Local Government Finance Bill

Lord Jenkin of Roding Excerpts

Thursday 5th July 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, in moving Amendment 41, I shall also speak to our other amendments in this group, Amendments 42, 44, 45 and 45A. Amendment 41 is a probing amendment. It concerns regulations about the levy payment calculations. These can be made,

“by reference to such other factors as may be specified in the regulations”.

Will the Minister indicate the type of other factors that it is envisaged might feature?

Amendment 42 would require the Secretary of State to allow 28 days for representations to be made on the basis of the calculation and to implement a process for receiving representations. I am sure that there will be informal arrangements but there should be some formal process by which local authorities can challenge the calculation.

Amendment 44 requires a report to Parliament after three years. The Government have yet to conclude on the safety net but it could be something like a 7.5% to 10% reduction from baseline funding, which, as time goes by, other than being uprated by RPI, would become an increasingly distant figure. Can we have an update on the thinking and on what evidence will be used? A significant diminution in base funding for an authority could be cumulative and we would be very concerned about that. We have debated before a significant loss of the business rate base: we heard from the noble Lord, Lord Greaves, last week. Some of it might be involuntary because of major closures; some of it might be voluntary, such as the discouragement of major regeneration projects. We need a clear path to review how it is working, so we believe that a report to Parliament at three years to see how that safety net is operating is very important.

In similar vein, Amendment 45 seeks to put down some criteria and the need for an evidence base. I apologise for the late tabling of Amendment 45A; it just got stuck in the system. It is a probing amendment intended to focus on the cumulative impact of the safety net, particularly when local authority reserves are being depleted and, in any event, the Government are focusing on levels of reserves.

I have put my name to Amendment 46, which is in the name of the noble Lord, Lord Jenkin, who will perhaps talk to it if necessary. There is something of a hotchpotch of issues there but it is intended to be probing in order to understand issues concerning the levy concept. I beg to move.

[Lord Jenkin of Roding]

My Lords, this group includes Amendment 46 in my name, to which I am delighted to see the noble Lord, Lord McKenzie, has added his name. We come to this in a splendid example of a total coalition, if I may put it like that to my noble friend the Minister.

I will say a word about a special point that affects the City of London in a moment, but the point about Amendment 46 is that it is asking that volatility in local authority income due to rating appeals is formally recognised and “fully compensated”. The justice of this is self-evident. Under the current proposals for business rate retention, local authorities will be unable to benefit from business rate yield growth due to rental increases after revaluation. However, when it comes to reductions, local authorities are expected to manage and absorb funding volatility caused by rating appeals after revaluation, subject to the provisions of the safety net. Of course, volatility in funding will fall entirely on the local authority.

Just as with other matters of this kind, it is not within the control of local authorities because the rating revaluations are all done by the Valuation Office Agency, which is outwith local authority control, and yet the Bill is providing that local authorities must bear the risk. This seems unbalanced and unfair. If it is right one way, it must surely have the converse effect of being right the other way. I should be grateful to hear my noble friend’s answer to that.

Under the current proposals there is what London Councils describes as asymmetry—a view that I entirely endorse. It seems to me that they are wholly asymmetrical and that, in these circumstances, there must be some form of indemnity from the Government against significant VOA errors. Without this, local authorities will simply have to bear the whole risk, which could be quite substantial.

I give notice that the City corporation has raised with me a separate point on which it may wish somebody to table an amendment on Report. It is a slightly different point but it comes up under the same general issue. It is technically distinct from our proposal, which I have just described under Amendment 46; nevertheless, it seems to be in some way similar. Our Amendment 46 deals with appeals founded on some error by the VOA. The City’s difficulty concerns appeals or alterations founded on a subsequent change of circumstances—namely, for instance, a movement in the local property market that produces an oversupply of commercial property. They have had experience of this in the City. Of course, it does not affect just one office or one set of business premises; it affects them all at much the same time. Therefore, it could have quite a serious impact on the City and on other areas where there are high concentrations of high-yield commercial property.

Even after the dispute has been resolved, the refunds can be backdated for several years, which means that the local authority has to wait for them. Here again the argument should be that local authorities should not be exposed to this kind of risk, because the Government have already accepted that they are not to be exposed to bearing the risk of general movements in the local property market. If it is right there, why is the same argument not applied to movements due to appeals from the valuation office? I understand that it would be appropriate to raise a separate amendment if one was going to try to incorporate something in the Bill, so at this point I am just giving notice of this issue to my noble friend. However, I think that there is a point on which she may wish to comment—she probably knows about this—as well as on what I would call the enlarged coalition proposal under Amendment 46 that the volatility of the ordinary valuation process should be borne by the Government and not by local authorities.

[Lord Palmer of Childs Hill]

I rise to make the coalition complete and show that it is indeed a multi-coalition point. My name appears on this amendment, as does that of my noble friend Lord Tope. Most of what I wanted to say has been covered by my noble friend Lord Jenkin. I just emphasise that the Valuation Office Agency is another separate body and that it will make decisions on appeals. It will decide whether there is any liability but local authorities will have to pick up the pieces. It seems that there is central government on one side and local authorities on the other. To my shame, I am not sure whether the Valuation Office Agency is still a part of HMRC but it certainly was as a valuation office. Local authorities will be caught between a rock and a hard place because things will happen that neither government nor local authorities will be involved with, and local authorities will then just pick up any compensation that might be needed. Although my noble friend Lord Jenkin widened it in many ways, so far as I can see, all the amendment is seeking is to ensure that losses due to appeals are fully compensated from the safety net. We believe that this would be fair and equitable for local authorities.

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[Baroness Hanham]

If the noble Lord is going to join the coalition, why not from the Front Bench, given the way things are going?

This group of amendments presents a good opportunity to discuss the key element of the rates retention scheme; that is, the operation of the levy and the safety net. From the outset, we have signalled our intention that the rates retention scheme will include a safety net mechanism to protect local authorities from significant downward shocks to their income. We did so in recognition of the inherent volatility in the business rates system, to which my noble friend Lord Palmer has just referred, that can see rates income vary from year to year, principally because of appeals, to which the noble Earl, Lord Lytton, referred, which are generally out of the local authority’s control, or a sudden change in local economic circumstances as a result of, for example, the closure or relocation of a major business. The safety net will be funded by a levy on the disproportionate benefits that some authorities would otherwise experience simply because of their high initial business rates baseline. The detailed calculations required to determine whether a local authority is to make a levy payment or receive a safety net payment and, if so, the amount of any such payments will be set out in regulations, which will be subject to the affirmative resolution procedure under paragraphs 20 and 23 of the schedule. In both cases, those regulations will need to set out the precise detail of what is to be measured and how it is to be measured, and the provisions in paragraphs 20 and 23 give the scope to be able to include all relevant items in defining income for the purposes of the calculations. Amendment 41, moved by the noble Lord, Lord McKenzie, seeks to remove some of that scope by removing the ability in regulations to make provision for the calculation of levy payments to be by reference to some factor other than retained business rates income.

I shall lay out how we think the calculations will work. The noble Lord, Lord McKenzie, will be aware that we intend to set a proportional levy at 1:1, which will mean that all authorities can expect to retain up to 1% growth in their baseline funding level for every 1% growth in their authority’s business rates baseline. This will require the authority’s retained rates income for the year to be compared with its baseline starting level. In other words, that is the rates income we initially calculated that the authority would collect—its business rates baseline—plus or minus any top-up or tariff before applying the levy rate to the difference between the two. The initial comparison or the application of the levy rate could be described as another factor.

We are also trying to create a legislative framework that will stand the test of time. Noble Lords have already referred to the need to keep the safety net under review, and we agree with that. A consequence of keeping it under review is that we may at some point in the future want to redefine how the safety net works and we may—who knows?—want to include a reference to other factors. If a future Government were to do that, they would, of course, have to get the agreement of Parliament to those changes through the affirmative resolution procedure, so the right level of scrutiny is clearly available.

There is no secret conspiracy here. We do not intend to take account of some other mysterious factors. The provisions as they stand simply enable the way the levy payments are to be calculated to be set out in regulations. It is true that they may also provide some flexibility, but we have no plans to do anything other than provide for a proportionate levy on retained business rates income, as I have set out.

I have more sympathy with the noble Lord’s Amendment 42—that must be the first time I have said that since we started.

[Lord Jenkin of Roding]

I should have come back sooner from the Chamber.

[Baroness Hanham]

Don’t get too excited. The amendment for which I have more sympathy, Amendment 42, seeks to ensure that there is a period during which authorities can challenge the calculation of the levy payment, but I do not believe that it is necessary to set that out in regulations. The basis of the calculations is, as I have explained, to be set out in regulations and local authorities will have ample opportunity to comment on that. Individual calculations will be based on the information supplied to local authorities, so there should be no reason for the calculations to be wrong.

However, I appreciate that local authorities have concerns, as this is something that we have discussed in the working groups that we have with them. Although I am not convinced that a requirement in the Bill is appropriate or necessary, I shall take this away to give further consideration to how we might meet those concerns. That is my sympathetic bit.

Turning to the discussion on the safety net threshold, prompted by Amendments 43, 45 and 45A, noble Lords will be well aware that decisions about the levels of the safety net threshold and the levy ratio are very closely linked. They must balance a range of competing issues and they cannot be divorced. While the safety net needs to offer protection against significant shocks in the local rates base, as I mentioned earlier, it will be funded by other local authorities through the levy. Therefore, the levy ratio must be set at such a level as to generate sufficient income to fund demands on the safety net at the chosen support threshold. Equally, that level must be such that it continues to offer an incentive to authorities to pursue growth.

We have carefully considered all these issues and believe that the levy ratio at 1:1, together with the safety net support threshold in the range of 7.5% to 10% below baseline funding, offers the best combination on balance. We will be consulting local government over the summer before any final decisions are taken. Therefore, although I appreciate the intention behind the noble Lord’s amendments, I am not in a position to accept them.

I think that Amendment 44 tabled by the noble Lord, Lord McKenzie, is unnecessary. I understand his aim but he will no doubt appreciate that we will of course want to keep the operation of the safety net under constant review, particularly during the early years of the scheme. If we believe that it is not offering the right level of support, we will change it.

Finally, with Amendment 46 my noble friend Lord Jenkin seeks to ensure that provision is made for the effect of appeals on an authority’s income—a matter raised earlier by the noble Earl, Lord Lytton. We recognise that the impact of rating appeals on an authority’s income is outside the control of the authority but we do not believe that this amendment is the way to deal with it. Instead, as I have previously explained, we will be building two significant protections into the scheme. First, we will be reflecting appeal losses in the initial calculation of tariffs and top-ups. In other words, we will set the level of tariff or top-up as though authorities have collected less income from rates than is the case, recognising that over time they will lose some income on appeal. Generally, we have put in place the safety net so that, where authorities lose more on appeal than is allowed for in the initial calculation, they will be substantially protected through the safety net payments.

With those assurances, I hope that the noble Lord will feel able to withdraw his amendment.

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[Baroness Hanham]

I will write to the noble Lord. My understanding is that as long as you have sufficient income left as a tariff authority, you probably would not justify help from the safety net. It is for those who lose an enormous amount of income and are not able to cope with that because it is below the base line. None the less, I shall have the noble Lord written to about that.

[Lord Jenkin of Roding]

My Lords, I am grateful for what my noble friend said about looking again at the issue raised by Amendment 46, but I am not sure that I wholly understood. I do not want to anticipate the argument that we might have on any amendment that she might bring forward on Report, but I understood that she said that one thing that the Government might do would be to try to take into account the impact of appeals. Is that what she said? How can you know before the appeal has been heard? I just do not understand. It is just another estimate, whereas the amendment is looking for full compensation for that. I am not sure whether I have properly understood what my noble friend said in her earlier response.

[Baroness Hanham]

It must be extremely difficult to work out in advance how many appeals will be won or lost. There will be an assessment of what that will be and it will be taken into account at an early stage. The noble Lord is asking for full compensation on every appeal that is lost or won—if it were the other way round, we could take money back. At present, if it is likely that a lower amount of rates will be collected than expected because of outstanding appeals, that will be taken into account. That is some form of compensation, it seems to me.

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Moved by

[Lord Jenkin of Roding]

47: Schedule 1, page 36, leave out lines 25 to 31 and insert—
“(2) Before making such a determination, the Secretary of State must consult such relevant authorities and bodies representing relevant authorities as the Secretary of State thinks appropriate about whether the Secretary of State should make such a determination.
(3) If, following consultation under sub-paragraph (1), the Secretary of State determines that the amount referred to in sub-paragraph (1) is to be distributed among one or more relevant authorities, the distribution may not be made unless—
(a) the basis on which the Secretary of State intends to make the distribution (“the basis of distribution”) is specified in the local government finance report for the year in question, and(b) the report is approved by a resolution of the House of Commons.(3A) If a report is approved by resolution of the House of Commons under sub-paragraph (3)(b), the Secretary of State must calculate what amount (if any) fails to be paid to each relevant authority as its share of the amount referred to in sub-paragraph (1).”

[Lord Jenkin of Roding]

We now turn to the issue of the distribution of the remaining balance of the levy fund, which comes on page 36 of the Bill. As the Bill currently stands, it is entirely up to the Secretary of State to decide how that is going to be done: whether it is going to be rolled over or distributed to local authorities. Amendments 47 and 48 propose that this should be a matter of consultation between the local authorities and the Government, and then be subject to approval by Parliament via the local government finance report. Without that, there is no way for Parliament to exercise any control over the distribution of the levy, which could be quite a significant sum at the end of the period to which it applies.

The logic of the system that the Government are introducing is that it is local government money. It should therefore be returned to the local authorities and not be the subject of a further centralisation of control by the department. It is the old question and the department seems to want to retain overall control over the decision as to whether the balance should be rolled over or distributed, whereas in accordance with any sort of localism agenda it should be recognised that it is local government money and it is for local government to decide what should happen. At least it should be the subject of consultation, as the amendment provides, and then be dealt with subsequently in the local government finance report and so be within the control of Parliament. I hope that my noble friend will be able to see the sense of that and how it is in accordance with the Government’s overall policy of localism. I beg to move.

[Lord McKenzie of Luton]

My Lords, I have added my name to Amendments 47 and 48 and wholeheartedly support the proposition that has been argued by the noble Lord, Lord Jenkin. There is nothing more to say on that matter.

The noble Lord, Lord Beecham, and I also have Amendment 49 in this group, which is a bit of a failsafe proposal. It says:

“Should any part of a balance on a levy account for any year remain undistributed after 3 years from the end of that year, the Secretary of State shall report to Parliament on the reasons therefore”.

If it is accumulating over that period, there is real cause for concern. This is an added protection and certainly does not displace the propositions in the earlier two amendments.

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[Lord Jenkin of Roding]

My Lords, I listened to my noble friend with care. Due to the extraneous noise overhead, I am not sure that I heard it all. This Room is rather vulnerable to the helicopters flying overhead. I got the impression that she feels that there is merit in what we are saying and that she understands that her regulations will in fact deal with it. Would that be a fair summary?

[Baroness Hanham]

I am happy that the changes that were made in the other place will ensure that the levy is redistributed as quickly as possible, in consultation with local government, and that will be laid out in regulations.

[Lord Jenkin of Roding]

Indeed, if that is going to happen, that is not unsatisfactory.

Can I have an assurance that the regulations that this clause provides for will be available by the time we get to Report?

[Baroness Hanham]

We have said that we will have all regulations available before we meet again.

[Lord Jenkin of Roding]

In those circumstances, I hope that my noble friends in the expanded coalition will agree that I withdraw the amendment.

Amendment 47 withdrawn.

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[Lord Jenkin of Roding]

My Lords, I shall add a word or two on this, about which I spoke briefly at Second Reading. I agree entirely with the arguments that have been put forward so far. The speech of the noble Lord, Lord Best, was extremely clear and he made his point with great force.

We have been here before. I introduced in the House of Lords a Private Member’s Bill on business improvement districts, or BIDs. That was based on a precedent from the United States, as is TIF. We got it right though the House of Lords but the previous Government found no time for it in the Commons, so it failed. Two years later, a Bill was introduced by the Government, which the noble Lord, Lord Rooker, presented with enormous pride, saying, “Look at what we’re doing”. It was my Bill, almost word for word, but the noble Lord, Lord Rooker, whom I have known for some time and for whom I have great regard, did not acknowledge that fact at all. I took the view that I was not prepared to make a fuss. The fact is that I was pleased to see BIDs reach the statute book, and they have been quite effective so far, so one has seen this happen.

I have some sympathy for my noble friend at the Dispatch Box, but of course the person who ought to be answering these arguments is my right honourable friend the Chief Secretary to the Treasury, Danny Alexander. That is part of our system. I have been the Chief Secretary so I know and understand the system, which is extraordinarily advantageous to Treasury Ministers. They make the operational department answer all the arguments that are put up. The most we can expect from my noble friend on this is if she says that she is impressed by the strength of the arguments and that she will prevail upon her Secretary of State to have another go at the Treasury. The fact that the Treasury is proposing to treat this simply as an addition to the borrowing requirement in the year in which it is spent is, as the noble Lord, Lord Best, and others have made clear, to ignore totally the reality of what a TIF is. It is not just spending in the year; it uses the prospective revenue from additional business rate income in order to raise a loan which can then be used for infrastructure projects. Many examples could be given, such as money being spent on a housing estate, roads and so on.

That is what everyone expected would happen. When we heard the announcement back in 2010 by the Deputy Prime Minister, enormous hopes were raised. I would suggest that the Chief Secretary to the Treasury might be invited to answer why those hopes have not been met. As I say, I have some sympathy for my noble friend because there is nothing she can do about it except to go back to the Secretary of State and have another go by bearding the Treasury and saying, “Look, this is not a tenable argument. It has to be made to work”.

After all, the Government have made a great song and dance about how one of the ways we can secure economic growth is by investing in our infrastructure. Some very large schemes have been put forward on that basis in the hope that they will be funded by the private sector or even from inward investment. A few hours ago I was discussing foreign direct investment in the Chamber, and this is the same issue. If one can borrow money in order to be able to develop infrastructure in this country, one is creating jobs and building in growth, which is what we all want to see. What is in the Bill—simply having TIF 1 and TIF 2—is what I would say advisedly is simply a form of emasculation. I quoted at Second Reading the view of one of the local authority associations. It has looked at this carefully and does not think it adds anything that will be of any use to anybody. It pains me to have to say this to my noble friend, but I would ask her to go back to the department to say, “We cannot defend this. The arguments are overwhelming and we must look at it again”. Otherwise I suspect that we shall be asking the House to accept amendments on Report perhaps along the lines of those put forward by my noble friend Lord Tope and the noble Baroness, Lady Kramer, tabled today. Again, I feel very strongly about this and share their views absolutely, so I hope that my noble friend may be able to respond.

[The Earl of Lytton]

My Lords, unlike my noble friend Lord Best and the noble Baroness, Lady Kramer, I am not an expert on TIF, but I can relate to this process, having been involved with development schemes in one form or another. I understand the principle behind this and I strongly support it. I feel like something of a spoilsport in view of what has been said because I have just one slight concern. In normal circumstances if one was looking forward to steady and progressive growth, one would say, “Let’s do it”. However, the information that I have had has indicated that one or two municipalities in the United States have suffered from solvency problems after getting themselves involved in these things because of a larger-scale downturn that was beyond their or probably anybody else’s control. I could understand a Treasury reticence about opening what it might see as a floodgate if it felt that we were in sufficiently uncertain times—and I believe that we are in quite uncertain times—and that, as a long-term punt, it could not foresee a guarantee of growth that would pay that back.

There are many instances right across London. I go back to the early days, when Canary Wharf was being developed. One of the problems that it hit was that, at that time, it could not finance the Jubilee line extension. In effect, it caused the developer to become insolvent. If you imagine that being done on a municipal scale, then obviously it is a very significant issue. The guarantees are not built in. I do not think that any of us would want to find that municipalities involved in TIF schemes would become insolvent. I am sure that there must be safeguards.

