Local Audit and Accountability Bill [HL]

Debate between Lord Smith of Leigh and Lord Beecham

Wednesday 26th June 2013 Grand Committee

[Lord Beecham]

My Lords, I am a vice-president of the LGA but I am not sure that I will retain that position after what I have to say. I am afraid that I do not entirely concur with the sentiments and positions taken by the two noble Lords who have spoken thus far. I said in a previous Committee sitting that I had a concern that, although the Audit Commission was, in fairness, asked by the previous Government to over-regulate, overprescribe and over-report, it nevertheless performed a valuable role in looking particularly at the interface between services and the comparisons between different types of authority. Actually that information, contrary to what the noble Earl, Lord Lytton, said, should inform local debate. It does not supplant it. It should help to facilitate the citizens to hold their local authority to account, because they must have some comparative data to see how well or badly they are doing in relation to other authorities. That will be one of the things that we will miss. I express a hope—or, put another way, a fear—that with only six value-for-money studies to be carried out by the NAO, which I understand is the position, we would lose that independent assessment of what local authorities are doing.

I am a great supporter of peer review and of the work that the LGA has done in promoting improvements across the sector, and it has done very well in that regard, but when it comes to an objective assessment, the perception will be that that is an in-house job. It is better in my view that there should be a role for a body like the Audit Commission was—and currently still is, temporarily—or the National Audit Office will be. That is something that this amendment would very much restrict. Yet the formulation here depends on a division of resources, and whence comes the money? Of course, increasingly we will see national organisations, be it in the health service or other bodies—the Chancellor again mentioned what was called “total place” and is now called whole community budgeting—

[Lord Smith of Leigh]

Whole place.

[Lord Beecham]

Yes, whole place. It is playing with words, and of course Labour words such as “total” are not acceptable. Within these areas there will of course be collaboration, and the proportion of funding will vary considerably. For example, in public health, less than 50% of government money will be coming in, so the Audit Commission would presumably be prohibited from taking a look at the effectiveness of that. It is not an audit job in that sense, but it is particularly desirable that it should address the issues of effectiveness and outcome, not purely in financial terms but across the piece as well, and that in itself should facilitate the work that the LGA and individual local authorities are doing, particularly in their scrutiny functions, to see how they are faring relative to others, and for that information to be communicated to the people who elect them. So I certainly could not support these amendments. I understand what the noble Lords are saying, but I think that a mission creep has overtaken their amendments as well. They were going too far in the interests of local democracy and the effectiveness of local government.

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[Lord Beecham]

My Lords, with the leave of the Committee, I will speak to both this amendment and the following one, Amendment 19BC, since they both relate to council tax referendums, which is a highly contentious issue—to use the noble Baroness’s phrase—about which no doubt several authorities would be only too pleased to be able to lobby. I do not think a telephone call would suffice to deal with this issue.

Amendment 19BB deals with a particularly objectionable part of the Government’s proposals. I remind your Lordships that the ad hoc committee on the Bill had no opportunity of considering these amendments, or indeed the code of practice that we have just discussed, because these matters came very late in the day and were added to the Bill as a convenient vehicle for the Secretary of State’s obsessions, to which I have already referred. In terms of the council tax referendum, what is particularly objectionable is that there is a potentially retrospective effect here, because decisions already taken in the past can be used as the basis for requiring a referendum in the future. That is particularly objectionable where the decisions might have been taken by a body that is not actually the individual local authority. If it is a precepting authority or, as this Bill is seeking to require, a levying authority, that is even more objectionable. There is no justification whatever for this element of retrospectivity and I hope that on reflection the Government will see that it is a departure from normal practice and one that cannot be justified except in the most exceptional circumstances. In my submission these simply do not arise.

Amendment 19BC acknowledges—as do both amendments—the fact that we are living with a provision about council tax referendums. Many of us opposed them when they were inserted into what is now the Local Government Act but they are there and we have to live with that. What this amendment deals with is the position that might arise as a result of not simply a decision in the past but a decision in the past with a continuing effect on expenditure. So, for example there are authorities—I understand that Leeds has raised this—with city deals that have entered arrangements which would require expenditure over a period which, if the current referendum provision is applied, might severely impact on the schemes to which the Government are party.

The city deal, which one welcomes, is an opportunity for the Government, local government and private sector partners to work together. It involves a commitment of expenditure on all parts. If such decisions are not to be thwarted, given the ever tightening situation affecting local authorities, at the very least the Government should be making transitional provision to ensure that decisions fairly recently arrived at, but which will have a continuing impact, will not merely be on the finances but on the economic state of the area with which these arrangements are very largely concerned. The Government’s proposed changes could cause very severe problems, whether they are over transport—which I think was the case in Leeds—or about city deals such as that in which my own authority has been involved. No doubt we shall hear from my noble friend Lord Smith about Greater Manchester Combined Authority and its arrangements.

