Growth and Infrastructure Bill

Debate between Lord Shipley and Lord Smith of Leigh

Wednesday 30th January 2013 Lords Chamber

[Lord Shipley]

My Lords, in speaking to this amendment I first declare that I am a vice-president of the Local Government Association and, as your Lordships know, a government adviser on cities policy. This amendment would extend the city deals structure, potentially to all councils, and it would be a practical manifestation of what we passed in the Localism Act. I welcome that. The aim of this amendment is to boost economic growth, based on the core package for wave 2 cities. As the noble Lord, Lord McKenzie, explained there will be a confirmation, I think within a few weeks, of those wave 2 cities. However, the core package will be derived from the experience of those in wave one. I expect that that announcement will be made during March; I certainly hope it will be before Easter.

The amendment would mainstream the core package of the city deals. When the Deputy Prime Minister launched the wave two process at the end of October, he said that,

“while it’s too early to talk exactly about what a third Wave might look like, I very much see this”—

wave two—

“as a step in a journey”.

I have concluded that the door is ajar and that this amendment may well represent a means of providing it with a gentle push, for all the reasons that my noble friend Lord Jenkin outlined. There is a very clear base of evidence that if you localise, decentralise and devolve, you will actually drive faster economic growth if you provide local councils and their local enterprise partnerships with the statutory means of delivering that economic growth.

I have one caveat. Councils will need to show governance structures demonstrating their stability, their ability to manage risk and their ability to pool thinking and resources with their local enterprise partnerships and neighbouring councils so that driving growth in an area is seen as a collaborative process rather than a competitive one. I am particularly impressed by the governance structure that is in place in Greater Manchester, where the combined authority—enabled under legislation from 2009—provides a model that could be built on in other parts of the country.

Finally, on timing, if wave 2 city deal announcements are made later in 2013, this amendment will be implemented some time around the summer or autumn of 2014. As my noble friend Lord Jenkin said, this gives the Government an opportunity to consult and think further—but then to come forward with a means whereby the powers that are being given to a number of cities will actually be available to all of local government.

[Lord Smith of Leigh]

My Lords, I must follow the noble Lord’s compliments to Greater Manchester by speaking at this point. I need to declare my interests, which I repeat from Second Reading, particularly to mention that I am the chair of the Greater Manchester Combined Authority. I therefore support this amendment, which gets to the heart of the Bill’s Title—it is what the Bill should be about.

I took part in the negotiations with the Government over the city deal. It was a very interesting process. Obviously, we developed ideas on our own and in conjunction. The noble Lord, Lord Jenkin, is absolutely right that it needs to involve not just local authorities but the local business community. It takes a very special skill for many businesspeople to rise above their day-to-day work to have that comprehension of local economic policy, but in Greater Manchester we are fortunate to have many people who can do that. We rely on them and other partners such as universities, which are very important, too. On the key partners, we need to remind the Government that this is not a financial issue for local authorities. We are actually asking for devolution—not necessarily for more money but to have the money spent at a local level, where many of us believe it will be spent more effectively. In some cases, no money is involved at all; it simply gives us permission to do what we currently have to do.

The city deals work. They can harness the strengths of local partners and build on local knowledge, and they can be addressed to the local circumstances. I am sure that the city deal for Greater Manchester is different from the city deal for Newcastle, because the issues are clearly different. We will have some similar issues. No doubt skills are a very important part but, for us, transport was a key issue. As the noble Lord, Lord Jenkin, rightly said, this amendment mirrors the report of the noble Lord, Lord Heseltine. It is really beginning to address this point about freedom. At a meeting of the Greater Manchester Combined Authority on Friday, we were pleased that we were beginning directly to fund local businesses to take on new workers and expand, so the measure is working practically on the ground. It is not a theoretical thing, and I will be very glad to see the rolled-out programme.

Like the noble Lord, Lord Shipley, I am a bit concerned about the wording of the amendment because I would not like every local authority to have to have its own deal with the Government. That is not what the spirit of this measure is about. What we did very carefully in Greater Manchester was to think about the functional economics. What is an economic area that makes sense? As important and lovely as the great city of Manchester is, its geography is a very odd shape. It is very long and thin. It is not a functioning economic area. The centre of Manchester and the centre of Salford are very close together, so we need to go over local authority boundaries. I hope that in passing some version of this amendment, we can encourage local authorities to be co-operative, as the noble Lord, Lord Shipley, said, to work together to think about what is in the interests of their communities and to make sure that we start to deliver what all noble Lords want, which is more growth, more employment and more opportunities in the country.