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[Lord Beecham]

My Lords, having spent some considerable time searching through the Bill to find where TIF was, I have to congratulate the noble Baroness on discovering it. It is a bit like Higgs boson. The physicist who discovered the Higgs boson will no doubt get the Nobel Prize for Physics. Perhaps we should nominate the noble Baroness for the Nobel Prize for political metaphysics.

[Lord Jenkin of Roding]

One might also congratulate the House of Lords Library on a very splendid section about TIF in its briefing pack for this Bill. It, too, had to say that TIF was not mentioned in the Bill at all. That point is enormously well made.

[Lord Beecham]

I reiterate my congratulations to the noble Baroness—and indeed the House of Lords Library.

The noble Baroness was rightly critical of some of the aspects of the public finance initiative with which she lived for around 20 years. I was with an LGA delegation on one of our rare visits to 10 Downing Street when we met the then Prime Minister, John Major, at the very beginning of this process. Of course, it has been adopted by successive Governments with considerable enthusiasm. But it always struck me that, whereas there was a good case for that kind of scheme where you could see a revenue stream, there was very little case where there was not a revenue stream. Schools and hospitals, for example, could not be allowed to close or fail, so there did not seem to be a chance of risk-classing in those sorts of cases, whereas on a more commercial basis it seemed quite appropriate. This, arguably, is a better version of PFI.

Of course, as the noble Baroness said, TIF derives from America, where they have other forms of municipal financing, such as bond issues. At some point we might want to look again at those as opposed to this particular scheme, which is analogous in some respects but tied more particularly to specific projects. There are certainly distinct advantages to this. I note the point that the noble Baroness, Lady Kramer, made about the relationship with enterprise zones. I hesitate to raise—for the fourth or fifth time—the question of enterprise zones and their relationship to various aspects of this Bill. I hope that I will have a reply to some of my previous questions, but I join the noble Baroness in asking about the relationship of enterprise zones to the TIF programme.

I am intrigued by Amendment 51, which seeks to avoid the trap of any such financing being regarded as part of what we used to call PSBR—now debt—and takes it off balance sheet. It seems such a simple solution that I wonder why it has not been adopted before, perhaps in relation to other matters. I hope that it stands up; it would be good if it did. If it does, I think we would be in a similar position to that of former Labour Ministers in 1931, when the incoming Government went off the gold standard and they said, “They didn’t tell us we could do that”. If this proves to be a viable mechanism, I hope that it will have a wider application, and indeed it might.

The noble Lord, Lord Best, referred to his special field of expertise, housing, and rightly pointed out that the schemes will not be available to support housing but will be available to support infrastructure. There are two aspects to that. First, there is surely another way of promoting housing construction. If the Bank of England is going to pump endless billions into the vaults of our esteemed banks, would it not be better to pump that money directly into housing construction? This would have precisely the same effects on the economy that the noble Baroness has alluded to: the net cost after you take off the savings to the benefits system—increased tax income from corporate tax and the like—would be less than the amount devoted. You would have assets on the balance sheet—this is not money for current expenditure—and that might be a way forward. I suppose that is not really within the province of the Local Government Finance Bill, but it raises the question of TIF and its use for infrastructure.

As I understand it, the Government have been looking for investment in infrastructure from pension funds and the like. I recall a recent report, although I cannot remember whether it was produced by the National Association of Pension Funds or the IFS, which indicated that there was little interest thus far in such funding from those sources, whereas this offers a clearer route to making rather more rapid progress, and I very much hope that it will be pursued.

Nevertheless, there are some potential flaws in the present proposals. In particular, the amount allocated— I think the noble Baroness said £160 million although I thought it was £150 million, but it is in that region—is pitiful, as she rightly said. I do not know whether yesterday’s “city deal” announcement dealt with this £150 million or £160 million—whatever the figure is—which I thought was to be allocated to the authorities involved in that city deal but, if so, however it is divided up, it is a very small amount indeed and will do very little. Even in a single authority, it would not do an enormous amount. Spread across eight authorities, it would do very little. I hope that this is seen as a first instalment and that the process will go on to much larger sums in future, and rapidly, if we are to see a real impact on the present situation in the economy.

TIF 1 also has its problems because, as the noble Lord, Lord Shipley, and the noble Baroness, Lady Donaghy, pointed out, the restrictions seem to be quite perverse. The timescale for repayment is particularly so because, if there are to be resets and so on, nobody is going to be taking on large sums that have to be repaid in a very short time, as the noble Lord, Lord Shipley, rightly said. Indeed, lenders may very well be reluctant to lend over those times. I entirely concur with the view expressed by the noble Lord, Lord Shipley, that it is ridiculous to have an absolute limit and for there to be a cap on expenditure in the first year. On the contrary, I would have thought the more the better to get the thing moving in the early stage.

We certainly approve of the concept and hope it can be made user-friendly, if I can put it that way, to lenders and authorities. These amendments certainly go some way to taking us in that direction. Again, the noble Lord, Lord Jenkin, is quite right. We cannot expect too much of the Minister in replying today, unless she has somehow received a blank cheque from the Treasury, which would be a first. I am sure she will report back the strength of feeling among people with considerable expertise in these matters, whether ministerial or professional, and we might see some improvement.

On Report, it would be helpful to have explicit reference to the scheme in the Bill. It has to be very clear what we are talking about and whether there are to be any changes in the scheme as adumbrated so far. It is clear that this is not going to be a panacea. It will not do everything, but it would be a welcome extra tool for local government, which is perfectly capable of using it effectively, as it has demonstrated for generations. It can and does play a significant part in regeneration, very often in partnership with the private sector. I very much look forward to the day when local authorities can get on with schemes under the aegis of TIF—however it eventually emerges from this Bill—and, perhaps, other measures.

I note that Scotland seems to have jumped the gun. That is interesting because presumably—certainly in the present state of affairs—what happens there would impinge upon the national UK debt. Sitting where the noble Lord, Lord Shipley, and I sit, just over the border, it would be extremely irritating if it were found that Scotland was able to do a great deal and we in the north-east were not. Of course, the same would go for many other parts of the country where there is huge need and demand for investment of this kind, and for the contribution that that could make to the economy.

I certainly commend these amendments, and I hope that the Government in one form or another can look sympathetically at them and address the very legitimate concerns that have been raised in order to make a good policy work effectively, which is what we must all seek.

Local Government Finance Bill

Lord Jenkin of Roding Excerpts

Tuesday 3rd July 2012 Grand Committee

[Lord Smith of Leigh]

My Lords, I will speak to the amendment in my name. I am glad to follow my noble friend Lord McKenzie and support the arguments that he used. Before I come to the detail, I declare my interest in this matter. I am leader of Wigan Council, chair of the Greater Manchester Combined Authority, vice-chair of SIGOMA and vice-president of the LGA. I can see that I am not alone in that.

Looking in detail at the Bill, Clause 1(7) clearly gives the Secretary of State some flexibility to defer introducing the Bill. Therefore, I tabled my amendments for two purposes. One was simply to try to understand—and I hope that the Minister can help me in her response—under what circumstances and when the Secretary of State may use the power under this clause. More importantly—again, I want to follow up the points raised by my noble friend—if local authorities want to change the funding system, they want to do it well. However, we have to accept that if we do not let them know what the new system of funding is by a certain point during this year, it will be difficult or impossible for them to implement it by 1 April next year.

I have chosen 30 November as the cut-off date as that gives local authorities four months in which to plan and make sure that computer programmes and so on are able to cope with the technical aspects of the Bill. Those are not yet in place and cannot be until all the details and statutory instruments are available. If we leave it much later than that, we will be getting towards the end of December, although as far as government is concerned the middle of December will probably be the latest date because Christmas will intervene and not much will be done then. If we respect the fact that local authorities will have work to do on this part of the Bill, and probably more informally on some of the later parts of the Bill, then we need to be honest, say that we cannot achieve what this House needs to achieve by a certain date and not go forward.

[Lord Jenkin of Roding]

My Lords, before my noble friend replies to the debate, I should like to add a word. The noble Lord, Lord McKenzie, quoted a passage from London Councils’ briefing, which we have all received. I and my noble friends have tabled a number of amendments—to which we will come later and to some of which the noble Lord has added his name—which recommend a marked change in the structure of this division of the business rate. London Councils—I should declare an interest as one of its presidents—has indicated to me that on balance, with regard to this part of the Bill dealing with the business rate retention scheme, it would be a little upset if the date were postponed.

A lot of work is being done on this by London Councils and there has been a good deal of discussion about the pooling arrangements that may be appropriate. Although it is not put as a very firm and immutable point of policy, its view is that 2013 for this part of the Bill is right, and I think it would regret it if the date were changed. I draw a very clear distinction between this and the later part of the Bill dealing with the council tax, where there is still an enormous amount of anxiety that councils will simply not be ready with their own local schemes. However, we shall come to that later. I think that I should let the Committee and my noble friend on the Front Bench know that on balance London Councils would regret a postponement of Part 1.

[Lord Tope]

My Lords, I suppose that I, too, should begin by declaring an interest. I am simply a councillor in the London Borough of Sutton. I am not a vice-president of anything, or at least not yet—I see that the noble Lord, Lord Beecham, is disappointed with that declaration.

I listened to the noble Lords opposite making the case, with which I am sure many in local government would have some sympathy. I think that all of us, on both sides, would wish to be a little further ahead than has proved possible. However, I suspect that as we will say time and again with this Bill, we are where we are now and we have to consider the question of postponement. My noble friend Lord Jenkin is right to draw a distinction between postponement of the business rate retention proposals and a possible postponement in implementing the localisation of council tax support, to which we will come later. There will be many in local government who have sympathy with what has been said on the other side of the Committee and perhaps more so when we get to council tax support.

As a councillor, I have thought quite hard about this in respect of my own authority and more generally. I do not support postponement. I would rather we were not where we are. Until relatively recently, it was expected that this Bill would be enacted by the end of this month but clearly that will not happen until much later. I hope that, in reply, the Minister will be able to give us a clear and firm commitment that by Report stage, in October, all that is required to be published will have been published, albeit in draft form. I take the point that until the Bill is enacted, it cannot be in an absolutely final form. However, if local authorities know all that they need to know by October at the latest, and I hope a little before that, and if the Minister is able to give a reassurance, I believe that most local authorities will share my view on business rate retention that we are so far down the road and there is so much expectation that this will happen—there has been so much wish that it should happen and we shall come to that later—that postponement now would not be welcome, particularly to me. I hope, with some confidence, that the Minister will resist these amendments.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, before the Minister replies, perhaps I might return to the reference made by the noble Lord, Lord Jenkin, to London Councils. I accept entirely that London Councils has changed its position on deferment of the business rate component of this Bill—the briefing that we had a month ago certainly put us in a different slot—and I was not seeking to suggest otherwise. However, I was seeking to relay what is still its current view, as I understand it, which is that the scheme needs to be urgently revamped if it is to produce the radical shift in the structure of local government funding that the Bill proposes. I do not know what process the noble Lord might feel there is to achieve that if there is no deferment of the Bill. Are we going to follow up with an amendment Bill next year? How is it actually to come about? What is there within the Bill that would enable that radical restructuring that is apparently wanted? I do not know whether that is what the noble Lord supports.

[Lord Jenkin of Roding]

I am grateful to the noble Lord for giving me an opportunity to explain. I referred a few moments ago to the number of amendments tabled on the first part of the Bill that would make quite substantial changes, particularly about the division between the central and local shares of business rates revenue. That would be a change that, if my noble friend Lady Hanham could persuade her colleagues that it might be accepted, would go a long way towards meeting the concerns not only of London Councils but of the Local Government Association and local authorities generally, which are anxious to see a faster process of the localisation of business rates revenue. I will no doubt have an opportunity to talk about this a little later, but I do not think that the questions of timing and of the changes that we are proposing are in any way inconsistent. As my noble friend Lord Tope said, there would be some regret if this were to be delayed. I think that both he and I were making that point. Perhaps that is a way of explaining to and satisfying the noble Lord, Lord McKenzie, that there is no inconsistency in what we were arguing.

[The Earl of Lytton]

My Lords, the noble Lord, Lord Beecham, made a perfectly correct reference to some comments that I put to him. Indeed, I have made comments in the context of this Bill before. Before I go any further, I ought to declare various interests: as a practising chartered surveyor, a member of the Rating Surveyors’ Association and a member of the Institute of Revenues, Rating and Valuation, which explains my interest in the valuation aspects of business rates.

There is a growing issue that creates a greater than usual level of uncertainty with regard to the yield of business rates. I referred previously to the number of outstanding non-domestic rating appeals. I believe that the current total is around 144,000 or 146,000. Even if you get rid of the repetitious ones, the true total probably sits at around slightly more than that—so, 80,000 or 90,000 appeals. Some of these go back to the 2005 rating list.

Business rate payers are getting increasingly concerned that access to justice is effectively being denied to them. A typical lead-in period from the time when an appeal is lodged to the time when the Valuation Office Agency is able to make any sort of substantive comment, I am advised, is in the order of two years—and that is not to the time when it actually gets before the valuation tribunal, when the valuation officer can actually open his book and address the issue. I do not blame the Valuation Office Agency for that. I think that the Committee should be aware that this is fundamentally to do with the agency being starved of the necessary resources. It is being starved of the personnel and starved of the resources to upgrade its computer technology; its computers do not interleave with the valuation tribunal’s computers, and so on and so forth.

Businessmen are particularly concerned because the non-domestic multiplier—that is, the multiplier that is applied to the rateable value in order to provide, as it were, the gross amount of the rates payable before transitional relief and other things—contains an element for potential losses to the tax base arising from successful appeals. So businesses up and down the country are bearing the cost of this contingent risk factor which is implicit in the fact that we are dealing with a system that is lacking in the necessary resources.

My point in raising this on Second Reading was to outline that this is the nature of the animal that is about to be bestowed—or, rather, its risks are about to be bestowed—on to billing authorities. I think that this needs to be addressed. I do not know how this relates to whether the Bill should be brought into force in 2013 or subsequently—I make no comment about that. I just say that there is an in-principle issue about the maintenance and management of the tax base that, if you do not get it right, will be in the nature of passing the buck, an issue that the noble Lord, Lord Beecham, raised on Second Reading. This is a risk factor. I think that it would be entirely wrong, although— I declare another interest as president of the National Association of Local Councils—that does not make me unaware of the risks that are being imposed on the principal authorities, which are represented here by their president, my noble friend Lord Best. I think that it is right that, when we are dealing with these matters of principle, we actually address them at this stage. This is part of the tapestry—the backdrop—over which an awful lot of the other bits that we discuss will have to be viewed.

--- Later in debate ---

[Lord Smith of Leigh]

My Lords, I shall also speak to Amendment 17, which is in this group. In tabling Amendment 9, I was intrigued by the language being used in the schedule. We obviously understand what “may not exceed” means but the implication is that it may on occasions be less than that figure. I am intrigued to know on what occasions it might be less and why. What did the Government have in mind in drafting this? If they did not mean it ever to be less then presumably they would have used the words that I use—“shall equal”. This is a probing amendment and I do not want to speak further to it.

Amendment 17 is more substantial. One thing that I think local government has welcomed over recent years is that we no longer do quite the procedure that the Minister outlined, and that in announcing a settlement for a year, Governments have given indications of what the settlements are likely to be in two subsequent years. The benefit of that to local authorities in terms of future planning and what they need to do is very important. In my own authority, under the current arrangements we now have a four-year plan and have to reduce expenditure by £66 million, which is 28% of our budget. It is not easy and we are trying to make sure that it happens. However, we could not take out the expected sum on an annual basis unless we knew what was intended for subsequent years. We have to plan to remove £20 million-odd this year and £18 million next year, so it is really important.

In keeping with the tradition that has grown up in local government, I am asking in this case that when a particular year’s settlement is announced we will be given indicative figures for future years, or at least for the next two years. That would enable us to plan the system much better than if we were simply told on an annual basis. As I say, this has been a real improvement which I think has been welcomed by all sides in local government, and I hope that the Government will maintain it.

[Lord Jenkin of Roding]

My Lords, the noble Lord, Lord Smith of Leigh, has made a point but I am sure he would agree that it is a fairly narrow one, whereas some of the other amendments in this group raise wider issues. Perhaps I may step back for a moment to remind the Committee of what the problem is that we are talking about. There can be no doubt whatever that when the Government published their position paper, Business Rates Retention Scheme: The Central and Local Shares of Business Rates, there was very substantial disappointment on the local government side at the figure of 50% as the split between the local and central shares of the business rates. The arguments were well rehearsed at Second Reading but I will remind the Committee of the two main arguments.

First, it is recognised that the higher the local share, the stronger is the incentive to encourage development and therefore growth and jobs. Indeed, the Government’s document more or less admits that, and the tables they have produced show that that is the case. One is talking here about a broad feature of national economic policy. The second argument is more specific, and is directed at the consequence of the division. As was said by a number of noble Lords at Second Reading, the result is that priorities are still being substantially determined centrally rather than locally. It has increasingly been the declared policy of the Government to achieve more local decision-making and more local control over their affairs and finances. At Second Reading, I warned my noble friend that she might hear some of the same arguments with which she was assailed during debates on the then Localism Bill. We were able to make a certain amount of progress on that. There were a number of quite significant amendments which strengthened the localist case for more local decision-making. I hope that we might perhaps have a similar result here.

There has been a good deal of discussion within the local authority world of how one could change the position to give the authorities the prospect of an increased share in future. A number of proposals were put up, some of which have found their way into other amendments. When discussing this with the Local Government Association—I ought to have declared a long time ago that I am a vice-president of that—

[Baroness Hollis of Heigham]

Can we all do that?

[Lord Jenkin of Roding]

Surprise, surprise, but there we are. Discussing this with the Local Government Association, it seemed to me that there would be merit in building in some form of escalator. Amendment 12 in this group introduces a limit, as it were, to say that it cannot be less than the previous year. However, that only stops it going down. Amendments 21 and 22, in the names of my noble friends and me, seek to build in a regular process by which the centralised share falls and the localised share rises. I do not for one moment claim that this is the only way of achieving an escalator; obviously, there might be a whole range of different options to do that. With these amendments we are arguing for the principle that the local authorities should be able to look forward over the next few years to a steadily rising proportion, both to increase the incentive to encourage development and more jobs, and to give expression to the increased localism which the Government aim to champion.

Amendment 22 spells out our proposal. I have said that I do not think this is necessarily the only way of doing it, but the proposal is quite simple: one starts at 50%; two years later the central share declines to 45%; two years after that to 40%; and two years after that to 35%. This takes us only up to 2018, and of course one is hopefully looking further forward than that. The corresponding local shares would go from 50% to 55% two years later; then to 60%; and then up to 65%. Therefore, over the period up to 2018, we would move from 50:50 to 65:35. Perhaps we could write this, or something like it, into the Bill. I made it absolutely clear that there are a number of different options for doing this and this was the one that seemed to attract some support in the local authority world. Local authorities particularly want to see some legislative provision setting out that the 50:50 split is not to be permanent or long-term.

As I have made clear—and this is very different from what I said when I was Secretary of State for the Environment in charge of local authorities—I am a huge supporter of the principle of localism. The noble Lord, Lord McKenzie, and others have made the same point. However, I detect the hand of the Treasury in this wish to maintain a 50% share. There is a feeling that it does not want to let go. My noble friend Lord Brooke of Sutton Mandeville and I have both been Treasury Ministers—I was the Chief Secretary at the Treasury—and I recognise that temptation. It seems to me that we have a choice here. Are we really going to encourage an increase in localisation or are we going to maintain a strong central control with some modest shift in favour of localism?

In considering the Bill and this particular proposal for the division of the business rate retention scheme, I hope that the Government will be prepared to accept that their good faith and belief in the principle of localism and localisation would be demonstrated by writing something like this into the Bill. That is what we are looking for. It would give an enormous fillip to the encouragement of local government which would go the whole way back, and local government would come to be seen as a more important area of governance in this country.

There is no doubt that as, over the past 30 or 40 years, the public have seen local government decision-making increasingly being taken over by central government, there has been a great loss of public interest in and concern over lower and lower voting figures. It is to the huge credit of local councillors such as the noble Lord, Lord Smith of Leigh, and others who are here that they have kept the flag flying in these difficult times. We now have a change of direction and I think that this has given local government an enormous boost of encouragement. It can say, “We really do still count. We are still looked to as an important area of government and not just as an instrument of central government”.