Referendums are both costly and unpredictable in their outcome. You cannot have that situation when you are dealing with third parties and have entered into arrangements that could be disrupted as a result of the change which is now being proposed. I think that the Government should take both of these matters back. The first point is really a matter of principle about retrospective legislation and requirements. The second is to deal with what appears potentially to be a significant issue for a number of authorities which are endeavouring to do their best in many respects to work with government on agreed programmes that could be rendered difficult—no doubt unintended—as a result of the provisions. I beg to move.

[Lord Smith of Leigh]

My Lords, before I speak on this matter I shall declare my interests. I am a vice-president of the LGA and also, as my noble friend indicated, the chairman of the Greater Manchester Combined Authority. Greater Manchester is one of the areas where the Secretary of State was somewhat upset by the level of council tax rises which were entirely consistent with the law as it stood. Before I begin I would like to quote from a document published by DCLG on 12 January 2012 on council tax referendums.

“The definition of ‘relevant basic amount of council tax’ . . . is essentially an adjusted Band D amount which is derived from a calculation of the authority’s basic amount of council tax. This amount is modified by omitting local precepts issued to or anticipated by a local authority, and levies issued to or anticipated by an authority, from the calculation. This is to ensure that increases in levies, over which authorities have minimal or no control, are not a factor in triggering a council tax referendum”.

Those were the words of the department in issuing guidance on council tax. As my noble friend indicated, levies come in to local authorities in a number of different guises. In Greater Manchester last year, two particular things impacted on the levy situation. First, not quite like Leeds, we had an agreement between authorities on transport expenditure, which will put a 3% increase above the day-to-day spending needs of the transport authority to invest in transport infrastructure. That programme began in 2009 with the commitment of the 10 authorities in Greater Manchester—which took some getting, I assure you, but we got there—to put that money in for six years. When we went to the Government and negotiated our city deal—we were the first conurbation to get a city deal—this transport expenditure was seized upon by the Government as an innovative way forward for local authority spending. It has taken some time, but we have devised an earn-back model and have now agreed that the Treasury will reallocate some of the increased taxation back to Greater Manchester. We will be able to spend that money on future investment. It is a good deal, and I understand that it will be part of the announcement on the public spending review.

Last year, the increase for the Greater Manchester transport levy was 3.6%. In other words, it was 0.6% for day-to-day transport needs—the cost of fuel and other things; this meant that there were big impacts on costs. The other 3% was that commitment made back in 2009, which continues to roll forward in future years—a contribution to investment and transport. We can prove that the transport investment is taking place. If noble Lords go to Manchester, they will see that the new Metrolink system is up and running, and new bus ways beginning in my area. There are all sorts of things going on which meet our commitment, and government commitments, to reduce greenhouse gases and all sorts of things. We thought that we would agree that with the Government but, obviously, they pushed up the levy.

I step back slightly from the second impact because Wigan is not part of the Greater Manchester waste disposal authority. The waste disposal authority signed a new PFI deal a couple of years ago because it did not have the facilities to deal with modern waste and needed expenditure on a new facility. So often with PFI deals, the early years have a really high cost which inevitably falls over future years. The effect on the waste disposal levy was 4.5%; obviously a very big increase for those authorities. A number of authorities in Greater Manchester therefore raised their council tax by more than the 2%, which the Secretary of State said would trigger a referendum. This was entirely legitimate within the rules of council tax referendums as they then were. In fact, the ironic thing was that a number of authorities, including those which seemed to have the biggest increase, actually reduced the proportion of the council tax take for their own services to meet the needs of external levies. That means that if this clause goes through, then the threat of the Secretary of State—the revenge of Eric Pickles—will be that any authority which raised its council tax by, say, 3.5% while the guideline figure remained at 2% can only increase its council tax next year by 0.5%. The rules have changed.

Who knows what would have happened if the council had known that that was the situation last year? Different decisions might have been made. How can we predict the mind of the Secretary of State and the mind of the department when it wants to change the rules in this manner? It is grossly unfair that some authorities, in addition to the awful amount of cuts that they are taking on board, will have to make savage cutbacks in services to cope with this part of Clause 39. This is bad and retrospective legislation and the Committee should think very carefully before it commits to Clause 39.