Local Government Finance Bill

Debate between Lord Shipley and Lord Smith of Leigh

Monday 22nd October 2012 Lords Chamber

[Lord Smith of Leigh]

My Lords, last week, I reluctantly supported a similar amendment and, within a week, I have not changed my mind thoroughly—although I preferred the previous amendment because it was more localist than this one, which is more restrictive. I need to declare an interest as a vice-president at the LGA, but that is not why I support the amendment. I support it because I am a leader of a council and will have to make the kind of decisions that noble Lords have described. This may be the least-worst option for some of us. I do not quite agree with the noble Lord, Lord Best. The amendment will not save the day. As I said last week, it will be a help, but it will not save the day, because the gap between what my authority needs to raise to meet the shortfall in the council tax benefit scheme could not be raised under this particular text. However, it will help to mitigate some of the worst impacts that would be felt by other members of my community who are poor and cannot afford to pay the large amounts that they will have to pay if the council tax benefit scheme is introduced in the manner proposed. While I am reluctant to support the amendment, it is much better than having to do some of other things that, without it, I would have to do.

[Lord Shipley]

My Lords, I agree entirely with the noble Lord, Lord Smith, that this is the best of the options that we have available. Crucially—and it is the reason why I thought that the Government might be willing to accept it—the amendment would cost them nothing.

In her Written Statement last week announcing a £100 million transitional grant, the Minister said that it was,

“to help those councils who choose to do the right thing”.—[Official Report, 15/10/12; col. WS164.]

The problem with that is that it does not recognise that many councils cannot do that. There are several reasons why this is the case. We have heard reference to the council tax freeze—last year, this year and now next year. Last year was fine, because the Government built into the baseline of all local authorities the amount that they had lost through the tax being frozen, but, in this financial year and the next financial year, no money has been or will be built into the baseline. That means in practice that councils will have to absorb inflation and rising costs.

There was an expectation that councils, in being able to tax at 100% empty or second homes, would be able to make up the gap in their finances. The problem is that many councils do not have many empty homes or second homes and therefore cannot use that means to make up the gap in their finances.

We should also note, as I reminded the House on Report, that according to figures from the Institute for Fiscal Studies, councils in poorer parts of England have had budget cuts since 2010 at almost three times the rate of councils in the south of England. That is partly a result of the loss of working neighbourhoods funding.

The consequence of all these factors is that many councils have no flexibility or room for manoeuvre. This amendment would give them some extra flexibility. It would mean a small extra weekly sum from a large number of working-age, single person households, most of which have had a freeze in council tax for the past two years and would otherwise have a freeze next year. It would be enough in most cases to take poor working-age households out of paying council tax, thereby preventing a regressive tax being implemented.

Last week, at Report, I reminded the House of a statement made by the Deputy Prime Minister a few days ago. I shall repeat his words because I think they are hugely relevant. He said:

“As we have to tighten our belts … as we have to make more savings as a country … you start at the top and work your way down, not the other way round”.

I agree that those who are poor should be protected. The reason why I give my full support to the amendment is that it does just that: it protects the poor better than the Bill. Given that it has the full support of all political groups on the Local Government Association, I hope that your Lordships’ House will feel able to support it.

Local Government Finance Bill

Debate between Lord Shipley and Lord Smith of Leigh

Tuesday 24th July 2012 Grand Committee

[Lord Shipley]

My Lords, I can give some support to the amendment moved by the noble Baroness, Lady Hollis. Like her, I am not a supporter of local income tax. I prefer council tax, which is essentially a property tax but indirectly related to income. A local income tax would primarily be a tax on work, and the case for asset taxation at a local level is strong. If we accept that, however, it follows that the real spread of asset values needs to be reflected in the council tax banding. On the question of a possible band I, the test for me is whether there would have been a band I had we known in 1991 that property values would change as they have. Had we known that in 1991, I think that we would have had a band I. For that reason and all those identified by the noble Baroness, I am in favour of a consultation to try to secure a further band.

[Lord Smith of Leigh]

My Lords, the Committee may recall that on Second Reading I mentioned revaluation of council tax, which is something that I have raised with Governments of all persuasions. Perhaps we should be buying a cake as it is the 21st anniversary of the current valuations—which, as my noble friend said, are totally out of date.

