unlikely coalition with and which turned out to be successful in securing a no vote. But we now have a situation where Newcastle, if the North East Combined Authority goes ahead, will have an elected mayor imposed and in the Tees Valley area we already have an elected mayor in Middlesbrough. However, we have an authority which, having had an elected mayor, then decided to get rid of him and the position in Hartlepool, and yet they are going to be faced with that requirement. It is interesting that the Secondary Legislation Scrutiny Committee asked the Government what consultation had been carried out about these proposals and the Government replied that Ministers had indicated that the:

“Passage of legislation, is founded on the longstanding tradition of representative democracy in this country. The matters covered in these Orders have been consented to by the democratically elected representatives of the people of Liverpool City Region, and of the Tees Valley”.

Accordingly they said:

“Those giving consent will have done so in the knowledge that they are democratically accountable through the ballot box to the people of Liverpool City Region and of Tees Valley, and we can be confident that they will have engaged with their constituents in such ways as they consider appropriate”.

That is a very high-sounding affirmation of the belief in local democracy. Oddly enough, the principle does not seem to extend to the decisions which councils can take about the services they deliver. They are being constantly eroded. We are now seeing further moves to distance local authorities from the provision of education and we have seen similar moves elsewhere. More particularly, of course, we have the financial position of local authorities, which are rigorously and vigorously constrained in the exercise of their functions. For example, the vaunted democracy about which the Government boast did not extend to allowing councils to increase council tax by more than 2% without a referendum. That was not a decision they were deemed competent to make. We have of course seen similar erosions of responsibility in other areas.

On the financial side in particular there is significant loss of resources to authorities involved in the devolution process. The National Audit Office report sets this out very clearly. We hear much about the additional funding, which in the case of a number of areas will amount to £30 million a year over 30 years, or £900 million, which sounds like a great deal of money. That sum will be paid into the Liverpool City region. A smaller amount, because it is a smaller area, of £15 million a year and therefore £450 million will go into the Tees Valley area. It sounds impressive, but then we must look at what is currently being spent. Total capital spending—this is what the money will be for—in the Liverpool City region now is £312 million a year. In addition, £44 million under the annual local growth fund is payable to the LEP, which is obviously also concerned with that infrastructure. Therefore the total amount in the Liverpool area is something over £350 million, so £30 million distributed between all those authorities amounts to something like 8% of what is currently being spent on capital programmes. The position is similar in Tees Valley where the total capital spend of local authorities and the LEP is just under £190 million. It will get £15 million, which obviously is something like 7.5% of what is currently being spent. The financial investment that is being made and boasted about in connection with this project is minimal.

On business rates, I think the Government are still consulting on what needs to happen with them. It is all very well to say that local authorities will be able to keep business rates, but in both Merseyside and Tees Valley areas—I suspect particularly in those areas—the business rate income will be pretty minimal relative to the population and in comparison with other authorities. Presumably there has to be some kind of mechanism for redistribution. I do not know whether the Minister will be able to indicate how far the talks have progressed, and she may not wish to tell us or not be able to tell us what the outcome will be. However, where are we as regards the timetable for coming out with a clear position on how the business rates will be redistributed, if there is a need for, as surely there has to be, an element of redistribution? As it happens, it appears that in some areas we will go into this new system and committing to it without even knowing what the timetable is for when the business rate agenda will be addressed. Surely that is extremely unsatisfactory.

The issue raised by the noble Lord, Lord Shipley, about scrutiny is valid. There has to be local scrutiny and it ought to be built into local arrangements. We provided according to my suggestion for an audit committee under the legislation which would give some measure of independent scrutiny, and those who have been calling both today and hitherto for an effective scrutiny process are obviously right to do so.

But of course there is then the question, given that business rates will be the only locally raised revenue, of what happens to the services not merely of the combined authority but also of the constituent local authorities since revenue support grant will no longer be paid. Surely the two things have to be aligned if local services and the devolved functions are to be delivered adequately. I refer again without making any apologies for doing so to the regret that I and others have voiced about the abolition in the early days of the coalition Government of regional offices of government, never mind the regional development agencies. As the noble Baroness will recall, the abolition of regional government offices changed a system which had worked well in providing a close working relationship between Government departments and local authorities. In each region virtually all the Government departments were represented, engaging with local authorities and operating as a conduit between Whitehall and those areas. Now that we are creating these potentially powerful mayoral authorities, it seems to be even more important that there should be a local dialogue which can facilitate a closer working relationship between central and local government.

I have a final question to raise about the position of police and crime commissioners. The understanding is that it will be possible—indeed, Manchester has already opted for this—to have the police and crime commissioner position combined with that of the elected mayor. The next Prime Minister in her current position, which will last for another 24 hours or thereabouts, was keen to promote the notion that fire authorities should go down the same route as police and crime commissioners. Does the noble Baroness have any thoughts or information about how that process might develop and whether the Government are currently working on proposals which would add fire authorities to the police service? Perhaps we will have to wait to hear what the new Prime Minister says, but is it the Government’s expectation, and possibly their political direction, that the new mayors will have as a matter of course that combined power or even just the police and crime commissioner power? That raises in my mind and I suspect in those of others both here and elsewhere some really strong concerns about the concentration of power in such sensitive areas in what will be effectively a single pair of hands, something that many would consider to be undesirable.

Clearly we want to see the new system being given a chance to work and we want local decision-making to be effective at addressing the different situations that face each group of local authorities, but that cannot happen in my submission without adequate financial resources and without the Government preparing not simply to offload these responsibilities, but actually engaging with what will in effect be two levels of local government to secure the improvements that they talk about wanting to see and which are desperately needed in so many parts of the country.

[Baroness Williams of Trafford]

My Lords, I thank all noble Lords who have made a variety of points on the order. Perhaps I may apologise to noble Lords for being late. I was happily having a cup of tea with the noble Baroness, Lady Hollis, and I did not hear my phone ringing to say that our business had started. I apologise to noble Lords for being a little late.

I shall start with the question from the noble Lord, Lord Shipley. He asked if I could confirm the election of a mayor in 2017. Once the order is made, a mayoral election will be held on 4 May 2017 and if further orders are not agreed, the mayor will be elected and he or she will chair the combined authority, but will have no powers to exercise individually. The combined authority will have only its existing functions; that will be the situation if further orders are not agreed from now on in.