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[Lord Smith of Leigh]

My Lords, I agree with the noble Earl about the problems of the electoral cycle. It was a bit disappointing that this is the fallow year for metropolitan authorities so we did not have elections. Noble Lords may recall that Wigan won the FA Cup and the feel-good factor was particularly good; obviously there have been fantastic comments on social media, but unfortunately we did not have any local elections to take advantage of that.

It was really interesting that the noble Lord, Lord Tope, read out the views of the director of finance from Bradford. The answer that the Minister gave to the earlier amendment was that, under Clause 39, the current provisions of the Localism Act, which define the relevant basic amount of council tax increase, will change from being what the council itself sets to include levies and other charges. Therefore, decisions that were entirely within the law as it stood earlier this year in March will be affected.

We had a debate earlier on the council tax referendum principle. The Government say they are not capping but actually they are. In my long experience of local government, I cannot believe that once the Secretary of State sets out the guidelines to which a referendum will apply, any local authority would want to set an amount of council tax increase above that guideline. If it does, it is on to an absolute loser. There is no way it will win a referendum on that. Which council tax payer is going to vote for higher council tax? They are not asking, “What services are being cut?”. It is a simple referendum on the increase in council tax and nobody wants it. The Secretary of State may want and need that part of it but effectively it is capping local authorities.

Capping does not always have the longer-term political impact that Governments may think. When capping was first introduced, my authority was one of the 22 Labour authorities that were all capped at once; no Conservative authorities were. We set a budget, but the Government said we could not and that we had to reset it and make significant cuts. When we came to the elections that May, we had a really big increase in our majority, so it did not have any negative political impact. I have great sympathy with the noble Earl’s position. Do we need this clause? I do not think so.

[Lord Beecham]

My Lords, I shall be brief. The position is a curious one in relation to what the Government regard as an area of excessive increases and what they regard as something else. An increase of more than 2% in council tax is excessive but an increase of 5.8% in social housing rents is acceptable. Indeed, the Chancellor has said today that social rents will increase by CPI plus 1% a year for virtually a decade. That actually will be rather less than the increases imposed in this past year but whichever way you look at it, it means that what is an unacceptable increase for council tax payers is well below what social housing tenants will be expected to pay. It is an interesting anomaly.

However, on the referendum point, it should be noted that three sets of organisations are involved in local government finance at the local level—the council, the levying bodies and the precepting bodies such as police commissioners. Several police commissioners increased their levies by significantly more than the 2% figure. That was acceptable because it did not raise the overall increase significantly. On the other hand, technically, their regime is rather different and rather more generous in terms of potential increases. However, if they breach the limit for precepting authorities, I understand that they would have to have a referendum. Therefore, there are two referendum systems here, as it were. It is odd that there are in effect two external bodies—some bodies, admittedly, comprise a combination of local authorities, but many do not—which can, by means of a levy, potentially force the council to have a referendum on its overall council tax levy, whereas precepting authorities are in a different category. That anomaly certainly raises questions to which we may want to return on Report.

I anticipate that the noble Earl will not seek to test the opinion of the Committee tonight. Given the fact that referendums are now, unfortunately, part of the system, despite the opposition of many of us when the Local Government Bill went through, I am not sure that we will get very far in that regard on Report. However, in this curious area of anomalous situations and differential rates of what is acceptable and what is not, we might at least provoke the Government into thinking about the system they are creating and the degree to which it is being made more elaborate, complex and, ultimately, less accountable to people with every successive announcement.

Local Government Finance Bill

Debate between Lord Smith of Leigh and Lord Beecham

Wednesday 10th October 2012 Lords Chamber

[Lord Smith of Leigh]

We now move to the safety net for local authorities. The Minister said earlier that this is a very significant matter and clearly it is for local authorities. It is recognised around the House that local government finance is going through a turbulent period and that there are likely to be movements of significant amounts while the pressure on local authorities continues to rise, particularly as regards adult social services, as my noble friend Lord McKenzie said earlier. The famous graph of doom is getting closer every time we meet. The Government have talked generally about a 10% safety net being accessible. However, given the discussion we had earlier and the fact that the review will not happen until 2020, we could have a local authority which suffers a reduction in its business rates of 9.9% in year one, would not therefore be eligible for any safety net mechanism and would have to run with that for a period of seven years. That is unsustainable in terms of supporting local authorities. As I previously argued, there is likely to be a lot of change, and we are now making judgments about what is significant in terms of a percentage. I should have thought, given the pressure on local authorities from central government in terms of reductions in spending and local delivery, that 5% would be a much more reasonable figure.