To my mind, if we could build into the Bill some form of escalator so that over the next few years there could be seen to be a shift in the percentage from a 50:50 towards a 65:35 split, or whatever it might be in six or seven years’ time, that would send out a very important signal to local government that the national Government are on its side and that they want to make localism work and make it a greater reality. The advantage would be that it would increase local authorities’ incentive to encourage development and so achieve growth and jobs.

If that is not done, it will give the impression that the Government—the Treasury would carry the blame—are giving a higher priority to tight monetary control than to encouraging growth. There has been a huge amount of argument about that over the past year or two but here is one way in which we can fight back on it. I hope that we will be able to persuade my noble friend on this. She will no doubt wish to discuss it not only with her colleagues in the DCLG but with Treasury Ministers—I know that they have a lot of other things on their plate at the moment—to see whether we can do something along these lines. It would be a hugely important signal to send out and a great encouragement to local authorities, as I hope that noble Lords will agree.

[Lord Best]

My Lords, I would like to speak to Amendment 16, which comes before the amendments in the name of the noble Lord, Lord Jenkin. I declare my interest as president of the Local Government Association. I express thanks to my various vice-presidents, particularly to the noble Lord, Lord Jenkin, for an exposition in very eloquent terms on the point covered by my rather cruder Amendment 16.

The LGA, representing district, metropolitan and county councils of all political hues, as the noble Lord has said, has expressed disquiet that there is to be a division of the business rates that retain so much central control, despite the positive rhetoric of localism. The LGA recognises that central government wants to keep a firm hand on local government finances during the period of deficit reduction covered by the current spending review, not least to impress the international financial markets that deficit reduction is being taken very seriously. The measures in the Bill are likely to last well beyond that deficit reduction timescale and local government at large is keen to ensure that the retention by central government of 50% of all business rates revenues, and indeed 50% of any business rate growth, shall not be maintained after its purpose has been fulfilled.

This amendment calls for central government to discontinue its retention of a share in local government business rates revenue after 2014-15; that is, after the last financial year in the current spending review period. I recognise that the Government may well be keen to extend the period a little longer because their deficit reduction objectives are likely to go on beyond 2015. However, the LGA, London Councils and others representing local government all agree that that top-slicing of business rates revenues by central government needs some clear end date. The 50% top-slicing greatly restrains the ability of local government to benefit fully from its support for any business rate growth and undermines the localism agenda of devolving powers away from the Secretary of State to local government.

In responding, perhaps the Minister could address one aspect of this concept of a central share of all business rates. I know that the Government have stated their intention to return the revenues that they receive through this arrangement to local government. That certainly sounds as though the Government’s intentions are not to redirect resources away from local spending, but it is unclear how the funding received by the Government will be returned to local authorities and what conditions are likely to be attached to it. Clarification on just how that somewhat circular movement of finance will operate would be much appreciated. The underlying point of the amendment is to draw out the Government’s view on just how long this central government control over half the business rates should last. I entirely support the comments on that from the noble Lord, Lord Jenkin.

Civil Aviation Bill

Lord Jenkin of Roding Excerpts

Monday 2nd July 2012 Grand Committee

[Lord Rosser]

My Lords, this is a probing amendment. The Bill provides that operators of dominant areas located at dominant airports require a licence to levy charges for airport operation services, and states that an airport area is dominant if the CAA makes a determination that the market power test is met in relation to the area. Subsection (8) of Clause 7 states that the Civil Aviation Authority may make separate market power determinations in respect of different areas at the same airport with the same relevant operator and may also make a market power determination in respect of an airport area that consists of two or more areas that are not adjacent if the areas are located at the same airport. Subsection (9) then states that a market power determination ceases to have effect if the Civil Aviation Authority publishes a notice of a further market power determination in relation to the airport area or in relation to an area that includes all of the airport area.

The effect of the amendment, which would add further words to the end of Clause 7(8), would be to require the Civil Aviation Authority, at such intervals as it considers appropriate, to,

“review market power determinations made on the basis of an earlier analysis”.

It is not clear whether other wording in the clause, or elsewhere in the Bill, is intended to require the Civil Aviation Authority to review decisions that it has made on market power determination. Circumstances can change over a period of time, and factors that were important in the original decision may cease to be so, or other factors may come into play.

Other subsections in Clause 7 say that the Civil Aviation Authority may make a determination that the market power test is or is not met in relation to an airport area, and that the Civil Aviation Authority must make a market power determination if asked to do so by the operator of the airport area or any other person whose interests are likely to be materially affected by the determination, subject to certain laid-down criteria being met.

There ought to be a requirement for the Civil Aviation Authority to review market power determinations it has made, irrespective of whether it is asked to do so. Subject to what the Minister has to say in reply, that does not appear to be a requirement laid down in the Bill. Even the reference in subsection (1) to the Civil Aviation Authority making a determination whenever it considers it appropriate to do so is not clear as to whether it also means reviewing a market power determination it has made that the test has been met or whether it applies only to making determinations where it has not previously been decided that the test has been met.

If the Minister does not intend to accept the amendment, I hope that he will say why the Government do not consider it appropriate, if that be their argument, or which provisions already in the Bill cover the issue raised in the amendment. Perhaps the Minister could also say how often the Government expect the Civil Aviation Authority to be making market power determinations. Are they likely to be regular occurrences and is it anticipated that such decisions will have to be revised or amended on a regular or frequent basis or only rarely? I beg to move.

[Lord Jenkin of Roding]

I was surprised at the last sitting of the Committee when my noble friend made it clear that it is envisaged by the Government that there should be competition between two different terminals at the same airport. At an airport such as the JFK International in New York, where the terminals are situated widely apart and are approached in different ways, there may be some sense in that. Even in as large an airport as Heathrow, which now has five terminals, I find it difficult to conceive how there could be competition between the various terminals. It is built into this clause, on which the noble Lord, Lord Rosser, has moved his amendment, which seems to have some merit.

I would be grateful if, in responding, my noble friend could describe how he sees such competition arising. At the moment, taking Heathrow or Gatwick as an example, they are all under the same management. It may be separate between the airports; I find it difficult to conceive how it might happen between terminals. I would be grateful if my noble friend could explain how this might come about. It would obviously need to involve a change of ownership between the different terminals. Is there any prospect of that or is it somehow envisaged that there should be competition without a change of ownership? Perhaps my noble friend might explain that.

--- Later in debate ---

[Lord Jenkin of Roding]

My noble friend must explain how it would work. I find it very difficult to see how it would if the facilities were under the same management.

[Earl Attlee]

My Lords, if they were under separate management there could be a competition situation. Under the current legislation, one simply cannot regulate because it does not provide for competition within one airport. Therefore, we are future-proofing the legislation.

The CAA’s functions under Chapter 1 comprise, broadly, deciding whether an airport operator should be subject to regulation—and if it should, regulating it accordingly. Clause 1(1) requires the CAA to carry out its functions under Chapter 1 in order to further the interests of passengers and freight owners in the provision of airport services. Under Clause 1(2) the CAA is required to promote competition when doing so, but only where it is appropriate to its carrying out its functions under Chapter 1. This is set out in Clause 1(2).

The concept of competition in provision captures competition in the provision of airport operational services between all airports, regulated and non-regulated, and competition in airport operational services within airports—for example, competition between terminals. However, the CAA must promote competition only where appropriate. It would not be appropriate to promote competition where the CAA was not carrying out its duty under Clause 1(1)—specifically, where promoting competition does not further the interests of users of air transport services in the range, availability, continuity, cost and quality of airport operational services.

--- Later in debate ---

[Lord Soley]

Before the Minister replies, I was looking at this with some interest. I cannot help feeling that the issue might be one of parliamentary drafting. I would like to know whether the CAA, the airlines or the Competition Commission asked for the wording to be changed. My noble friend Lord Rosser has already pointed out that there is a change of wording, with “the wrong exercise”, but it is also odd that the original wording from Schedule 1 is in the present tense, whereas the wording in the amendment is in the past tense. I cannot help feeling that the parliamentary draftsman who did it first was found to have got something slightly wrong; I am not sure what. It is puzzling why that wording has changed from the present to the past tense, unless it is just for a legal reason. If there is another reason, I would like to see where the amendment came from and why.

[Lord Jenkin of Roding]

My Lords, I am full of admiration for the textual criticism of the noble Lords opposite. I have a rather simpler question for my noble friend. As I listen to him, and I try to do so carefully, the main purpose of this large group of amendments is to ensure that the same rules apply to the Competition Commission and the Competition Appeal Tribunal. How is it that anybody ever thought that the rules should be different? Why is it only at this stage that we are making them all the same? Was there some purpose to the way in which the Bill was originally drafted? I would be most grateful for an explanation. I am sure that there is a perfectly good reason, but I do not know what it is.

[Lord Soley]

There is a reason I am picking up on this, of course. I am a member of the Delegated Powers and Regulatory Reform Committee. We are getting increasingly worried about the quality of drafting of government Bills. It looks like a case where the drafting has changed for some reason. I do not want to be critical of the parliamentary draftsman concerned without knowing the facts but, if we flag it up as rather odd, there might be an explanation. I do not know what it is, and I would quite like to.

--- Later in debate ---

[Earl Attlee]

My Lords, it is probably best if I write to noble Lords; this is a very technical point.

[Lord Jenkin of Roding]

I have not heard an answer to my question. Why were there different rules for the Competition Commission and the Competition Appeal Tribunal? What was the original reason for having different rules? I entirely support the proposition that the rules should be the same; it makes a great deal of sense. However, I am puzzled by why somebody at some stage thought they should be different.

[Earl Attlee]

My Lords, as I said, originally the grounds of appeal were based on statutory precedent and retrospective appeals to the CC and the CAT. The wording varied slightly; that is how the inconsistency arose.

[Lord Jenkin of Roding]

At least we are getting it right.

Amendment 20 agreed.

--- Later in debate ---

[Lord Berkeley]

I suppose my noble friend is thinking in particular about those bankers who are now all over the press for possibly having committed criminal acts to fiddle the LIBOR. They are probably the only people who could afford to spend an extra £2,000 or so to save five or 10 minutes—or maybe several hours—coming into the country. There is just one thing that I would add to this. There is some benefit in having famous people who are prepared to speak out going through the same process as everyone else. Occasionally, they get so fed up that they go to the media and complain about it. I suspect that part of the reason why things are getting better at immigration in airports is that one or two people have had the guts to speak out and say, “This is iniquitous”. If these people were tempted to jump the queue by paying £1,000 or £2,000, we would lose that. My noble friend has made a very strong argument for having this in legislation on the basis that people should not pay extra for special treatment.

[Lord Jenkin of Roding]

I should like to be reassured that the noble Lord, Lord Davies of Oldham, does not seek to insist that everyone must stand in the same queue for check-in. If you buy a first-class ticket, many airlines have special check-in counters for such travellers. That seems entirely appropriate and entirely different from going through immigration, either outwards or inwards. The amendment specifically mentions check-in. However, it seems entirely appropriate that if you buy a first-class ticket you can go to a first-class check-in desk and not wait as long as you would if you had bought a standard fare.

[Lord Trefgarne]

Perhaps the noble Lord will tell us how he proposes that disabled people should be handled. They often have special provision at airports, which is necessary and very proper.

--- Later in debate ---

Moved by

[Lord Jenkin of Roding]

27A: Clause 24, page 17, line 10, at beginning insert “except in relation to a relevant financial arrangements condition,”

[Lord Jenkin of Roding]

My Lords, we can also discuss Amendments 28A, 28B and 29A. I can deal with this fairly briefly because I made a point about it at Second Reading. No doubt noble Lords will recognise that this is the amendment which raises in Committee the issue that I described to the House on 13 June at column 1379. The problem is relatively simple. Appeals can be made by anybody who considers himself disadvantaged as a result of decisions affecting the airports.

The British Airports Authority raised the question of whether it could be to their huge disadvantage if they were trying to raise the large sums of money that they invest every year. I quoted the figures at Second Reading. It is investing very large sums in our airports. That investment depends entirely on confidence and a degree of certainty, otherwise the markets will be less likely to advance money, or will charge more, which of course would immediately affect the costs of the operation and therefore the charges to passengers.

--- Later in debate ---

[Lord Trefgarne]

I am bound to tell the noble Lord that his answer has been wholly unconvincing on this matter. I hope he will undertake to reconsider and bring forward amendments if he thinks fit at the next stage.

[Lord Jenkin of Roding]

When my noble friend started his reply by talking about the amendment being too extensive, I thought he was going to move on to say that a redrafted one that was not quite so widely drawn might meet with his approval. As my noble friend proceeded, however, that possibility seemed to disappear over the horizon until we got to the end when he said that he will continue to discuss this with his right honourable friend the Minister of State at the Department for Transport. I hope that will be a serious reconsideration. This is not a frivolous point and it is not covered by saying that the Competition Commission could dismiss appeals as being frivolous or pointless.

Of course, the financial markets would be totally spooked by the threat of an interruption which, as the noble Lord, Lord Soley, said, might last for more than six months. They would not be prepared to go on lending and the whole investment programme would be threatened. This could not be in the interest of passengers. I understand that my noble friend has to be cautious about what he says, but when he said at the end that he would not reconsider it but would discuss it with the Minister of State, I paid more attention to the second point than the first. Perhaps we are making progress. If it is a question of drafting something that removes the risk only so far as is necessary, I am sure that the lawyers working for BAA—perhaps with the department lawyers or parliamentary counsel—would be able to find a form of words. In the mean time, Ministers must be willing to recognise that this problem has to be dealt with and cannot be put off.

[Lord Soley]

Another way of approaching it is to allow the CAA to take into account the risk to investment before coming forward with any appeal. That is another way of coming at the same problem.

--- Later in debate ---

[Lord Jenkin of Roding]

I am grateful to the noble Lord, Lord Soley, who has been extremely supportive throughout this, raising a number of useful points. This has been a valuable debate. The point that was raised at Second Reading has now been exposed here. My noble friend met the BAA people and it seems that we are making some progress. However, it takes two to tango. I am not sure I would want to tango with my noble friend, although it might be rather fun, but I hope that what he has said indicates that minds are not closed and that the Government will be prepared to consider this between now and Report stage.

The Government would lay themselves open to criticism if they put anything in this Bill which was liable to put at risk the huge investment programme that BAA has at its airports. That is the point. However unlikely, the damage could be immense. Having said that, I am sure the Minister has recognised the support around the Committee and I beg leave to withdraw my amendment.

Amendment 27A withdrawn.

Amendment 28

Moved by

Civil Aviation Bill

Lord Jenkin of Roding Excerpts

Wednesday 27th June 2012 Grand Committee

[Lord Clinton-Davis]

The lack of clarity on this point has been demonstrated today by my noble friend and by some noble Lords opposite. It is not permissible that this situation should prevail. I hope that the Minister will be able to demonstrate that the issues that have been raised will be tackled by the Government in due course. It is totally unsatisfactory that this position should be allowed to remain.

[Lord Jenkin of Roding]

My noble friend will know that I have been pressing him to consider, in the context of HS2, the possibility of an extension around north London to reach the possible future hub airport in the Thames Estuary. This issue has been pressed not least by Foster + Partners, whose imaginative scheme is now the front runner for a Thames Estuary airport. Of course, communications and surface access will be important problems there.

While I have sympathy with what my noble friend Lord Bradshaw said about the desirability of improving surface access, that could not conceivably be a function of the CAA. I agree with those who have argued that. It must be a function for the Department of Transport because, after all, it concerns the railways.

[Lord Clinton-Davis]

And local authorities.

[Lord Jenkin of Roding]

I think the local authorities would have some difficulty planning together an orbital railway joining up the HS2 to HS1, with a branch to a potential Thames Estuary airport. It is a very imaginative scheme.

Having lived with the concept of a Thames Estuary airport for about 20 years, the first proposal put forward for it envisaged an orbital rail link around the north of London. In which case, therefore, you do not have a situation where people have to come right into London and cross from one station to another in order to get out to their airport. There is a substantial issue here; however, as I said a moment ago, I cannot see that this could be a function of the Civil Aviation Authority. It has issues that go much wider than what falls within their level of responsibility. One would suspect also the competence of the advice that they have—it must be from my honourable friends in the Department for Transport.

Perhaps I could ask one question. I have asked my noble friend if he would meet some of the people who are proposing to put forward the case for the extension of the HS1—HS2 to go around the north of London—and he has undertaken to consider whether that would be appropriate. I hope I do not misrepresent him. I wonder whether he is yet able to give me an answer: can he meet those who have done a great deal of work on this subject and would be able to offer very valuable advice that may well not be available within the Department for Transport itself?

It cannot be right for Ministers to keep at arm’s length, as it were, outside expert evidence that could greatly improve the quality of their decision-making. It arises only peripherally from this amendment, but we are talking about surface access, and therefore it is highly relevant.

While I am in some sympathy with my noble friend’s amendment, I am not able to support it for the reasons that I and others have mentioned, that it cannot possibly be the responsibility of the CAA to have to make provision for surface access in the way that the amendment suggests.

[Lord Berkeley]

Before the noble Lord sits down, perhaps I may press him a little further on what he said with respect to the proposed airport in the Thames Estuary—that it could apply anywhere. As the Government want, and as is suggested in this Bill, the airports are effectively in competition with each other. If they then want to expand, they will have to apply for planning permission in some way or another, then demonstrate what transport plans they have, and who will pay for them. That will then go back to the Government, who will decide which development happens where according to whether they are prepared to pay for the transport links. Is that the way the noble Lord thinks it should happen?

[Lord Jenkin of Roding]

Certainly, the question of paying for it would have to be considered in some detail. The great advantage of the Foster + Partners proposal as put forward is that they recognise that this would be financed not by the taxpayer but by investment which they would attract perhaps from around the world. There should be a great deal of investment interest in a project of this kind. The noble Lord, Lord Berkeley, is absolutely right, of course, that when this goes to the IPC or its successor, this is precisely the sort of thing that would need to be demonstrated, along with all the other things that the planning system requires. If, however, the Department for Transport is unable to meet the proponents of such a scheme, it will start with not one but two hands behind its back. That is why I have pressed my noble friend to say that in the context of the HS2 consultation he will meet the people concerned, and I very much hope that his officials will feel that it is appropriate for him to do so.

[Lord Davies of Oldham]

My Lords, the Minister’s worst nightmare must have been fulfilled from this opening debate—namely, because the Committee has, quite appropriately, addressed itself to what the amendment says about surface transport, and of course that then gives a wide range of exciting prospects on how we could improve surface transport. I will put my three penn’orth in if I may. Manchester Airport is very eager that the metro should be part of its facilities. It is some distance away at present. The airport is certainly prepared to face a proportion of the costs. We have heard the anxieties and proposals for the necessary improvement to surface transport to our airports expressed in very cogent terms. The danger is that that will open up a very wide-ranging discussion, as we have heard.

The Minister may have the obvious consolation, which the noble Lord, Lord Jenkin, and I identified, that most of these issues cannot possibly be covered by an extension to the remit of the CAA. We are largely talking about transport projects of the greatest significance, linking our major centres of population to our airports through improvements, which are certainly necessary to all the London airports. Apart from Birmingham, which already boasts excellent rail communication and has great expectations for HS2, all airports recognise that the ease with which people can arrive at them is absolutely critical to the experience and choice of travelling by air. However, as the noble Lord, Lord Jenkin, indicated, I doubt that this substantial range of transport issues is meant to be laid at the door of the CAA. I imagine that the Minister, while commenting constructively, as I hope he will, in response to Members of the Committee on ideas for improving connections, will say that this is not a matter with which we can directly charge the CAA.

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However, I also agree with the noble Lord, Lord Soley, and others, that it is not the CAA’s role to plan surface access enhancements—for example, to require an HS2 spur. The noble Lord, Lord Berkeley, made some interesting comments about surface access. Clearly, the wider network issues are a matter for the HLOS, referred to by my noble friend Lord Bradshaw. My noble friend Lord Jenkin asked about the Thames Estuary Airport and a high-speed rail link. Because we are just about to issue a consultation, I am advised that I am constrained as to who I can see. However, I undertake to verify this point with the Permanent Secretary at the Department for Transport.