I agree with the noble Lord, Lord Shipley, that the council tax system is a property tax. Although I support it in principle, one of the problems with it is that it was introduced in a rush. It was brought in because there was such a panic about the poll tax and the need to get rid of it—so anything was better than the poll tax. Because of the rush the valuations were not done properly and a national scale was used. Some of the problems that my noble friend mentioned about the difference in values between areas of the country in 1991 were therefore reflecting the fact that, yes, in my authority the vast majority of properties are in band A and B. Band H is pretty irrelevant to us, and a band I would probably not be of much help either. That use of a national scale for valuing is the problem.

When my noble friend cited the areas from which substantial benefits would come with this measure it just illustrated to me the further geographical bias there has been in the housing market over the past 21 years. The fact is that the areas she quoted are all in the south and the south-east and have had economic prosperity during that period, which has pushed up house prices. In other parts of the country economic prosperity has not been on the same level. House prices have gone up for some of that period but in the past two or three years those prices have been going down in many parts of the country, including my own.

I would clearly therefore be interested in some kind of revaluation. What is missing from my noble friend’s amendment, if I may say so, is that it would have such a huge geographical bias in its outcome that we would have to have a different form of equalisation. Those areas in the north, the Midlands and so on, which would not benefit from this, would be in a much worse situation if all we did was to put the amendment through without following it up with some equalisation.

Local Government Finance Bill

Debate between Lord Shipley and Lord Smith of Leigh

Tuesday 10th July 2012 Grand Committee

[Lord Shipley]

My Lords, first, I do not share the concern of the noble Baroness, Lady Hollis, about the capabilities of local government and councillors. Councillors are perfectly able to produce fair and equitable council tax support schemes. However, one problem we have is that timescales are driving the publication of draft schemes very quickly. Inevitably, draft schemes that go out to consultation will be different. After all, lots of things that local government does are different. Council tax rates are different. It would not be surprising, given differences between local authority areas that there may be differences in council tax support schemes. However, timescales are likely to prove too tight. I think that there will be a problem over equalities impact assessments and the timescales that they require. I would prefer a start date of April 2014, but we will come to that in a moment.

The real issues remain financial support, the level of financial support going into those schemes, and the new burdens doctrine. Amendment 73A matters quite profoundly because we are having a debate about the 10% cut and how it should be applied, and I absolutely subscribe to the view that it cannot simply be loaded on to the working poor. I would prefer it, if it is to be applied, to be spread across council tax payers generally.

Secondly, it has become clear to me that 10% is at the low end of what the reality will be. It will be significantly higher than that and, for the reasons that my noble friend Lord Tope outlined, demand is likely to rise and the change of title from “council tax benefit” to “council tax support” is likely to produce more people applying for it. Economic conditions remain difficult and will continue being difficult for the next two to three years; therefore, more people are likely to be applying.

Thirdly, the fixed-grant system that the Government are likely to introduce seems dubious in terms of who will actually decide on which data the government estimates are based. I fear that the estimates of demand over the first two years of the scheme will prove to be understatement. Therefore, the Government should manage the risk. In the context of 28% front-loaded cuts in the current and previous financial years, which have had a great impact on councils’ ability to meet all their obligations, there is a major principle at stake. If we have a new burdens doctrine, it ought to be applied; otherwise there is no point in the Government having a new burdens doctrine. Given the sum of money involved—£500 million, 10% of the £5 billion annual commitment to council tax benefit—this is an acid test of whether the new burdens doctrine has a future.

I sincerely hope that the Government will look again at this whole issue. I have subscribed, in my role as vice president of the Local Government Association, to the view that if you are going to localise—we are trying to devolve and localise—it is entirely appropriate for local government to take responsibility for this. They are the ones who set council tax. Therefore, they are the ones who are capable and should be responsible for setting the level of council tax support, but they have to be able to do it in the context of knowing that that cash will be available and the risk will be managed against rising demand by a Government that is supportive of them.

[Lord Smith of Leigh]

My Lords, in principle I support the localisation of council tax benefit, but I do not support this scheme at all. It will have impacts, and my noble friend Lady Hollis has raised them clearly. She talked about the regional in-fighting that we will have. Certainly, we believe that it will be worse in the area that I represent and many other parts of the country—worse, even than the poll tax. When the poll tax was in place, it was relatively easy for me; I was only chairman of finance. When somebody came to me and complained about the poll tax, I could always say, “The Tories have introduced the poll tax”. We swept all the Tories off the council; it was very easy. But now, when they say, “What are you doing with my council tax benefit support?”, at the end of the day I will have to devise a scheme. That will be down to me.