[Lord Jenkin of Roding]

I seek an explanation for this point, which my noble friend has also made to me in private. If the department is engaged in a consultation, why on earth should a Minister who is answerable for the department not meet some of the people who would have valuable advice to offer on a proposal, which they wish to put forward? How can it possibly be right for a department to conduct a consultation and shut itself off from outside expert evidence? I do not understand my noble friend’s explanation.

[Earl Attlee]

My noble friend makes very good points, and they are the ones put to the Permanent Secretary at the department. However, I have to accept the advice that I am given.

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[Lord Jenkin of Roding]

I am puzzled by the amendment. It is absolutely at the heart of an economic regulator’s job in the general context of government policy, as it has been under successive Governments, that you can give an organisation, perfectly properly, a duty to promote competition. Indeed, in the past, competition between the various airports has been a major feature of our airport structure. We will come later to the relationship between the CAA, the Competition Commission and the other bodies that are required by statute to promote competition. However, it does not seem in the least inappropriate that the Bill should state at the very beginning that the general duties of the CAA should include one to promote competition.

The noble Lord, Lord Rosser, asked what the meaning of the words “where appropriate” was. I give an example from the debate on the previous group of amendments. Does competition mean competition only between airports or competition between terminals in the same airport? I would have had no difficulty whatever in arguing that it should not conceivably be competition between the terminals of the same airport, which are under the same management and which one would expect to be run in such a way as to provide the best complementary service for the entire airport for the benefit of users and freight operators. Therefore, it would be quite easy to say that of course competition between terminals would not be appropriate, while competition between airports certainly should be. As I say, we will come later to how that might be applied and enforced.

However, subsection (2) as originally drafted is perfectly reasonable. When I read the amendment that noble Lords had tabled to the subsection, it aroused in me the very unworthy thought that perhaps they do not think that competition is good for users. Competition must be absolutely at the heart of the benefit to users, for the purposes of both the quality of service and keeping costs down. That is what it is about. If the noble Lord wishes to press his amendment when we get to Report stage, I have to say that I would be firmly opposed to it.

[Earl Attlee]

If the amendments sought to include a requirement that the CAA must promote competition only where it is consistent with the interests of passengers and owners of cargo, I would thoroughly agree with their intent. However, the presence of the words “where appropriate” in the primary duty in Clause 1(2) already achieves the intent of the noble Lord, Lord Rosser. Any further changes are therefore unnecessary. The noble Lord asked me for a definition of “where appropriate” but neither the CAA nor the appeal bodies would have any difficulty in working out what it means.

Broadly speaking, the primary duty provides for the CAA to carry out its airport economic regulation functions in a way that will further the interests of passengers and owners of cargo. The primary duty also states that the CAA must do so, where appropriate, by promoting competition in the provision of airport operation services. This means that it will not be appropriate to promote competition if it is not in the interests of passengers and owners of cargo. Clearly, the CAA will have to balance the issues listed in subsection (1)—for instance, cost and quality. There is a balance to be struck and it is the duty of the CAA to strike it on behalf of passengers and owners of cargo. As the noble Lord, Lord Rosser, recognised, these duties would also apply to the Secretary of State. Therefore, the intent of the amendment is already implicit in the primary duty and any further changes would be superfluous. I hope that this provides your Lordships with the reassurance required and that the noble Lord, Lord Rosser, will withdraw his amendment.

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[Viscount Goschen]

My Lords, I support the thrust of the amendments tabled by my noble friend Lord Rotherwick. I should also make a mildly spurious declaration that I hold a private pilot’s licence and am the operator of an aircraft, although I can assure the Committee, much to its relief, that I have no intention of going near an economic regulated airport, any more than a hot air balloon would.

My noble friend is right to draw attention to the economic importance of the heavier end of general business aviation. A great deal of economic value is tied up with the importance of being able to move business leaders around the country quickly and, indeed, between countries. To do that, access to major airports is required. My noble friend also drew the Committee’s attention to important areas, such as medevac or ambulance flights. One can also think of traffic monitoring flights, the importance of the maintenance sector and so forth. It is true that general aviation, in particular, business aviation, has been squeezed out of the major airports.

My noble friend is not trying to do anything prescriptive. He is not trying to ensure that a certain share of slots or capacity is accounted for by business aviation. That would not be appropriate. All he is trying to do in his carefully worded amendments and in his remarks in support of them is to draw the Government’s attention to the economic importance of this specialist field. It is easily overlooked. It is not a populous field. Most members of the general public are not going to come across general business aviation flights, but that is not to say that they are not extremely important. My noble friend was right to draw the Committee’s attention to its notable scale. I think he said that this sector is worth £3.7 billion to the economy and employs 50,000 people, so it is important that in determining its regulation the CAA should at least take account of the important interests of this field. It is very easy to portray it as cigar-smoking fat cats coming to appear on television game shows including, perhaps, Members of your Lordships’ House, but in fact we are really talking about the ability for business investment to be drawn into the country. Many business leaders travel by executive aircraft to access our centres of commerce around the country as efficiently as possible. I support my noble friend’s amendments, and I look forward to hearing the Minister’s response.

[Lord Jenkin of Roding]

My Lords, I am astonished that there is no regulation of general aviation of the sort that is covered by my noble friend’s amendment. If that is right, I cannot understand why the CAA should not have some general role. Air taxis are presumably within the definition that he encounters. There was a time when I had to fly from my home in Essex to Liverpool several times a month, and much the easiest way was to take an air taxi from Stansted Airport, which we used frequently. On one occasion, the pilot suggested that I take over the controls, which lasted for about 10 seconds because I did not have a clue. I look forward to hearing my noble friend’s response to the amendment.

Turning to the question of the noble Lord, Lord Berkeley, I, too, have had one or two very interesting trips in a hot air balloon. As Secretary of State for the Environment, I had to decide on the planning requirements for tethered balloons, which are often used for advertising. I was confronted by two very strong opposing views. Some people said, “These are perfectly horrible and should be strictly controlled”, while others said that it was a harmless form of advertising. I split the difference and said that no planning permission was needed if the balloon would be there for only 14 days or fewer. Everybody seemed satisfied with that and I have never heard any more about it.

Landing in a hot air balloon is very exciting. The important thing is not to get off too quickly or it will disappear up into the air again, which can be very disconcerting. However, it is a splendid sport and I have never forgotten the occasion when I was staying officially at Leeds Castle. Very early one still morning, there was a rally of hot air balloons. I was invited to it by American Express, which had a very large balloon. We took off and had the most marvellous flight. However, before we left, we carefully and quietly climbed up the side of Leeds Castle, where my wife was leaning out of the window in her nightgown. I was able to bid her farewell, almost touching but not quite. We had a very skilful pilot and I hugely admired how he managed the hot air balloon. Again, it seems that the CAA should have some regulatory role in this.

[Earl Attlee]

It does.

[Lord Jenkin of Roding]

I am assured that it does, so that is fine. No doubt my noble friend will explain that.

[Lord Davies of Oldham]

My Lords, given that the Bill has been through the other place without this debate being advanced there to any degree, we are grateful to the noble Lord, Lord Rotherwick, for his introduction of these amendments. I will be very interested in the Minister’s response. We can all see that the primary responsibility of the CAA in respect of regulated airports means that any aspect of general aviation may be pretty low in its priorities, although some aspects of business aviation have other advantages to the country. However, I must counter some of the rosier views of general aviation with an obvious point. The last time that private flying came to the attention of the general public was in the case of the individual who went up in his private aircraft each night to avoid a day on British soil counting against him and affecting his tax returns. So there is another side to private aviation.

I am very guarded about this but I have some sympathy with the points that the noble Lord, Lord Rotherwick, put forward. He may have over-egged the pudding with all three amendments. I will be most interested in the Minister’s response to Amendment 3. It merely asks that these interests are promoted and safeguarded, which seems a fairly minimal requirement.

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[Lord Jenkin of Roding]

I will be very interested to hear my noble friend’s response as to why the obligation contained in earlier legislation has not been repeated in the present Bill. I do not want to repeat what others have said. I, too, feel that Amendment 69 is likely to be the more acceptable of those in the group. One consequence if such an obligation were imposed is that it would go a long way to answer the question that I put to my noble friend at Second Reading on what Clause 84 is about. Clause 84 obliges the CAA to give all sorts of information. When I asked my noble friend at Second Reading what that meant, he said the Bill was,

“designed to require the CAA to publish such … information as it considers appropriate to draw passengers and freight owners into the Government’s wider efforts to address the environmental impact of aviation”.—[Official Report, 13/6/12; col. 1378.]

If the CAA does not have any sort of duty, I find that a very difficult paragraph to understand. Of course, as my noble friend Lord Cathcart said with eloquence, and as has been moved by the Opposition Front Bench, if the CAA had that duty then that would fall into place. It would be quite right, if it had that duty, that it should publish that information. The information by itself, without a duty, seems a pretty off way of drafting the legislation.

My noble friend the Minister was extremely good at answering several of the points that I raised at Second Reading but he did not quite have time to answer them all and he did not answer my question about what that paragraph in the Explanatory Note meant. I merely mention this as a consequence of the amendments to restore a duty to have regard to the environmental consequences of aviation and of the airlines.

[Lord Berkeley]

My Lords, as my noble friend Lady Worthington said in her opening remarks, it is useful to reflect on some of the industries which are regulated in this respect and to reflect that these industries have, for their own rights and reasons and in order to comply with the regulator’s duty, made big improvements in the areas of emissions, noise, water, energy and construction. The rail industry has been required to reduce its diesel emissions, as has the road sector. I am not sure that it will be quite as easy to persuade some ship owners to change their fuel but the European Commission is intent on doing so. I am sure that it will happen one day and that it will be either voluntary or forced upon them. As my noble friend Lord Clinton-Davis said, the air industry has made significant improvements.

It would be odd if the Bill did not contain a requirement or duty on the CAA to take into account environmental matters. That does not mean that the air industry is particularly bad at doing so but there is evidence from other industries that, because of these regulatory duties, they probably try a little harder and in a way that they would not do otherwise.

I am inclined to support Amendment 69 but it is very important that we include something here so that there is commonality with some of the other regulators’ duties to consider environmental issues, and to encourage airports and the airline industry to go that little bit further.

Many noble Lords will recall the debates when the third runway was last on the agenda about the emissions from Heathrow and whether they were over the limit. Were they caused by emissions from the M4 running past on the north side or from the M25? There were many debates—I do not want to go into who was right and who was wrong—and one solution was to put the M4 in a tunnel. I cannot see the point of that because emissions will still take place in a tunnel and will have to come out somewhere. They might come out further away but, to me, that would be cheating. Again, this concerns the idea of the noble Lord, Lord Bradshaw, of including surface access, which I am sure will come up again.

However, matters have improved since then in the quality of emissions from the air and road industries. It is essential that something along the lines of the amendments is included in the Bill.

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[Earl Attlee]

My Lords, a little inspiration comes and says that it does.

[Lord Jenkin of Roding]

May I follow up the point that the noble Lord, Lord Soley, has just made? My noble friend invited me earlier to table amendments when we get to Clause 84. I do not wish to amend Clause 84, but I need to know the context in which the information requirements and powers that will be given by that clause will operate. If, as has been suggested by other Members of the Committee, there should be a duty on the CAA, perhaps the clause is all right. If we are to reach the next stage of the Bill without having a government amendment on the Marshalled List that says what is happening to the general power, it is quite difficult to know what to do.

My interpretation is that while my noble friend has rehearsed some of the questions and objections, he is not shutting his mind to this. The possibility remains, therefore, that there will be a government amendment before Report, in which case we can look at Clause 84 in the light of that government amendment. However, if there is no such government amendment by that time, it is very difficult to see what else you could do to Clause 84. The point I made is that these things hang together.

[Earl Attlee]

My Lords, I assure the Committee that I have a very well thought-out speech. I believe that the upcoming aviation policy framework, due to be adopted by March 2013, represents a more proportionate and effective way for the Government to address the environmental impacts across the aviation sector as a whole. As I have said, this Government take seriously the environmental impacts of all airports. With regard to the other amendments, several of these have been extensively debated in the other place, and the Government’s position on these remains unchanged.

First, I turn to Amendment 4. As your Lordships will be aware, the previous Government decided to include a similar duty to that contained in Amendment 10. However, in practice the supplementary duty would have no substance, so the Secretary of State decided in July 2010 to omit it. This is because the duty as drafted would appear to require the CAA, in discharging its primary duty, to take account of the licence holder’s obligation to comply with planning obligations. It is not for the CAA, as an economic regulator, to enforce planning law through licence conditions. In so far as a licence condition purported to require the licence holder to breach planning law or otherwise act in breach of planning law, it would appear to be unlawful. Regardless of whether the CAA had this explicit duty or not, the CAA will need to have proper regard to the airport’s obligation to comply with all applicable legal obligations, including planning law.

Amendment 6, in the name of the noble Baroness, Lady Worthington, covers climate change. While important, this is also unnecessary because other policies seek to achieve it. Separately, the Government have committed to producing a sustainable framework for UK aviation that supports economic growth and addresses aviation’s environmental impacts. In addition, there are other policies, such as the European Union Emissions Trading System, which was mentioned by the noble Baroness when she touched on efficiency issues. Furthermore, this amendment would appear to go beyond airport economic regulation and it is unclear how the CAA would go about fulfilling this duty—a point I made earlier.

However, the Government have some sympathy with the thinking behind the remaining amendments—that is, Amendments 5, 7 and 13A. In particular, this debate allows us to acknowledge the importance of allowing appropriate investment at airports to mitigate their environmental impacts and those of activities associated with them. Without a doubt, this Government support the idea that airport operators—whether or not they are subject to economic regulation—should be able to invest in appropriate environmental measures. This concern was frequently raised in the House of Commons. However, obligations should not be put on some airports but not others depending on their economic regulatory status.

Our position is that a licensed airport operator should not be unable to recover, through the regulatory settlements, costs arising from undertaking environmental investment where an unregulated competitive airport would choose to incur similar costs for similar purposes and be able to recover those costs. After all, the overall aim of economic regulation is often cited as delivering the outcomes that would otherwise occur in a competitive market. Therefore, it is my belief that environmental investment that is in the passengers’ interests in the provision of airport operation services should be included in an airport’s regulatory settlement. This is a point on which more clarity could be provided in the Bill.

However, I am hesitant to accept these amendments today because I believe that it would be desirable to specify some or all of the environmental effects to which the CAA must have regard. Furthermore, we need to ensure that the drafting does not have the capacity to create distorting effects by putting greater obligations on regulated airports relative to non-regulated airports. With the assurance that I will consider these matters in detail ahead of Report, I hope noble Lords will be willing to withdraw Amendment 4, and not press Amendments 6 and 69. However, I am willing to consider Amendments 5, 7 and 13A—

Civil Aviation Bill

Lord Jenkin of Roding Excerpts

Wednesday 13th June 2012 Lords Chamber

[Lord Jenkin of Roding]

The noble Countess reminded me of the time when I served on the first Select Committee that looked at air travel and health. Many of the concerns that she has voiced again this afternoon were before us in that committee. Our main concern was deep vein thrombosis, which we had a lot of very interesting evidence about. I hope she will forgive me if I do not follow her speech, but I will certainly read it with much interest.

I would like to say how grateful I am, and I am sure other noble Lords are too, for the very careful briefing we had before this debate from my noble friend Lord Attlee and his officials. They gave us a wealth of detailed information and a very good start on how we might debate this Bill.

Like others, I give a very general welcome to the main thrust of the Bill. My noble friend described its main features with great clarity and it is unnecessary for me to repeat that. However, I shall make one preliminary point before I turn to the Bill itself. It concerns the consolidation of legislation. I have been very critical over the years of the failure of successive Governments to embark on the consolidation of legislation, particularly legislation that is by reference to large numbers of prior Acts. Paragraph 28 of the Explanatory Notes makes the point very clearly:

“The Bill makes changes to a number of existing Acts, most notably the Aviation Security Act 1982 … Civil Aviation Act 1982 … Airports Act 1986, Transport Act 2000 … and the Regulatory Enforcement and Sanctions Act 2008”.

All those Acts are being amended by this Bill. My noble friend will remember that at one of his briefings I asked why the opportunity was not taken to consolidate all this into a single piece of legislation and he agreed to look into that.

At the same time, I consulted our very excellent Library researchers, who, in their turn, consulted parliamentary counsel. They supplied me with a very full response with which, of course, I will not weary the House this afternoon—except for one brief paragraph:

“The question of whether consolidation is appropriate tends to be considered at two different stages. The first”—

that is the one with which I am concerned here—

“is when a Bill is being drafted. If the changes proposed to be made by a Bill are sufficiently extensive, rewriting the existing legislation with those changes may be appropriate”.

I was arguing with my noble friend that this was in fact precisely such a case. Parliamentary counsel went on to set out the reasons why, in his view, this Bill was not considered to warrant rewriting into existence a new, single Act. He made a fairly strong case, and I do not propose to pursue that, but I will make two general points.

Where there is complex, detailed, technical legislation, the practitioners who deal with this, and their lawyers, are thoroughly familiar with the legislation and all the terms, and can therefore read the new Bill and its amendments with full understanding straight away. For parliamentarians, however—I suspect that most of us do not begin to share that expertise—it is a very different process. Either we have to spend a great deal of time on researching the thing and getting all the earlier legislation, looking it all up and deciding how the Bill will impact it, or, as I suspect most of us do because we do not have that time, we rely on those who brief us. They are interested parties. They may not give us a fully objective view of what is happening. It therefore seems to me to be right that when a new Bill is being drafted and there might be a case for consolidation, that should be considered.

The second thing is the device known as the Keeling schedule. If you have an existing clause that is being substantially amended by a whole series of amendments, which may run to several pages of the Bill, it is extremely helpful if there can be a Keeling schedule—a schedule at the back of the Bill which illustrates what the Bill will look like with the amendments all incorporated. I hope that Governments will be ready to consider this. I have come fairly new to this legislation, and I confess to my noble friend and to the House that I in no way consider myself an expert in it. It would be a good deal easier if one could have either a consolidated Bill or a Keeling schedule. I hope that the House will forgive me for deviating from the general tenor of the debate to make that point.

In the rest of my remarks I will touch on three issues. There has already been mention of Clause 84, about the environmental effects of civil aviation. I declare an interest: I am a resident of Vauxhall. We are directly under the main westbound flight path into Heathrow and very conscious of not only the noise but the atmospheric pollution. My noble friend Lord Attlee supplied a very helpful note on air quality, pointing out all the existing legislation, both domestic Acts and regulations, and EU directives, in which all these things are firmly regulated. It was a long list; again, I will not weary the House. At the end of his note to me, my noble friend said:

“Clause 84 of the Civil Aviation Bill has been designed to require the CAA to publish such environmental information as it considers appropriate to draw passengers and freight owners into the Government’s wider efforts to address the environmental impact of aviation, and to raise awareness of the environmental effects of civil aviation in the UK and measures taken to mitigate its adverse effects”.

I am afraid that I do not understand what that means. I do not know what its effect is to be. One thing is perfectly clear: it is not intended that the CAA should become yet another environmental regulator. There are plenty of regulators of different sorts there already. I hope that my noble friend may be able to give us some explanation.

My second point concerns the duties imposed in the Bill on the CAA. It is, of course, the main economic regulator. Unlike other regulators, however, there appears to be no explicit requirement that it should act efficiently. There is no efficiency or proportionality objective in this. I have to ask my noble friend, “Why not?”. Every other regulator—all the other regulators—have requirements to act efficiently and proportionately. Why not the CAA? It seems to me that this might be the subject of not only an amendment but, as the noble Lord, Lord Davies, said, audit by the National Audit Office. Why not? The Government’s argument as I have understood it and as it was advanced in the other place is to say, “Well, this is not a government body. It is not like a government department”. But it is a statutory regulator and it is entirely appropriate that its efficiency should be audited by the National Audit Office. I get the impression, which others have had, that over the years the Department for Transport has not put efficiency of the CAA at a very high level. It has had a low priority. The Bill seems to be an opportunity to put it right.

My third point is rather more technical; for that reason, I have given my noble friend notice of it. It concerns the risk to the financing of the considerable airport investment by the BAA. This of course refers specifically to Heathrow, and I will take a few moments to explain. Heathrow is the largest private infrastructure investor in Europe. It invests over £100 million a month in capital projects. It supports thousands of jobs. Heathrow accepts the Government’s intention—this is important—that critical assets should be safeguarded by ring-fencing. Noble Lords may recollect the case of a water authority owned by Enron, but where the assets were ring-fenced in this country so that the bankruptcy of Enron made no difference at all; that is what it is aimed at. Heathrow accepts that that is entirely appropriate, so it is not concerned with that. What it has concerns with are specific aspects of the ring-fence, which the Government’s policy states could be derogated from in practice and would now be subject to appeal, as the noble Lord, Lord Davies, said, perhaps by airlines or by the CAA itself. BAA is having to raise very large sums of money on the markets. Any uncertainty of that kind would immediately imperil its fundraising operations. I questioned its representatives on this when I met them, and they were really very clear. They said, “This is a very important issue indeed for us. We have been promised that there can be derogation but, at the same time, there is no exemption from the appeal process”. To quote the note which they gave me:

“BAA’s position is straightforward: the possibility of appeal by an airline in relation to BAA’s debt arrangements would have an extremely negative market impact. It would be likely to hamper our ability to raise finance, possibly over a long period. This, in turn, would restrict our ability to invest. Since our capital projects are amongst the largest in Europe and create many thousands of jobs, this would be a very unfortunate outcome at a sensitive time for the economy”.

They have been promised derogation. What they must have is an exemption from any right of appeal. That could very properly be incorporated into this Bill. None of this, of course, is contrary to the main thrust of the Bill which, as I said at the beginning, I warmly support.

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[Lord Clinton-Davis]

I speak as a former Aviation Minister and European Union Commissioner for Transport and the Environment. Those experiences have some relevance to this debate.

It is absolutely right to emphasise the importance of aviation, as the noble Earl, Lord Attlee, did. The contribution of aviation to our economy is immense. The number of people that it employs—some 250,000 directly and another 200,000 indirectly—is impressive. However, in a recent poll, to which I alluded earlier, some 91% of BALPA members considered that the Government did not sufficiently support the industry. I hope that the noble Earl will comment on that, since what he said in reply to my intervention was wholly inadequate.

Safety standards need to be stressed whenever possible. Should this point not appear forcefully in the Bill? This issue undoubtedly affects the members of BALPA and will, like others, be raised in the meetings that the Minister foresees taking place in the near future.

New technologies and biofuels, about which the Minister said nothing, need further investment. The Minister’s opening speech was silent on this issue. Perhaps he will expound on it in winding up.

As many Members have said, particularly my noble friend Lord Hunt of Chesterton, safety is a vital component of an effective aviation strategy. Lip service alone will not suffice. It is simply unacceptable for financial pressures on operators to push safety standards downwards and the Government should say so at every available opportunity.

I turn to the question of fatigue. Too often, insufficient attention is paid to this issue. Jim McAuslan, the general secretary of BALPA, has said that its call to the Government remains that they must follow the principled stand taken by the previous Government and underwrite existing UK standards until Europe can come up with something better. I ask the noble Earl whether the Government agree with that proposition. If so, what is being done?

The noble Lord, Lord Aberdare, stressed the importance of environmental duties. I entirely agree with his comments. It is essential—whatever the Government may say about this—

[Lord Jenkin of Roding]

I hope that the noble Lord will give way. In defence of my noble friend, the last speech was made by the noble Earl, Lord Cathcart; the noble Lord, Lord Aberdare is not here.

[Lord Clinton-Davis]

I am sorry—I did not know. It is entirely my fault.

No issue affecting aviation can be considered without addressing the issue of Britain’s runways. I know that the noble Lord, Lord Bradshaw, does not entirely agree with that, but he is quite wrong in not stressing the importance of that issue. It is highly significant. It is a case of Hamlet without the prince, and it is entirely ignored in this Bill. The issue of where Britain’s airport is to be located is essential, and I make no apology for referring to it. No legislation affecting aviation should be considered without addressing that issue. Of course, I differ with my own party concerning this issue, but they will all come round eventually. My own party and the Government will see the advantage of making Heathrow a vital part of our economy in ways that it is not at the moment. Of course, the Government excuse their silence by referring to the inquiry which it has set up—and they are right to do that. However, equally, there is no alternative to expanding Heathrow.

Prevarication in action inevitably impedes progress and, moreover, it is immensely costly. In my view there can only be one candidate: an improved Heathrow. Its advantages are manifest. First and foremost, the waiting time for the start of operations would be far less if Heathrow were chosen. Then, further airport and aircraft development, both of which will inevitably occur, will enable Heathrow to derive huge advantages from these issues. Most significantly, there is no viable alternative within a reasonable time span. The Government, plainly, are playing for time in the hope that something—anything—will turn up. That is not a policy but the abandonment of foresight. The clear fact is that Heathrow exists. Undoubtedly there are some—even major—disadvantages, but any alternative regime will also have those. There must be, and can be, the possibility of overcoming them. Above all, decisive action and a powerful lead from the Government are needed, and sadly, at the moment, both are lacking.

Localism Bill

Lord Jenkin of Roding Excerpts

Monday 17th October 2011 Lords Chamber

[Lord Berkeley]

My Lords, I shall speak to Amendment 223ZA and the other amendments in this group. I first apologise to the House for bringing these amendments forward comparatively late in the day. I will be as quick as I can although the amendments are fairly technical, with some pretty detailed arguments behind them.

The amendments stem from the issue of the change in responsibility for decision-making from the Infrastructure Planning Commission to the Secretary of State and provide that Parliament, in the form of the House of Commons only, approves the national policy statement series that is supposed to underpin the new regime. There have already been some minor changes to improve the process of planning major infrastructure projects and to streamline the whole process. I suspect that now that the Secretary of State will be the final decider—that is a political decision—rather than an official, many of the checks and balances that were in the original Act could possibly be dispensed with or reduced in scope to try and simplify the procedures.

I know that these points have been made to officials quite frequently over the past few months and that the noble Lord, Lord Jenkin of Roding, moved similar amendments in Committee. When the noble Earl, Lord Attlee, responded to the noble Lord on 19 July, he said:

“I would like to consider the points he has raised in more detail and consult him and others between now and Report to see whether anything further can be done”.—[Official Report, 19/7/11; col. 1319.]

I am not aware of any meetings that have taken place since then, which we probably all regret in retrospect. I will try to go through these various issues as quickly as I can and hope that we can all have a meeting with the Minister between now and Third Reading to see whether any of these particular issues can be resolved. The Government could then bring back some amendments at Third Reading.

To go through them quickly, starting in not quite the right order, Amendment 223ZD refers to Section 127 of the Planning Act, which requires a separate consent to be sought from the Secretary of State in some circumstances when it is proposed to acquire statutory undertakers’ land compulsorily. Again, now that the decision has been transferred back to the Secretary of State, this is probably an element of gold-plating. I suggest it would be sufficient if the Secretary of State was required to take into account the views of the undertakers.

Amendment 223ZE refers to Sections 128 to 132 of the Planning Act, concerning the special parliamentary procedures which are available if there are objections from various organisations and authorities which end up having to go through a Joint Committee of Parliament, which could take quite a long time to resolve. The restoration of the Secretary of State’s decision-making power could allow these provisions to be removed and for it to be left to the Secretary of State to decide whether to grant consent for an application that affects these types of special land holders. The SPP seems to be unnecessarily complex and gold plating.

Amendment 223ZF refers to Section 137 of the Planning Act, which requires a separate consent to be sought from a statutory undertaker or the relevant Secretary of State in some circumstances where the undertaker’s apparatus is installed. Again, the same comments could apply to that. Amendment 223ZG refers to Section 138 of the Planning Act. It inserts an additional test and a consent from the relevant Secretary of State where the undertaker’s rights to use land are being extinguished.

All these separate consents, which will often involve other Secretaries of State as well, fly in the face of one of the main purposes of the Planning Act regime, which was to create as far as possible a single consents regime. There are many examples I can quote but it is well known to your Lordships’ House and Ministers. It seems that the Planning Act provisions set out in these texts go much further than the two key order-making procedures that the Act replaces—TWA and harbour orders. Taking them as precedent there is an argument for saying that there is a bit of gold plating in here.

It is interesting that on 13 October we heard the first IPC decision which was to allow Covanta’s proposed energy from waste project in Bedfordshire. It was made within the statutory timescale of nine months. I am sure we are all happy to see the IPC sticking to its timetable. However, 43 of the 96 plots of land to be purchased are owned by statutory utilities or local authorities and they have made representations about the project. The Planning Act requires the project to be subject to the special parliamentary procedure which could add six to nine months to the programme, which for a big project is actually quite serious. There is an opportunity to put this right and to incorporate some of these amendments to simplify the process and accept that because we now have the Secretary of State making all the decisions he can take all these issues into account.

I will now mention one or two other items as briefly as possible. There are a large number of things that we really cannot go through at this time of night but there is one issue that refers to the construction of these big projects. It means that regulations made under Section 150 of the Planning Act still require the promoters to seek myriad other consents and regulators before they can start construction. The Infrastructure Planning (Miscellaneous Prescribed Provisions) Regulations 2010 lists 42 separate agencies or authorities from which permissions have to be sought and a further 36 for Wales only, which I find quite interesting. Why is Wales so much more complicated? Again, it would be an enormous help to these projects if there could be just one consent which went through the IPC process.

I could spend a lot more time going through the detail of the technical issues. I hope that it might be possible for those of us who take an interest in this to have a meeting with Ministers before Third Reading to see whether we can encourage the Government to make some changes at that stage. I am sure that the noble Lord, Lord Jenkin of Roding, and perhaps other colleagues, would wish to participate fully in such a meeting. I beg to move.

[Lord Jenkin of Roding]

The noble Lord, Lord Berkeley, has masterfully reduced what could have been a very long speech into one that lasted less than 10 minutes. There has been some confusion about this whole matter. The group of amendments that I moved in Committee on 19 July contained a large number of separate and discrete subjects. The amendments that I moved were concerned primarily with ensuring a seamless transition from the existing IPC procedure to the NSIP procedure. I will not go into the details now but my noble friend Lord Attlee very kindly said that there should be discussions on this. Those who were advising me on this matter did have discussions with officials in the department. The result was that when we approached Report stage, when I asked them whether they had achieved what they were looking for, they said yes. Therefore, I have not retabled those amendments. However, as the noble Lord, Lord Berkeley, has rightly said, there were other amendments, a lot of which were aimed at the proposition that there should be a one-stop shop.

As I understand it—I am open to correction—for some reason the meeting with officials did not take place until last week. There was a misunderstanding about who was seeking to organise the meeting and make sure that proper discussions could take place. I think that the meeting took place on 13 October, with the result that the large number of amendments in the name of the noble Lord, Lord Berkeley, were tabled only on Friday and appeared with an asterisk in this morning’s revised Marshalled List. I had not realised that they would appear on the Marshalled List. I have made inquiries and I have a great deal of information on this issue but most of them are the same as those we discussed on 19 July in Committee, although there are one or two additional ones to which no doubt attention will be drawn at some stage. Whether it was the fault of my noble friend on the Front Bench or of those who have been advising us, the fact of the matter is that there have not been the discussions that there should have been and that my noble friend offered when he wound up the debate on 19 July. Therefore, we are in a slight difficulty on this. I hope that the request of the noble Lord, Lord Berkeley, that serious meetings should be held before Third Reading so that we can, if necessary, retable the amendments, or some of them, at that stage and have them debated will be taken note of.

--- Later in debate ---

[Lord Berkeley]

My Lords, this is a completely different subject; it is to do with something which is colloquially called fracking. I raised it very briefly in Committee, but we were short of time then and I am grateful to the noble Baroness for the letters that she wrote, dated 5 September. Since that time I have had further thoughts about it. I have had quite an amazing amount of correspondence from people on the basis of a very short entry in Hansard. That is why I have tabled this amendment tonight, because it needs a different solution.

Very briefly, fracking comprises drilling a hole that is probably several kilometres under ground, pumping in water and unspecified chemicals, and sometimes apparently causing an explosion in the hope that gas will come up to the surface. There have been some pretty horrendous stories from the United States, where this is apparently quite common. There, houses have collapsed or settled seriously while water sources, and therefore water supplies, have allegedly been poisoned. In one instance, I believe that gas came out of the water tap, which must have been quite frightening.

I am not saying that that is going to happen here. However, the press release relating to what I believe is the first attempt at fracking in this country, somewhere near Blackpool, by a company called Cuadrilla Resources—the noble Lord, Lord Browne, an ex-chairman of BP, is apparently its chairman—said that it was excited because that could produce 200 trillion cubic feet of gas. I do not know what that means to the ordinary person in the street but it would be something like 30 years of gas. It all sounds very nice, with mouth-watering profits. But what will happen to the people who might be affected not by just the drilling and the things that I have mentioned, but by extra traffic on the roads, construction work and everything like that?

I know that there would be licensing from DECC and others. But if it were to happen around the country, I do not think that one can expect a local planning authority to have the resources to give something that is pretty technical due consideration, especially when it is balanced by potentially exciting numbers of new jobs and extra revenue from rates. It would be unfair to expect local planning authorities to give it the consideration that it deserves. I believe that the right solution is to make another change to Section 14 of the Planning Act to create a new type of project to include hydraulic fracturing of underground rock —it is not called “fracking” in the amendment.

This new type of project would then be subject to the IPC process but, equally importantly, it would have to have a national policy statement in which all these questions that I have been suggesting and more could be investigated, responded to, debated in the House and consulted on. We would all then have confidence that if this process could be done safely with minimum upset to local residents, it could go ahead on a national basis. If not, it will be in trouble. That is the purpose of my amendment. I beg to move.

[Lord Jenkin of Roding]

My Lords, it is right that the noble Lord, Lord Berkeley, has brought this matter back to the attention of the House. I have attended a number of lectures and presentations about the development of shale gas. As he said, it is perfectly true that there are substantial areas of shale several kilometres or more under the surface of this country, which could be, in appropriate circumstances, a source of gas for this country. However, a good many people have said to me, “But you would never be able to deal with this properly in a country that is as crowded and as fully populated as the United Kingdom”.

It has happened in the United States—indeed, it is happening on a very substantial scale—but there are wide open spaces there. It is apparently likely to happen in Poland where, again, there are substantial areas where it could be done without interfering with the life of the normal population. But in the crowded areas of western Europe and the United Kingdom, there is a widespread view that this is not likely to happen.

I, too, have had correspondence from a farmer in west Lancashire who has written in terms of being extremely anxious about what is happening. Yes, we had the small earthquake outside Blackpool, which is perhaps a foretaste of what may come. But the real concern is the huge amount of surface activity that has to go on at regular intervals. There is a limit to the amount you can drill horizontally before you need to drill another hole down and have all the equipment and plant at the top to deal with it.

There is quite a movement now to say that there should be a moratorium on this until it has been examined a great deal more thoroughly. I do not know enough about it. The noble Lord, Lord Browne of Madingley, clearly regards it as very important: he is the chairman of Cuadrilla, which is the only company that I am aware of that is drilling so far in this country. One needs to treat this very seriously, as it is a serious prospect. If we could find an acceptable process for recovering very large quantities of shale gas, that would replace a lot of the North Sea gas, which appears to be coming towards the end of its life. At the same time, however, if there are enormous disturbances of local populations and communities because of a huge rash of surface activity, this solution would seem to be worse than the problem.

I do not know what the answer is—whether it is a moratorium, or it is simply sufficient to say that it will come under the NISP process. As I said to the lady who wrote to me, it is going to be jolly interesting to learn what the Minister says in answer to this amendment. All I know is that there is a widespread view that it is not going to catch on in this country for the reasons I explained a few moments ago. I look forward hearing my noble friend’s response.

[Lord Greaves]

My Lords, this issue is closer to me than to other noble Lords, since the Bowland shale, which is the reserve of rock that potentially contains a large amount of methane, if it could be extracted in a sensible and safe way, underlies at a very great depth of some two miles or so a large amount of the Lancashire plain, and extends up towards Pendle Hill, where it is rather nearer the surface. Like other noble Lords, I have taken an interest in this and decided that I ought to find out something about it, as it is clearly extremely controversial. I have been doing just that, and I spent an extremely interesting three hours last Friday afternoon at the site at Banks in Lancashire where the firm Cuadrilla is currently drilling. Its employees showed me around, explained what they were doing and told me a very good tale. I listened and, like all very good tales, will assess it against all the other evidence in this particular case.

I have been deliberately trying not to take a view on the desirability of the extraction of shale gas until I discovered a great deal more about it. My current view is that the people who claim that this will be the answer for decades to the gas problems of this country are overegging their case a little bit, or quite probably a very large amount, but, equally, the people who claim that it would be the kind of environmental disaster in this country that it clearly has been in parts of the USA are also overstating the case. The regulatory regime in this country is very much stricter and more acceptable than the regime in the USA, particularly in some states of the USA. I doubt whether we will get the environmental devastation that has happened in some parts of the USA. I am told by Cuadrilla, although I cannot confirm it, that the famous picture which we have probably all seen on television of the water tap setting on fire was a result not of shale gas but of drilling into coal-seams. Even so, this clearly has to be taken extremely seriously indeed.

The licensing regime at the moment appears to be threefold. First of all, drilling for shale gas comes under ordinary petroleum exploration and development licences. Areas in which shale gas is currently being looked at have licences, issued in 2008 as I understand it, under that regime. It is a licence to explore and develop, but it does not grant planning permission or give the go-ahead even with planning permission. It is the first stage. The areas of this country where these licences have been issued in relation to shale gas include part of south Wales, where a different company, a British one I believe, is involved. I understand that there is also a wish to explore in a part of Somerset that has given rise to concerns in Bath about the spa waters.

The second stage is planning permission, which is what the noble Lord, Lord Berkeley, has been talking about. Planning permission is needed for exploration, and that is what is taking place in Lancashire at the moment. That planning permission was obtained from Lancashire County Council because in two-tier areas, the upper tier authority gives permission for mineral extraction. I have to say that, given the scale of the present exploration, it seems reasonable that the local planning authority, the county council in the case of Lancashire, should be in charge of this, although if it really took off, the points made by the noble Lord make a great deal of sense.

--- Later in debate ---

[Lord Howarth of Newport]

My Lords, it is ironic that the Government's attempt to clarify the purport of the existing law has led to large-scale confusion and anxiety. While I was enormously relieved to hear what the noble Earl said, and absolutely accept that that is the appropriate interpretation of the provision, none the less, since he also said that the addition of this clause and the amendment that we are debating to the new clause that the Government brought in at a late stage in Commons proceedings does not do anything to change the law, would it not be better to withdraw the clause and issue guidance to clarify, for anyone who may be in doubt, what the existing law means? That would be helpful. Of course, those who attempt to construe the law and the Government's intentions will take careful account of what the noble Earl said on the record this evening. However, it would be better to remove the clause, clarify the law as it is and allow everybody to settle down and get on with the work that they need to do.

[Lord Jenkin of Roding]

My Lords, the Minister deserves complete support. When we debated this in Committee, I made the point that the clause did not change the law at all. My noble friend made this clear and stated that there had been confusion, which the amendment was designed to remove. The noble Baroness, Lady Parminter, spoke eloquently. Her noble friend Lord Greaves suggested that perhaps, in order to remove doubt, it might be helpful if the Government could clarify the extent of the clause and explain that it did not put financial considerations above all others, but that it was entirely for the planning authority to determine what weight should be given to them. That has been done. I find myself very unsympathetic to the argument advanced by my noble friend Lady Hamwee that by going on and trying to make this clear, my noble friend is digging himself deeper into a hole. That is very unfair. He recognised the concerns that were expressed in Committee and moved an amendment that puts the matter beyond doubt. He deserves complete support.

[Baroness Hamwee]

Perhaps I may clarify that I am not suggesting that the hole is of the noble Earl's making.

--- Later in debate ---

Moved by

[Lord Jenkin of Roding]

249: After Clause 224, insert the following new Clause—
“Post-legislative impact assessment
(1) The Secretary of State must produce and lay before Parliament an assessment of additional expenditure incurred by relevant authorities as a direct consequence of this Act within two years of the Act’s commencement.
(2) This assessment will be known as the Localism Act post-legislative impact assessment.
(3) A relevant authority must supply the Secretary of State with such financial information as the Secretary of State may specify for the purposes of enabling the Secretary of State to exercise functions under this section.
(4) In producing the Localism Act post-legislative impact assessment, the Secretary of State must have regard to—
(a) any relevant guidance issued in relation to new financial burdens placed on local authorities;(b) any relevant pre-commencement regulatory impact assessment; and(c) information submitted by relevant authorities as the Secretary of State may require.(5) In this section “relevant authorities” means—
(a) county councils in England;(b) district councils in England;(c) London borough councils;(d) the Common Council of the City of London in its capacity as a local authority;(e) the Greater London Authority;(f) the Council of the Isles of Scilly.”

[Lord Jenkin of Roding]

My Lords, my estimate as to when we would reach the end of Report took me up to midnight, so I reckon that I have 25 minutes in which to speak. Like my noble friend Lord Attlee, I have two speeches. One was a very short speech which said, “I think this is a good idea”. The other one was a rather longer speech which said, “I think that this is a very good idea”. The Explanatory Notes to the Localism Bill estimated at paragraph 491 that the charge to local authorities would amount to £21 million per annum. I have seen an estimate of the net value of all the changes in the Bill as having a range of between £20 billion and £35 billion. There have been changes and many amendments to the Bill. However, local authorities are worried that they will still have to meet expenses substantially in excess of the Government’s estimate of £21 million. The purpose of this measure, which is not, of course, a full post-legislative assessment—I have no doubt that the Government will want to do that anyway—is to place a very firm date on when there should be an estimate of the actual costs that will be incurred by local authorities.

I have here a three-page speech but I will not read it out. However, it seems to me that given that so much of this Bill has affected the way that local authorities are to carry out their duties, it is only fair for the Government to be prepared to have that estimate examined so that there can be a proper assessment of what local authorities have to pay and what will otherwise fall on council tax payers. I will read no more of my speech but I think this is a very just proposal which is supported by the local authorities. I beg to move.

[Lord Beecham]

My Lords, it is fitting that the noble Lord, Lord Jenkin, should effectively conclude Report stage after his many distinguished contributions to the Bill’s proceedings thus far and, indeed, his previous very substantial record in government. I have a couple of questions. I entirely endorse the thrust of the noble Lord’s amendment. I hope that it will be acceptable to the Government. This is more a matter of process. We are not entirely clear how the new system of post-legislative scrutiny will work and what pieces of legislation will be included in it. I hope that this will be one of them. I do not know whether the Minister can indicate whether that is so but in any case it is understood from the impact analysis that the Government intend to draw up the finer details of the review methodology in the months ahead, as they put it. Since the relevant document was written some time ago, that will presumably be done through a soon to be formed Localism Bill review steering group. Has such a group been formed or will it be formed? Who will be involved in it if it has not already been set up? When is it likely to report? How will it work? These are the crucial procedural questions. The noble Lord, Lord Jenkin, rightly refers to the financial aspect and we entirely endorse the view that as this will effectively be a new burden on local government, it will presumably be within the new burdens doctrine. It will be good to have an assurance on the record that any additional costs of that kind will be met by central government.

[Lord Shutt of Greetland]

My Lords, Amendment 249 would mean that the department has to produce a post-legislative impact assessment setting out the additional expenditure incurred by relevant authorities as a direct consequence of this Bill. An established process is already in place for post-legislative scrutiny of Acts. As set out in Cabinet Office guidance, departments are required to submit a memorandum to their departmental select committees three to five years after Royal Assent of an Act. This memorandum sets out a preliminary assessment on how the Act has worked out in practice, relative to objectives and benchmarks identified during the passage of the Bill.

In addition, each of the individual impact assessments for the specific policies in the Bill is accompanied by a post-implementation review plan. The amendment to insert a further requirement to produce a post-legislative impact assessment is therefore unnecessary. Inevitably, putting the provisions of this Bill into practice will mean local authorities taking on some new responsibilities. However, the Government are committed to ensuring that any additional burdens on councils are funded in accordance with the new burdens doctrine. The impact of the Bill has been assessed in the usual way, and the necessary funding will be made available.

I regret that I am not cited on the localism group referred to by the noble Lord, Lord Beecham. Obviously, I shall have to drop him a line on that point. I hope that my noble friend Lord Jenkin will feel able to withdraw his amendment.

[Lord Jenkin of Roding]

My Lords, I am very grateful for the kind remarks made by the noble Lord, Lord Beecham. I am not wholly reassured because this is such a very special and particular post-legislative assessment that it will be necessarily picked up in that form by the full PIR. However, my noble friend has made the Government’s case on this. I have argued that local authorities generally want to know early the total extra burden, but I am happy to withdraw the amendment.

Amendment 249 withdrawn.

Localism Bill

Lord Jenkin of Roding Excerpts

Monday 17th October 2011 Lords Chamber

[Lord Jenkin of Roding]

My Lords, I am most grateful to my noble friend for the care with which he has set out these quite significant changes to the whole process of charging and applying the community infrastructure levy—or CIL, as he called it. We have moved a long way from the original intention of the CIL. In the Planning Act 2008, Section 205 states:

“In making the regulations the Secretary of State shall aim to ensure that the overall purpose of CIL is to ensure that costs incurred in providing infrastructure to support the development of an area can be funded … by owners or developers of land”.

It was perfectly clear to those of us who debated those provisions during the passage of the Planning Act 2008 what the previous Government were looking at. For instance, if you build a large housing estate, that is going to involve the building of roads. It may well involve the provision of a new school, and a number of other capital infrastructure measures that are necessary to support the community that will be enlarged by the main application when it is allowed and when it takes place.

It is quite clear from what my noble friend has said that we are moving a long way from that. It has caused a good deal of concern among those who are anxious to champion the promotion of more infrastructure. The British Property Federation, referring to what he called a “raft of new amendments”, has said:

“The upgrading of the country’s infrastructure is vital for our future economic success and the contribution from CIL will be a critical part of that at a time when public funding is heavily constrained”.

The letter that I had from my noble friend Lady Hanham, dated 7 October—just a few days ago—makes it perfectly clear that, under the new arrangements proposed, the CIL is not limited to providing infrastructure. Having set out the proposals, she writes:

“We have concluded that spending at the local authority level must continue to be directed to the provision of infrastructure”.

I will press a little further on that in a moment. She continues:

“However, at the neighbourhood and community level the demands and concerns amongst local people that new development creates are more diverse, direct and localised”.

She then refers to the amendments which my noble friend has just spoken to. She goes on:

“We believe this change is vital if we are to genuinely change attitudes to new development and secure sustainable growth”.

Changing attitudes is quite a long way from building capital infrastructure. It has changed the nature of what the CIL was originally introduced to achieve.

It may be that, in the new planning regime, it will be desirable to provide means whereby local communities can feel that they are getting some benefit. This may not take the form of schools or roads but may be some other form of benefit that will compensate them for the impact of the development to which they might otherwise have been opposed. I have always quoted the example of the French electricity system; if you want to build a new power station, in order to reconcile the local population to having to put up with that—after all it involves substantial interference in their normal lives, not only during the building but during the operation—they get electricity at a cheaper rate. That seems to me to be a very sensible thing to do. I am therefore not opposed to the idea that we need to provide something that will secure the consent, as my noble friend was saying, of the local community to the development that is being imposed upon them and to which they might have been quite vigorously opposed.

However, one point that I want to emphasise is still unclear, and I would welcome it if my noble friend could clarify this when he winds up. If councils in spending the CIL are confined to providing infrastructure, which is what I understood him to say and what my noble friend Lady Hanham said in her letter, spending at the local authority level must continue to be directed to the provision of infrastructure. That is fine, but then we are faced with the proposition that a “meaningful proportion” of the proceeds of the CIL, which is charged on the developer, can be devolved to the local parish or community, which, as I understand it, is free to spend it on anything it thinks would improve the condition of the community. What is a “meaningful proportion”? As I understand it, a local authority will be perfectly free to say, “We don’t think any more roads are necessary or that we need to build a new school, or anything like that, and therefore 100 per cent of the CIL for this particular development is going to be devolved to the local parish or community to spend as it wishes”.

I made the point previously in Committee that the CIL must not simply be used as a way of filling the gaps in local authority spending. It is not intended for that. It is intended to balance the provision of a planning application for a new structure of some sort with the infrastructure that is necessary for it. I have of course accepted that that must include the operation, maintenance and upkeep of the infrastructure, a matter that we discussed at length in Committee, but is there no limit to what the devolved body, parish, community or whatever it is can spend of the “meaningful proportion” that is delegated to it?

There is a good deal of concern about this among various bodies. The County Surveyors’ Society, which I understand is now called ADEPT, the British Chambers of Commerce, the British Property Federation, the Chartered Institution of Highways and Transportation and the local government tactical advisers group have all expressed the concern that this seems to be slipping away to the point at which it is simply providing inducements—I will not use the word “bribes”—to persuade a local community that it would be to its advantage to cease to oppose a planning application. I hope that my noble friend will be able to give me some reassurance that it is not intended to go as far as that, but there will have to be some specific measures.

I come to my two amendments, on which my noble friend has given his views. Amendment 204H would make a minor change to replace “may” with “must”, and would compel planning authorities to outline the infrastructure that they actually intend to support through CIL. If local authorities are going to have to confine their spending of CIL to infrastructure, I see no reason why they should not be instructed by the Act to outline the infrastructure they intend to support. Amendment 204J is also intended to link the evidence base used to justify an area’s CIL charging schedule to the levy’s actual expenditure. As I think my noble friend recognised, these are both intended to add to the transparency of the application of what CIL is: a tax on development. So far as local authorities are concerned, I see no reason why both these amendments should not be applied to them.

That leaves the “meaningful proportion” that is to be spent by other people. At the moment I feel that it is wide open for them to decide more or less what they would like to spend it on. I cannot believe that that is a wise way to spend the proceeds of what is in fact a tax. I hope that my noble friend can reassure me on this, but I have to tell him that there is a good deal of apprehension out there. He has told me that he has come under a lot of pressure from local authority and other community interests, which are saying that this sort of thing is necessary in order to reconcile people to new development in their area. But there must be some sort of limit on it, and I am not sure that the government amendments moved by my noble friend and the explanation set out in my noble friend’s letter of 7 October give that reassurance. I hope that my noble friend will be able to allay my anxieties.

[Lord Shipley]

My Lords, I agree with my noble friend Lord Jenkin on the need to be clearer on the gain to neighbourhoods and parishes from the community infrastructure levy. Whether that is done in the Bill, through guidance or by other means, it will be extremely important that local people in neighbourhood areas where development is taking place understand what the community gain might be as a consequence of that development.

My point is a parallel issue which relates to the duty to co-operate. It is implicit in the Bill that there is a duty to co-operate between councils on the community infrastructure levy. However, I am not certain that it is sufficiently explicit and in urban areas where there are boundaries between different local authorities, a development that could take place wholly in one council area might well impact upon the infrastructure and the well-being of one or more neighbouring council areas. To what extent should we make it explicit that there should be a duty to co-operate between local authorities on the community infrastructure levy where a development is taking place very close to a boundary? That will need to be clear, certainly by Third Reading, otherwise there could be a great deal of strain between local authorities over what a duty to co-operate over sustainable development actually means and how it is delivered on the ground.

--- Later in debate ---

[Earl Attlee]

My Lords, I am struggling to read my inspiration here. However, I intend to make a substantive speech in our debate on Clause 130, which I think the House will find very helpful.

Lord Jenkin of Roding: Is my noble friend prepared to consider further any limitations in the amendments that he has put down, which say in several places, for instance, “for ‘projects’ substitute ‘anything’”? The concern is that it is “anything”, not just “projects”. Would he consider further representations on that subject?

[Earl Attlee]

My Lords, I will consider any input that is brought to me or other Ministers.

--- Later in debate ---

Amendment 205C agreed.

[Lord Jenkin of Roding]

My Lords, the noble Baroness, Lady Gardner of Parkes, was here a moment ago. I am not sure why she is not here, but the rest of us can speak to our amendments when we get to them. I do not think that we can move hers.

[Earl Attlee]

If it might help the House, the noble Lord, Lord Berkeley, can move Amendment 206 without any difficulty.

Amendment 206

--- Later in debate ---

[Baroness Gardner of Parkes]

I am very grateful to the noble Lord, Lord Berkeley, for starting this debate. I will speak to Amendments 206, 224 and 227. Amendment 206 is the one about consultation. I have a somewhat sceptical view about consultation because when I was building my house, we consulted all the neighbours and they all objected just the same, so it is of limited value. However, Dr Thompson, who has done a lot of work and held public meetings on this issue, quoted me an example of someone who consulted their neighbours and agreed that they would have all the cars washed every day and would have everything swept and cleaned. Apparently the whole basement development went through without a hitch. That person has now moved into the basement and the people next door to her have started to do theirs. Apparently, it is absolutely chaotic and they have not consulted or agreed anything, so consultation might be of value but it is of limited value.

It is far more important to deal with the other items which I am covering in Amendment 224. One is the question of precedent. I should declare an interest in that, when I die, my children, in order to get the best value for my home, will definitely want to be able to say that they could have a basement under it, because in that part of London a hotel has just been built with six storeys underground. Other people are building to a lesser extent, but at least half the people in the streets adjoining my house in London have already either got permission or done their basements. Because you cannot go up, the only way you can continue to live in a place with an expanding family is to go down so there is a definite need and a case for basements. That is why I have included in subsection (1) of Amendment 224 the issue of precedents. If an area is already full of basements, why should you not have the same right?

More importantly, subsection (2) refers to a bond or security. When my husband was alive, he represented St John’s Wood as a councillor and I certainly know of a basement there that was under construction for three years. There was another one in Brompton Square. After three years, the people each went bankrupt and with that, the people in the houses on either side of them were faced with a terrible situation. They could do nothing: their houses could fall into the hole or fill with water, as the basement was filling with water. It is quite alarming. A bond or security could be an answer in this kind of situation. It should be easy to find cover as part of your buildings insurance. Subsection (3) refers to “a qualified structural engineer”. Some of the better London boroughs already impose such conditions. They apply them to any such planning consent and the work has to be both planned and supervised. The three subsections in Amendment 224 are important.

Even more important is Amendment 227, which relates to amendments to the Party Wall etc. Act. I am grateful to the noble Lord who gave me some marvellous papers from the RICS, on its practice standards for UK party wall legislation. They were very interesting. The noble Lord is an expert on the subject. If the party wall legislation were updated to cover these matters, there is already a great deal of provision for security in there, which would also cover the consultation issue. As far as I can see, basements are more or less a big city issue. I do not know whether it is a big issue in big cities outside London, but in London it has certainly become one. It is important that something should be done about it.

[Lord Jenkin of Roding]

My Lords, I support my noble friend’s amendment, which was moved by the noble Lord, Lord Berkeley.

I say at once that I was extremely grateful to my noble friend Lady Hanham for acceding to my request that I should take a deputation from two of the community bodies interested in this subject. We met my noble friend on 31 August. The community bodies included representatives of some of the householders who have been so appallingly affected by these basement developments—“subterranean developments”, they seem to be called. So impressed was my noble friend by what she heard and read that she instructed her officials—I hope I quote her correctly—“to find a solution”. The delegation therefore left in some considerable hope that something might be done to meet their concerns.

In passing, I asked them whether they had tried to raise this issue in the other place. Their answer was rather revealing: they had tried but they could not find any Member of another place who was prepared to take up the issue. There was no delegation to see a Minister in the other place. It has been left to this House to pursue the issue and to gain the assurance from my noble friend that her department should find a solution.

I have four amendments in this group. The first two were tabled for Committee and have been carried through to Report. One was intended to provide a code of practice and the other to provide some form of recompense for the massive disturbance that householders face. However, I have subsequently received a letter from my noble friend explaining that those amendments were not acceptable. In the letter of 9 August she said:

“With regard to your proposals relating to the Secretary of State issuing guidance, in the spirit of localism, I believe it is best to leave it to local authorities to issue guidance”.

Relying on that, I then tabled Amendment 230 to provide that the local authority shall issue guidance.

However, my noble friend also was not keen on the idea of compensation. She said she believed that,

“the introduction of such a provision would set an unwelcome precedent for this to be adopted more generally”.

I have therefore tabled a second amendment.

--- Later in debate ---

[The Earl of Lytton]

My Lords, I rise to plead guilty as charged I am afraid. I am indeed a professional practitioner in matters of party walls, and I am indeed the chairman of the professional panel set up by the Royal Institution of Chartered Surveyors on boundaries and party wall issues, which was responsible for the recent guidance note to which the noble Baroness, Lady Gardner, and the noble Lord, Lord Jenkin, referred.

I am also a paid-up member and a former national council chairman of something that is known as the Pyramus and Thisbe Club—that delightfully named organisation which is peopled by specialists who have a particular interest in party wall matters. Noble Lords will realise straight away that it is named after Shakespeare’s characters in “A Midsummer Night’s Dream” who whispered, conversed and conducted their courtship through a chink in a party wall. I have to say that most of the things that go on through chinks in party walls are anything other than courtship, as we have already heard. A further charge to add to the sheet is—

[Lord Jenkin of Roding]

There is, I believe, a committee of surveyors called the Pyramus and Thisbe group which draws its name entirely from what the noble Earl has just referred to.

[The Earl of Lytton]

Yes, indeed. It is actually called the Pyramus and Thisbe Club, and it has London and regional representation. It expanded quite considerably after the Party Wall etc. Act 1996 became law. Noble Lords—and certainly the noble Baroness, Lady Gardner—will remember that I took that Bill through its stages in this House in a previous parliamentary incarnation. I make no apology for saying that I have always thought that Section 10 of that Act—which is the dispute resolution process—was a model for our time. It is a form of alternative dispute resolution, and I thought it was well worth applying to a much larger range of inter-neighbour issues, as opposed to people having to go through the courts.

Let us leave aside for one minute the point that the noble Lord, Lord Jenkin, mentioned about the state of the housing market and the huge pressures that that brings to bear on scarce urban space, about which I will make a comment later. Many of the things that noble Lords have referred to are, of course, true. Subterranean development can have very significant implications for neighbouring properties both during the course of construction and in the subsequent effects, often several years later. The planning and building regulations regime provides only a partial protection. Sometimes it provides none, and the common law gives rise to actions often only once damage has become apparent, sometimes long after the original developer has gone from the scene.

I turn to the question of whether the Party Wall etc. Act 1996 can be usefully amended. At this juncture I would say that that legislation is, of course, very narrowly framed. It came out of the old London Building Acts, which had broadly similar provisions. That legislation risked being abolished under the terms of the repeal of the London Building Acts with the abolition of the GLC. It was saved from that in no small part by the prompting from the noble Lord, Lord Lucas. I am very grateful to him. From his knowledge and experience at the time, he was one of the mainsprings for making sure that that legislation was preserved. I pay him tribute for that. But widening its scope would have to be considered very carefully. It is a very finely drafted construct. There are many professional and technical understandings that are interwoven right the way through the Act. To amend one particular bit through an amendment to this Localism Bill would, I am afraid, have other consequences that might be less desirable—possibly the law of unforeseen consequences. That said, I would welcome the opportunity to see whether that Act can be amended to deal with this issue.

On security for expenses, we have this issue with the technically challenging nature of very deep excavations. They often create larger risks than those just arising from works for which notice would have to be served under the party wall provisions. So there is an issue about how you extend that scope, and make sure that it remains cohesive. There must be very few surveyors involved in this area of work who have not come across a building site where the contractor or the developer—or sometimes both—have gone bust, possibly leaving a building site with a large hole in the ground, and creating huge ongoing liabilities for adjoining properties. Enabling a default mechanism where this can be addressed is in the public interest. But then comes the question: if you are going to empower something to be done about it, how do you pay for it? This brings into question the matter of an insurance-backed warranty of some sort.

Again, this is a very difficult area. It depends how the provision is constructed, how it is worded, and how it benefits other people, who are not necessarily identified from inception as being beneficiaries of this. Overseas-based developers, non-resident owners and possibly eastern European builders do go to make a bit of a heady mix in the more valuable and economically important parts of our inner cities. Clearly these matters need to be dealt with by technicians who are competent and know what they are doing, know what they are looking at, can identify issues of boundaries and know something about construction. However, there is no generally applicable or enforceable code of practice for this type of development. The noble Lord, Lord Jenkin, referred to Camden. The London Borough of Camden probably has the most competent of all the codes of practice that I have seen.

However, the whole process is permissive at the moment. It is actually dogged by having poor enforcement procedures. It needs to have something better than it has. It operates by a process of consensus. With those who wish to play fast and loose with the system, often the consensus does not exist. That is a criticism of the whole process.

Localism Bill

Lord Jenkin of Roding Excerpts

Wednesday 12th October 2011 Lords Chamber

[Lord Greaves]

My Lords, we return to the Localism Bill and have reached Part 5, which is about the substantial changes the Bill makes to the planning system. Amendment 203K, which is grouped with one other amendment, is about sustainable development. This is the third time during proceedings on the Bill that I have had the privilege of opening a debate on sustainable development. We had a comprehensive debate at the beginning of our consideration of the Bill, and a further, pretty comprehensive debate at the beginning of the planning section. Both debates took place in Committee. We are now on Report and come to sustainable development again. I am grateful to the noble Lord, Lord McKenzie of Luton, for adding his name to the three Liberal Democrat names on the amendment.

The amendment seeks to place in the Bill a definition of sustainable development. This debate reappears every time a planning Bill comes before the House, or a Bill related to planning or similar things. So far, although Governments have increasingly included the words “sustainable development” in legislation, they have always resisted including a clear definition of it in legislation. This amendment also sets out a duty of each person who carries out functions within the planning system, from the Secretary of State down to local planning authorities, to promote sustainable development. It also applies to the neighbourhood forums or parish councils which will be carrying out neighbourhood planning functions under the new provisions within this part of the Bill.

There are therefore two issues. The first is whether a definition should appear in the Bill. It has always been the view of the Liberal Democrat Benches in this House that it should, and we have not really changed in that view. The second is what that definition should be.

Sustainable development is a phrase which has been in current use for about 20 years. However, it has really come to the fore in the past 10 years. In 2005, the then Government issued a report called Securing the Future—Delivering UK Sustainable Development Strategy—I am not quite sure why the title does not have an “a” or a “the” in it. Page 16 lists a set of guiding principles, and it is those guiding principles which this amendment sets out, exactly as they appeared in the 2005 strategy. These are: living within environmental limits, ensuring a strong, healthy and just society, achieving a sustainable economy, promoting good governance, and using sound science responsibly—all with the detail set out. Although this strategy was issued by Defra, it was to apply across government, throughout all departments and all government activities. One assumes that that definition applied to the planning system, since the planning system is part of what the Government do, although parts of the strategy might be more relevant to planning, just as other parts might be more relevant to other aspects of government activity.

In 2010, we had the exciting development of the formation of the new coalition Government, who clearly had to review their policies and strategies, and in particular those which had been passed on to it by the previous Labour Government. In February of this year, the Government issued Mainstreaming Sustainable Development—the Government’s vision and what this means in practice. That vision was very much based on the 2005 strategy, and according to the Defra website, which still existed when I looked last week, the Government are reaffirming their vision for sustainable development.

The website said in February this year:

“The Coalition Government has reaffirmed its commitment to sustainable development and set out its vision of achieving economic growth, improved wellbeing and a protected environment now and for future generations”.

The word “wellbeing” has come into prominence recently since it appears in the health Bill as well, but I take it that in this context it encompasses the social side of the three prongs of sustainable development: economic, social and environmental.

The Deputy Prime Minister, Nick Clegg, welcomed the new vision by saying:

“The Government is determined that as we reduce the deficit, we also rebalance the economy and put it on a greener, more sustainable footing. In order to achieve this, we must lead by example. I am pleased to see this document”—

He means the document entitled, Mainstreaming Sustainable Development—the Government’s vision and what this means in practice published on 28 February last—

“sets out exactly how we can do that and take our place among the greenest governments of the world”.

I am going to read out much of the introduction to the document because it is crucial:

“The Coalition Government is committed to sustainable development. This means making the necessary decisions now to realise our vision of stimulating economic growth and tackling the deficit, maximising wellbeing and protecting our environment, without negatively impacting on the ability of future generations to do the same. These are difficult times and tough decisions need to be made”.

That is what they say all the time, but it is true, of course. It continues:

“This Government believes in going beyond the short term with eyes fixed firmly on a long term horizon shift”—

this is the crucial bit, and I think I know what it means—

“in relation to our economy, our society and the environment … This refreshed vision and our commitments build on the principles that underpinned the UK’s 2005 SD strategy, by recognising the needs of the economy, society and the natural environment, alongside the use of good governance and sound science”.

These are the guiding principles that appear in my amendment. The introduction goes on to say:

“Sustainable development recognises that the three ‘pillars’ of the economy, society and the environment are interconnected. The Government has initiated a series of growth reviews to put the UK on a path to strong, sustainable and balanced growth. Our long term economic growth relies on protecting and enhancing the environmental resources that underpin it, and paying due regard to social needs. As part of our commitment to enhance wellbeing, we will start measuring our progress as a country, not just by how our economy is growing”—

although clearly that is very important—

“but by how our lives are improving; not just by our standard of living, but by our quality of life”.

I could not have put it anything like as well as that.

In launching the document, the then environment Minister, the noble Lord, Lord Henley, said:

“While the Government is committed to tackling the deficit and rebuilding Britain’s economy as we recover from recession, not least through the development of a sustainable green economy, we recognise that our success and progress as a country is about more than economic growth”.

The Prime Minister, when announcing the measurement of the nation’s well-being in April, said:

“Prosperity alone cannot deliver a better life … The Government must be focused on quality of life as well as economic growth … Improved wellbeing is important to our goal of creating a more family-friendly country … Sustainable development is also about ensuring a high quality of life for our children and future generations”.

We appear to have a pretty firm commitment from the noble Lord, Lord Henley, Nick Clegg, David Cameron and from the Government themselves.

The purpose of the amendment is to suggest to the Minister that now is the time to put all this on the face of the Bill so that we are absolutely clear about what it is. If she cannot agree to do that on the wording in my amendment today, perhaps we might consider this again at Third Reading with wording suggested by the Government themselves. In any case, it asks her to give a firm assurance—in view of the controversy around the country, not least over the national planning policy framework—that the firm commitments made back in February this year by the high-ups in the Government to sustainable development are still the view of the Government. I beg to move.

[Lord Jenkin of Roding]

My Lords, I agree with almost everything that my noble friend has said about the desirability of promoting the concept of sustainable development. I rise to speak only for one reason—namely, the news of the death of Sir Arthur Norman, who was a very distinguished president of the FBI, as it was before the CBI. He and the noble Lord, Lord Barber of Tewkesbury, came to see me when I was Environment Secretary. They were very concerned about what appeared to be a growing conflict between those who championed the environment and those who were concerned with the well-being of industry. Their view was that, in fact, they are mutually dependent on each other—you cannot improve the environment unless there are the resources there to do it; and business cannot hope to succeed if it flouts all the canons of good environmental behaviour. They came and asked me to help them set up an organisation that could reflect this—and, if I may say so to my noble friend Lord Greaves, this was well in advance of the Brundtland definition, which he has just quoted. I had no hesitation in offering them a launching grant to set up what became the United Kingdom Centre for Economic and Environmental Development—UK CEED. It is going strong today.

I believe that this has now become—as my noble friend has rightly said—absolutely embedded in the policies of, I suspect, every party in this country and, indeed, across the world. My only concern with my noble friend’s amendment is whether it is actually going to achieve anything. “Sustainable development” is one of these expressions that tends to mean, rather like “humpty-dumpty”, what I want it to mean when I use it. I am not sure how far it helps to seek to have a definition, because circumstances and conditions change and one is going to find oneself having to amend it as new developments, inventions and technology come forward. I support the concept of trying to build in sustainable development, as has been done in this Bill and certainly in the framework planning policy document. I just question whether putting an amendment of the sort that my noble friend has proposed in the Bill carries this forward. I say this with some background awareness of the huge importance of trying to get everybody—every major part of the economy and the community—committed to this principle of sustainable development.

--- Later in debate ---

[Lord Jenkin of Roding]

An illustration of what my noble friend is talking about is that it is a developer who builds a new house in the forest, and an environmentalist who goes and lives in it.

[Lord Lucas]

That is a nice illustration. There are bits of wording; as my noble friend Lord Deben said, if we are going to put something in legislation, then we must produce something that works in the courts. An authority must know that it is complying with the law and other people must be able to judge whether it has complied with the law. There are bits in here which are frankly impossible from that point of view. The words “of all” appear several times, and completely remove the definition from reality when it comes to deciding the matter in a court. There are things about future generations, where we cannot know or even begin to imagine. We hardly know what is happening to the economy next week, let alone what will be the effects of a future development on future generations. We can do our best to assess that, but we cannot be held accountable for whether it does or does not; one just produces an immediate morass in the courts if one goes down that route.

There is a lack, as several noble Lords have said, of development, or the understanding of development. If you are going to assess a sustainable development you have to look at it as a whole, as a picture of everything that is happening, and not its individual bits; as a picture of what will happen over time, and not at any particular instant. There is no recognition of that at all in this definition. You could trip up a development just because it is doing a bit of harm to something, even though looked at as a whole it was doing good.

Indeed, many developments harm things but do good in other ways, and some developments compromise the ability of future generations to meet their own needs. Every time you take a bit of coal, gravel or gas out of the ground, that is not available to future generations. It is inevitable that we are living with compromise and fuzziness in this area. It is up to us to do our best by some well designed guiding lights, but we should not try to pin down a legal definition to something which is not suitable for it.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, the purpose of this amendment is to impose a duty on the Secretary of State to produce and keep up to date,

“a National Planning Policy Framework, which will establish policies to achieve sustainable development … including mitigation of, and adaption to, climate change”.

This also requires a consultation process and a parliamentary process.

I am aware that some would argue against this proposition and that it opens the door to giving parliamentary sanction to a framework that they may consider to be flawed. However, given the potentially profound effect an NPPF can have, we consider that the better argument is for Parliament to be able to have its say. Obviously we welcome the opportunity for upcoming debates in your Lordships’ House—even two of them—but this is not a substitute for a proper parliamentary process.

I remind noble Lords that the coalition agreement said:

“We will publish and present to Parliament a simple and consolidated national planning framework covering all forms of development and setting out national economic, environmental and social priorities”.

As I said in Committee, if that commitment can be enshrined in the coalition agreement, why not in the Bill? To be clear, the amendment does not seek to put the NPPF in the Bill; it simply seeks the obligation for one to be produced and updated and to be subject to a consultation and parliamentary process, which can be determined by the Secretary of State.

When we debated this issue in Committee, we did so in the absence of an official draft of the NPPF. This of course we now have, although it did not see the light of day until we were embarking on the Summer Recess. Indeed, the announcement of the planning framework while Parliament was not sitting increased fears that Ministers were trying to steamroller through important changes without proper scrutiny or debate. An assurance of a proper consultation and parliamentary process could have lessened these fears and potentially obviated some of the more unpleasant exchanges that ensued via the national press.

This amendment does not seek to spark a debate on the merits or otherwise of the NPPF, but there can be no doubt about its significance, whatever its final form and interpretation.

[Lord Jenkin of Roding]

The noble Lord has accused the Government of trying to sneak through the framework document because it was published during the recess. I am quite sure that he will have had, as I have, a letter from my noble friend that says:

“We are keen to take every opportunity to consult on and improve the text of the draft framework. We are inviting the Communities and Local Government Select Committee to comment … and are seeking to secure time for both Houses to consider the draft framework in the autumn”.

Did he have that letter?

Localism Bill

Lord Jenkin of Roding Excerpts

Monday 10th October 2011 Lords Chamber

[Lord Jenkin of Roding]

My Lords, perhaps I may add to what my noble friend said. In fact, I introduced the London Local Authorities Bill which originally included a clause to provide for the licensing of pedicabs. It went through a long process of petitions that were heard. In the end, the promoter of the Bill, which at that stage was the City of London, decided that it was wiser to drop the pedicabs provision in order to get the Bill through. However, it was perfectly clear that the proposal aroused a lot of opposition. There is quite a lot of financial interest in this pedicabs business. I am talking primarily of London—I do not know about the situation outside London—but it is possible for those employed to drive pedicabs to make quite a lot of money if they are prepared to work hard, late into the night and in the small hours of the morning. The amendment is obviously not without some merit because there are members of the public who will use pedicabs in preference to hanging around for buses or going down to the Tube.

Therefore, I hope my noble friend can say something on this. There is a problem that needs to be dealt with, but perhaps not so much by amending this Bill but through a local authority private Bill. The issue should eventually be picked up by the Government and some form of regulation should be imposed.

[Lord Berkeley]

My Lords, as a cyclist in London, I have come to know the London Pedicabs Operators Association quite well. Yes, pedicabs irritate taxi drivers—and they irritate me because they are wider than my bicycle and I cannot always get past them. However, taxis, cars and white vans irritate people. At some stage, we all have to live together and hope that it all works well for the benefit of the community and for people who want to go somewhere late at night. Of course, tourists love pedicabs.

However, I agree with the noble Baroness that there is something wrong with the current situation. The noble Lord, Lord Jenkin, mentioned the private Bill debated here in, I think, 2009. My understanding is that there was a voluntary registration scheme that the pedicab association was prepared to sign, given that Westminster City Council apparently made specific undertakings in Committee to provide pedicab ranks around Westminster. That has not happened and the whole idea seems to have evaporated.

Perhaps I may move on to early this year, when a new plan came from the mayor’s office, Transport for London, the Metropolitan Police, Westminster City Council and the London Pedicabs Operators Association. They were asked to draw up a framework mechanism, documentation and software to satisfy the requirements of a formal licensing scheme that would include a partnership agreement, and to write a code of conduct—which is important—and a memorandum of understanding between those parties. However, again, nothing seems to have happened on this.

The pedicab association says that many of the issues listed in the noble Baroness’s amendment would in fact be in some of the agreements that it was setting out to achieve. The one thing that it says would be very difficult—and I agree—is to have, as suggested in the amendment, a separate agreement for each borough in and outside London. Most pedicabs operate in Westminster but I live in Camden during the week and they certainly move into Camden. Therefore, I believe that any such registration has to be London-wide and I am not sure why Transport for London is not picking this up and running with it, so to speak.

There is an issue here but I believe that licensing by TfL on a reasonable basis would work well. I know that taxi drivers do not like pedicabs because they see them taking away business, but we are not really here to preserve the monopoly of taxis in taking people around London. There is also the TfL cycle hire scheme, which seems to be doing quite well.

I believe that some of the issues that the noble Baroness lists in her amendment should be in some kind of agreement, but someone has to take that forward and I think that it should be TfL with everyone else’s agreement. However, every time there seems to be a step forward, something stops it. Perhaps, as the noble Baroness has suggested, people do not want a registration system because that would legalise pedicabs.

I think that pedicabs are here to stay. They are good fun. If they are registered, there will be some control over them, and I hope that that will get rid of those who do not comply with the regulations and that it will allow a good service to be properly enforced, with vehicles that have back red lights and front white lights, which are important. The noble Baroness makes a very good point with this amendment but it is probably not the right way to go forward at this stage.

[Lord Kennedy of Southwark]

My Lords, first, I think I should make it clear to the House that my father was a licensed London taxi driver and that both my brothers are licensed London taxi drivers. In fact, one or two noble Lords have mentioned to me that they have been picked up by them and taken home after a busy day in your Lordships’ House.

[Lord Jenkin of Roding]

If the noble Lord would give way, I have suddenly realised that my eldest grandson was for a time a pedicab driver and I should have declared that.

[Lord Kennedy of Southwark]

As far as it goes, I support the amendment moved by the noble Baroness, Lady Gardner of Parkes. Pedicabs, and the way in which they operate, can be a nuisance, and it is only by licensing them that we can get some control over them. It would therefore be good if local authorities could establish local by-laws for the licensing of pedicabs in their area. If people are going to travel in them, we should make sure that they are roadworthy, that there is proper insurance cover for passengers, that there are rules about where they can stand when waiting for business, that the people peddling them comply with traffic legislation and that, where breaches occur, there is provision to get them off the road.

I accept that at present they seem to operate only in central London, so Westminster council faces the biggest problem. However, like my noble friend Lord Berkeley, I would have preferred to see London-wide licensing of pedicabs. They will no doubt move elsewhere, with Camden, Islington, Kensington and Chelsea, Southwark and Lambeth all likely to have them in parts of their boroughs. By-laws that differ from borough to borough just risk confusion and it would be better to have a London-wide option. However, as I said, the Opposition support the thrust of the amendment and I hope that the Government can indicate what they will do to deal with this problem.

--- Later in debate ---

[Lord Reay]

My Lords, I have put my name to my noble friend's amendment. Litter thrown from motor cars is a scourge of the countryside. It is a regular practice for people to discard litter from moving vehicles—in particular, drink containers and food wrappings. I am sure that to try to reduce the incidence of that habit is a goal worth pursuing. It is surely one test of how well a country is governed how tidy it is. I remember, when I visited Libya in the last years of Gaddafi's regime, how staggered and disgusted I was to see the quantity of litter to be found on the road between the airport and the centre of Tripoli. It was knee-deep in plastic. Of course, that was under a dictatorship, where regulating such things should be easier.

I also understand that the present situation here, where responsibility must be pinned on the person who has thrown the litter, is unsatisfactory. It is difficult enough to trace a car from which litter has been thrown. To then require the prosecuting authority to identify the culprits in the car is surely asking too much. It seems to me quite reasonable to hold the registered keeper of the vehicle responsible. As my noble friend explained, that is the idea behind the amendment. Whether such a change in the law would be successful in reducing the amount of litter thrown, we would have to see. I can certainly imagine that it would have a deterrent effect, with vehicle keepers not wanting to be exposed to legal penalties as a result of the actions of other people, whether members of their family or not, and therefore to some extent themselves acting as policemen.

Unfortunately, the amendment, for a reason which I do not entirely understand, does not propose creating a new national offence. As I understand it, the Bill was thought to be an unsuitable vehicle, although the amendment in another place proposed exactly that. This amendment would simply enable local authorities to adopt by-laws along the lines my noble friend described. As he said, there are grounds for believing that many local authorities might be interested in doing that. On that basis, I recommend the amendment to the House. I very much hope that the Minister will indicate that the Government now intend to do something about this problem.

[Lord Jenkin of Roding]

My Lords, I have huge sympathy with my noble friend’s amendment. Before he left the Chamber, my noble friend Lord Newton, who is taking part in the Welfare Reform Bill Committee, said that he was sorry not to be able to add his voice because he feels very strongly about this.

For nearly 30 years I lived in rural Essex within reach of my former constituency, and one of the disadvantages of the road we lived in was that it was perennially the subject of littering. There was a corner at the bottom of the hill with a bit of spare ground on the left-hand side and my children very quickly christened it “Mattress Corner”. It had become a place where people could dump their unwanted mattresses, which then had to be cleared up by the local authority. It was not only that. We lived a mile and a half outside the village where there was a fish and chip shop. We discovered that we were almost exactly the distance away that it took people to eat a bag of chips. I found myself as the riparian householder having to go out at fairly regular intervals with a plastic sack and one of those nice machines with which you can pick up things and pop them in the sack, simply to clear up the litter on both sides of the road that had been deposited by passing vehicles. Even if you saw a car with litter being thrown out of the window as it went past, there was nothing you could do. You did not know who the driver was or who had thrown it out. There was no point in taking down the number because nobody would do anything about it. You had to prove who it was. So I have every sympathy with this.

My noble friend Lord Marlesford said that it is not enough just to talk; you have to do. I have previously declared an interest as the joint president of London Councils and I am happy to say that London Councils is engaged at the moment in tackling this problem in London. It does this on behalf of the London boroughs and I think it is now ahead of the game. The London Local Authorities Act 2007 contains a provision to decriminalise the dumping of litter from cars and to impose a liability for penalty charges on the keeper of the vehicle. That is slightly different from the proposal put forward in my noble friend’s amendment but it is clear that we all have the same objectives in mind. A London Local Authorities Bill is currently awaiting its final stages in the other place. It will make a small drafting correction to that provision which will allow it to come into force.

Other steps are necessary. Discussions have taken place and progress is being made with the Ministry of Justice in relation to the making of regulations which will enable London borough councils to enforce their penalty charges under the civil regime in the courts. Officials are also co-operating on the necessary alterations to the Civil Procedure Rules and London borough councils understand that these changes and regulations will be made very shortly. I hope my noble friend on the Front Bench will be able to confirm that the provisions will be implemented very soon and the system can start to work in London. That is doing and not just talking. I believe London will show that this solution is perfectly feasible and can be addressed by local authorities. Other authorities may wish to copy what London Councils is doing and it will not be the first time that has happened. I support my noble friend’s amendment.

[Lord Beecham]

My Lords, I am very taken with the image of the noble Lord, Lord Jenkin, patrolling the highways and byways of rural Essex as a sort of unpaid litter warden. It is a charming thought and I am sure he did a very good job, but he should not have to. That is the message of the amendment tabled by the noble Lord, Lord Marlesford, and I congratulate him on bringing this matter to the attention of the House and hope that the Government will be able to respond. As the noble Lord said, the matter was debated in another place on an amendment moved by the Member for Gateshead, Ian Mearns, with whom I was discussing this on the train from Newcastle this morning. He received what seemed to be a sympathetic response from the Minister, Andrew Stunell, who said:

“We will certainly look carefully at the matters that have been raised”.—[Official Report, Commons, 18/5/11; col. 441.]

Time has passed so I hope that the consideration has taken place. I think it is preferable to have this in national legislation rather than leave it to by-laws. There seems to be no reason why this amendment should not be proceeded with on this Bill or at least a clear indication given that it will have some priority in other legislation. But this is really too good an opportunity to miss and I hope that the Minister in replying, even if he cannot say today that the amendment will be accepted, will indicate that by Third Reading there will be a clear position and the Government will feel able to adopt it.

Of course, as the noble Lord pointed out, this is essentially a matter of enforcement. There is little point in having regulations without the capacity to enforce them. But, as the Essex police have found out in another context, enforcing measures concerning the driving of vehicles is not necessarily straightforward. This would certainly obviate the kind of difficulties that have arisen in another case and one would hope that the Government would see the logic of that and accept the thrust of the noble Lord’s amendment, and see to it one way or another that the objective which most of your Lordships share is carried into being.

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[Lord Jenkin of Roding]

My Lords, I raised this issue at Second Reading, as did a number of other noble Lords. I would like to join my noble friend Lord Tope in expressing gratitude to my noble friend Lord Attlee for the immense amount of work that he and his officials have done to produce this substantial body of amendments, which to my mind now make this provision acceptable. I particularly welcome his efforts to produce what probably would be called a “Keeling schedule”, showing what these clauses will look like in toto if the amendments are passed. It is rather difficult otherwise to fit them into the Bill. However, that was an immensely helpful document which I hope my noble friend’s other colleagues on the Front Bench might be persuaded to imitate from time to time. For those of us who have to grapple with these things ourselves, it can be much more helpful to know what the whole thing is going to look like, rather than just looking at a whole series of amendments. This is a very helpful precedent which I hope will be followed in the future.

I have only one question to my noble friend. It is a point that I have made on previous occasions, and it concerns retrospective operation. My noble friend has assured me that nothing in these amendments will make the powers retrospective so that a penalty may be imposed on a local authority for something that has already happened. I would be most grateful if he could give us an assurance on this when he winds up the debate.

I understand that this cannot apply to fines that have already been imposed on the Government, but you could have a directive which imposed obligations on a local authority where that local authority was previously in breach and subsequently a fine was imposed on central Government. I would welcome an assurance that under no circumstances could that fine refer to anything that has happened before the date of the process introduced by these amendments. Nothing could be done before these amendments have taken effect—they must not be retrospective or retroactive. I take encouragement from my noble friend saying that one of his principles is that there will be no surprises. That, to my mind, is immensely valuable. If he could say that that rules out any retroactive effect of these amendments, that would be very helpful indeed.

I thank my noble friend for his enormous efforts. He explained to me that he had to get the assent of every other government department in Whitehall. He is a magician to have achieved that. One understands the difficulties that he has faced and I thank him very much.

[Lord Berkeley]

My Lords, I join the noble Lords, Lord Tope and Lord Jenkin, in congratulating the Minister. I raised one or two issues in relation to this matter in Committee and I think that the noble Earl has done a fantastic job in a short space of time to come up with a process that few can fault, if one is going to have fines at all, and they do arise. I warmly congratulate him and join others in hoping that this happens more often with other legislation that comes before your Lordships’ House.

Before I speak to my own amendments, I would like to follow up on a point that the noble Lord, Lord Jenkin, made about the retrospective nature. There will be a time when these clauses come into effect, but there is also a time when the European process moves forward from infraction proceedings and reasoned opinions to the court summons and finally the court decision. That can take several years. The UK Government have a good record in complying with EU regulations. I am involved in railway issues, and in the first railway package there are 13 member states with infraction proceedings against them. We are not one of them, except for a new one relating to the Channel Tunnel. On the whole, we have quite a good record, but quite often the cause of the eventual fine could be something that was created several years beforehand. The local authority may not have been able to do something, or something may have gone wrong and it is grinding on with the Government refusing to give way, and three or four years later it gets to the European Court. I hope that the Minister will look at the retrospective nature of this not only from the UK side but also from the European side as to where the so-called potential offence has been committed and when.

My amendment was of course a probing one. I am very grateful to the Minister for his answer, which he gave before I had the chance to speak to it. That enables me to ask another question to clarify things. The Minister said that the provision would apply to a private company carrying out or performing “public functions”. I assume that “public functions” in this respect means operating rail or inland waterway infrastructure, although that could be carried out by a private company. I am not convinced that the Rail Regulator has powers to enforce fines on Network Rail—I do not think that there is a regulator for inland waterways yet—when something contravenes European regulations. I am sure that there will be an answer to this but perhaps when he responds the Minister could agree to look at this matter further so that there is some clarity within Network Rail and eventually the British Waterways charity about the circumstances under which they might be liable for a fine. I conclude by congratulating Minister very strongly on a really good piece of legislation.

[Lord Beecham]

I join other noble Lords in warmly congratulating the noble Earl on the manner in which this matter has now been put back on track. The noble Lord, Lord Tope, said that most of us would not have wished to have started from here, but where we are ending owes very much to the thoroughness, attention to detail and decisiveness of the noble Earl—qualities in which he emulates his distinguished grandfather. It is some 49 years since I had the pleasure of meeting the noble Earl’s grandfather and he made a significant impression on me, young as I was at that time. The noble Earl is doing so again today, not merely on me but on all Members of your Lordships' House.

[Lord Jenkin of Roding]

My noble friend's grandfather lived in my constituency.

[Lord Beecham]

He was none the worse for that. I do not think that his wife, who used to drive him around, would have been guilty of depositing fish and chip papers anywhere near the noble Lord’s house.

The position that we have reached is one that the Local Government Association has worked very hard with the Minister and colleagues from all sides of the House to achieve. In particular, the outcomes around the designation and the opportunity to correct a situation that perhaps led to a fine—the provision of an effective appeals system—have all been significant. I am encouraged that the statement of policy that has been produced by the Local Government Group is one that I understand the Government are minded to adopt. Perhaps when he replies the noble Earl will indicate how far their consideration of the document has gone and whether there are likely to be any issues of significance that might not accord with the proposals that have been made. I understand that effectively an agreed position has been reached around four main areas: working in partnership; that there should be no surprises; that there should be a fair and proportionate process; and that consideration should be given to the ability to pay.

One of the crucial issues first voiced in the debate to the Committee by the LGA was the lack of an opportunity for local government to be involved in the legislation from which proceedings ultimately might flow in terms of infringement of European law. It is welcome that the Government have now indicated that local government will be identified specifically as a key sector for consultation when the Government enter into negotiations on EU legislation that could ultimately lead to fines coming down to local authorities. That is an extremely important extension of the consultative role that should ensure that the legislation is right in the first place, which would be a distinct improvement on the position hitherto.

The Minister has made it clear that there will be no surprises in future. No local authority will be taken by surprise because of the designation process, which is a reasonable one in which Parliament will be involved. Equally, the process will be broadly based in terms of those involved in deciding a number of matters—for example, whether the UK Government themselves have contributed to the infraction. I take it that that will also apply to any infraction that might have been contributed to by the devolved Administrations where their activities impinged on European legislation. I assume that that is taken care of in the arrangements that the Government have come to with the devolved Administrations.

My final point is crucially important. The panel will determine these matters and the Minister will consider the authority's ability to pay a fine and provide for possible alternatives in the event that the ability to pay is not present. It is conceivable that a small district council might find it impossible to pay a significant fine in respect of some infraction of environmental legislation within its competence. It is extremely welcome that the Government have acknowledged that that is a risk and that they will not be seeking to extort from such an authority a contribution to a financial penalty that would seriously impede the activities of that local authority.

Thanks very largely to the Minister, we have reached a satisfactory position on this. It has been a good example of the way in which local government and the Government can work together and in which Ministers can listen to proceedings in your Lordships' House, take back concerns and proposals and work with them. I hope that the noble Earl will feel able, metaphorically at least, to bite one or two of his ministerial colleagues in the hope that this becomes a habit across government and not confined to the noble Earl.

Localism Bill

Lord Jenkin of Roding Excerpts

Monday 12th September 2011 Lords Chamber

[Lord Beecham]

My Lords, I hesitate to trespass on to the territory of the capital but I have a good deal of sympathy with the points made by the noble Lord, Lord True. He argues powerfully for greater involvement by the London boroughs and for procedure that would facilitate that and indeed put the onus on the Government to prove their case in terms of delegation.

However, another aspect should be taken into account. The amendment speaks of a requirement to consult,

“each London borough council … the Common Council, and … the Assembly”.

There is, of course, a cross-London body of councils, London Councils. In addition to the individual approaches, which obviously make sense, I would have thought it would be useful for London Councils to express a view as an organisation. The noble Lord is nodding his assent to that. Obviously it would be possible to garner the views of the 30-odd London boroughs, but seeking the view of London Councils itself might facilitate a better dialogue across the capital and, I hope, influence the outcome in directions that might not otherwise arise through separate consultations and responses. I wonder whether, if nothing else is done, London Councils could be added to the list of three given in Amendment 105.

[Lord Jenkin of Roding]

My Lords, I would like to respond to that briefly. London Councils has made it very clear from the beginning of this Bill that it has been unhappy with the extent to which the regional authority in London—namely, the mayor and the London Assembly—seems to have been more successful in securing powers and opportunities than have London boroughs. Maybe that is their fault, but the fact of the matter is that the point made by my noble friend Lord True is shared by London boroughs as a whole. There needs to be a better balance between the mayor and the boroughs on these sorts of matters. As I have said before, the boroughs are responsible elected authorities and deserve to have a proper consideration on these matters. I hope that the Minister will feel able to give further consideration to this point. Here is another case where the mayor’s lobbying seems to have been more effective than that of the London boroughs. I am not sure whether that is right or justified, but that seems to be what has happened.

[Lord McKenzie of Luton]

My Lords, as we have heard, the government amendment requires consultation before there is any delegation or variation of a delegation of ministerial powers to the Mayor of London. This consultation must take place with each London borough, the Common Council of the City of London, and the Assembly. The noble Lord, Lord True, requires consultation on whether the function could be more appropriately conducted at borough level and, if a majority thinks so, an explanation has to be given to Parliament. We obviously support the consultation and the government amendment, but there is no specific guidance in the amendment as to what might result from such consultation. There is no specific requirement to publish the results, produce a response or indeed report to Parliament. Could the Minister give us some more details about these matters? If, for example, the consultation were to be overwhelmingly hostile to the concept, would it still proceed? Can he give us an idea of the type of eligible functions likely to be involved in the sort of delegation contemplated?

The amendment tabled by the noble Lord, Lord True, with which, like my noble friend Lord Beecham, I have some sympathy, raises an interesting point about the role of London boroughs and their equivalents under the so-called Core Cities amendments, which we will shortly come to. Should it be accepted at any stage that the boroughs—one or all of them—would be a better destination for such delegation, and what powers in the Bill would allow that to happen?

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[Lord Taylor of Holbeach]

Yes, indeed it does. Functions may well be legislated for in the future that are borough-based and not a matter for the GLA or the mayor.

[Lord Jenkin of Roding]

Can my noble friend point—I am sorry; this may be an unfair question—to a provision under which the mayor can delegate functions to the boroughs? I am not sure that that provision is in the Bill. I am sorry; I perhaps should have given notice of this.

[Lord Taylor of Holbeach]

I thought the noble Lord, Lord McKenzie, was asking me whether, in future legislation, responsibilities could be delegated to boroughs.

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[Lord Faulkner of Worcester]

My Lords, I am sure the House is grateful to the noble Lord, Lord Tope, for moving this amendment and giving us an opportunity to discuss the case of passenger representation in London. However, it may not surprise him to know that I take considerable exception to the case that he, the mayor and the Greater London Assembly are putting forward because I think it is fundamentally flawed. I am aware that it has come about as a result of the review of London TravelWatch carried out last year by the GLA, which did indeed recommend that it be wound up and its functions folded into the assembly. However, that process was seriously flawed. The assembly consulted a number of stakeholders, but then completely ignored what they said. For example, the Association of Train Operating Companies, ATOC, has written to me and said:

“We firmly believe that the functions of a consumer watchdog, in providing impartial casework and research support, and facilitating the resolution of individual complaints with train companies should be demonstrably independent, not under direct political control.

Assembly Members are keen to point out that taking on London TravelWatch's activities will help them to provide greater scrutiny of the mayor's and GLA's activities. However, we believe the priority for London TravelWatch should be handling disputes from individual passengers as a consumer champion and undertaking independent research, not being sidetracked on to issues of political or electoral interest to Assembly Members. Passengers will not benefit if London TravelWatch becomes merely a means for point-scoring”.

The assembly's review claims—and the noble Lord, Lord Tope, has referred to this—that there is scope for substantial savings. The review is vague about where those savings will come from. There does not appear to be any reference to transitional costs or to the cost of the GLA accommodating the staff, although the noble Lord, Lord Tope, did say that a TUPE arrangement may apply, which would undoubtedly have an impact on whatever savings may be possible.

London TravelWatch itself has demonstrated that it can cut its budget by 25 per cent over the next two years, while staying completely independent from politicians and concentrating on its core functions of appeals casework, and policy and investigation. There is a huge danger that the present multimodal work on behalf of the travelling public who use buses, the underground, the Docklands Light Railway, Tramlink, taxis, Dial-a-Ride, and National Rail in and around London would be fragmented if this amendment were adopted. It makes no sense to separate London TravelWatch's rail-related work from its work covering other modes. An example is its excellent, recent report on incomplete Oyster pay, which affects everyone who uses public transport in and around London.

I conclude with one further point: the GLA does not speak for those who are not resident in London. Seventy per cent of all rail journeys begin, end, or pass through London and London TravelWatch's remit extends far beyond the boundaries of Greater London, and includes large chunks of Essex, Hertfordshire, Bedfordshire, Buckinghamshire, Surrey and Kent, and it is from there that passengers travel into London for work or leisure purposes.

This is a really bad idea, which would lead Londoners to be disadvantaged compared with those outside London, who have independent representation on Passenger Focus, looking after their needs, whether they are rail or bus passengers. It is that independence that is important, and that is why I hope the Government will resist this amendment.

[Lord Jenkin of Roding]

My Lords, my noble friend Lord Tope moved the amendment comprehensively and I only want to make two points. The first point, which has been referred to by those who have already spoken in the debate, is that the September 2010 report by the London Assembly was a very substantial document indeed. It was not entered upon lightly and inadvisably. Despite what we have just heard, it was conducted with great thoroughness and we then came to the conclusion that there was no point, if you have an elected assembly already, in having a second, different body dealing with transport. It was a serious piece of work and the degree of support which my noble friend Lord Tope has indicated is sufficient evidence of that.

My second point is that all local authorities are under stringent spending pressures. Here is a proposal which could save up to £1 million a year for London. In the present circumstances, it is rather unwise not to accept that that is something which should be considered very seriously indeed. I understand the points made by the noble Lord, Lord Faulkner, and the case that has been made by London TravelWatch. At the same time, there is here a formidable piece of work. It will save £1 million and the proposals in the report should be accepted. I therefore put my name to this amendment in order to give the House a chance to make that change.

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[Lord Tope]

I am grateful to the noble Lord, Lord McKenzie, for moving the amendment. As he rightly said, my noble friend Lord Shipley has added his name to it and was hoping and expecting to be here to speak in support of it. He has been in Manchester all day on government business. I have just heard that he has only just got on a train in Manchester, so I suspect that he will not be here in time to contribute to this debate. However, I have a fairly good idea of what he would have said had he been here, and I speak on his behalf. As someone who has been a London councillor all his adult life, I must say that I had not expected to be speaking on behalf of Core Cities. It is a rare privilege and something I do enthusiastically because I very much support these amendments.

Both this Government and the previous Administration have made firm commitments to devolution and decentralisation. The Bill now offers an opportunity to hand decision-making powers from central to local government, working in partnership with the private sector. The Government’s stated aim is to rebalance the economy, focusing on the whole of our national economic system as well as London and the south-east, enabling other places to develop their economies to boost national growth and productivity.

Devolution has happened at different speeds in different geographies. London will receive further powers through the Bill, and the devolved Assemblies already have powers that are not available directly to cities in England. Without further decentralisation there is a risk that England’s core cities, which generate 27 per cent of England’s GVA—my noble friend Lord Shipley points out that that is more than London—and other towns and cities will be unable to perform to their full potential and support nationwide growth and enterprise. Recent independent forecasts by Oxford Economics demonstrate that the core cities’ eight local enterprise partnership areas are capable of delivering an additional 1 million jobs and £44 billion GVA over the next decade, given the tools to do so.

This enabling amendment creates a route to these tools to ministerial delegation and the transfer of public service functions for economic development and wealth creation to single and combined authorities in England. Any such actions would be subject to competency tests, including strong local governance and private sector buy-in, evidence that growth can be delivered and sound arrangements to work across administrative boundaries.

The potential of the amendment would be open to any place, as the noble Lord, Lord McKenzie, has said, that can demonstrate that it can pass the competency tests that the Government will set out. It will ensure that local areas have the powers and financial autonomy to deliver local solutions to their challenges, and that further legislation will not be needed to pass these powers to cities’ civic and business leaders. Any major transfers will be subject to parliamentary scrutiny.

The amendment would support private sector growth and new opportunities for investment, ensure continued buy-in from private sector partners on LEPs, support the implementation of policy to incentivise places to deliver growth, support double devolution to local communities, and be a significant step towards decentralisation.

As the noble Lord, Lord McKenzie, has said, these amendments enjoy support from at least three sides of the House and, I hope, passive support from the fourth. Therefore, I am very pleased to be able to support them.

[Lord Jenkin of Roding]

My Lords, having heard the case in favour of these amendments, I am not in the least surprised that my noble friend on the Front Bench has added her name to them. My only comment is to say how much has changed since I was in charge of local authorities back in the 1980s. It is a change that is entirely welcome. This is a far more positive approach than anything I had to deal with at that time. Perhaps a veil might be drawn over that period; it was a very unhappy period for much of local government. I thoroughly support these clauses and I congratulate the core cities on the work they have done to bring all this forward.