As regards my Amendment 46A, the issue is intriguing because we assumed when the Government introduced the system in the Bill that they would be funding it and the money would come out of central government because of the impact on particular local authorities. We are now led to believe that some of that funding will not come from central government sources but from local government itself. It seems somewhat bizarre that a system that is meant to help local authorities which are suffering from turbulence due to the current funding system are to be paid for by other local authorities. I hope that the noble Baroness can make it clear that the funding will not come from other local authorities and that central government will take responsibility for it. I beg to move.

[Lord Beecham]

My Lords, I shall speak to my noble friend’s amendments, and the amendments in my name and that of my noble friend Lord McKenzie.

My noble friend Lord Smith rightly referred to the concern about the threshold level above which protection would be given. I note that in the debate in Committee, the Minister said that the Government had been carefully considering these issues,

“together with the safety net support threshold in the range of 7.5% to 10% below baseline funding”,

and said that that offered the, “best combination on balance”. She went on to say:

“We will be consulting local government over the summer before any final decisions are taken”.—[Official Report, 5/7/12; col. GC424.]

It would be interesting to know what representations there have been and what progress was made during those consultations because, on the face of it, it looks as though the Government are still on course for that higher figure. My noble friend Lord Smith rightly pointed out the severe financial problems facing local authorities—a combination both of cuts in government grant and the rising demand for and costs of services. Many authorities will find themselves in an unprecedentedly grey financial situation. The noises outside suggest that the heavens appear to echo my sentiments.

The problem is shared by many authorities. I ought to declare an interest as a member of Newcastle City Council and, like others, I am an honorary vice-president of the Local Government Association. In Newcastle, we are contemplating reaching a position whereby we have to find £90 million a year by the end of a three-year period. That is £90 million every year, which is a significant proportion of the budget. Consequently, any diminution of resources from the reduction in business rate income would be a matter of even greater significance.

Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) Regulations 2012

Debate between Lord Smith of Leigh and Lord Beecham

Tuesday 14th February 2012 Grand Committee

[Lord Smith of Leigh]

My Lords, I have to confess that I am another honorary vice-president of the Local Government Association. I am also leader of a council. I declare those interests.

I agree entirely with what the previous three speakers have said. The noble Lord, Lord Jenkin, said that he approved of a new capping. We were one of the first authorities to be capped, in 1990-91, when we were cunningly capped by a Government who did not tell us the rules before we set a council tax and we suddenly found that we had done it outside the rules—but never mind, we got over that. We then had to set another, lower council tax, and of course the democratic influence came around and we got a much increased majority on the council as a result.

I have also been a passionate advocate for localism and I fought my Government on many occasions when I felt that they were being too centralist. I really welcomed the principle of the Localism Bill when it came through. Unfortunately I was not able to attend any of those debates, but with this measure the fundamental business of localism is undermined because it says that the Secretary of State will decide the council tax. As a practical local politician for many years—too many years, people may think—I would ask: which authority is actually going to go to its electorate and say, “We think that we should have a much bigger increase than the Government do”? Have we any evidence of anybody ever voting for an increase in taxes? They do not do that, but this will be on a specific item of tax and it is a question of the words.

What is surprising to me is the use here of “excessive” regarding a council tax rise, because “excessive” is pejorative. You are assuming that it is beyond what it ought to be. No local politician wants to set an excessive council tax but, looking at the local problems in their area, they will want to think, “What are the issues in the set of problems that we have to address?”. What worries me is that, in a sense, we are creating a problem of the democratic mandate. I have a democratic mandate; I am elected by people in my ward. Come next November, we will have police commissioners who will have their own mandate. Somebody may stand as a police commissioner in Greater Manchester on this platform: “There are not enough police on the beat, and we need to put more on the beat”. That will cost more money and therefore the increase in their precept next year may well exceed what the Government think is reasonable. As a billing authority, we will have to cope with that situation. The police commissioners probably will be not too worried if it costs us more money, because they will say that they have a mandate to do it. A referendum is a slightly different form of mandate.

The Minister mentioned that this year there will in most places be a council tax freeze—as there will be in my authority. However, we had to make sure that all the precepting authorities were also going to freeze their tax. There would be no point in me saying that there would be no increase in council tax if the precepting authority had not done that. As she said, the Government have given a grant for one year, but next year that grant drops out, so without anything being done at all the council tax in areas that have had a zero increase will increase simply to pay for the loss of the grant in year one. Is that going to be deemed excessive or not, as part of the principles? It does not matter what I think we need next year; in 2013-14, we will have to make an increase for what would have been there in 2012.

The noble Lord asked about the cost of the referendum. If we are having a referendum only on the first Thursday in May, when most billing authorities will have wanted to send out bills well before the end of March, so that the cash flow begins early in April, the serious cost will be that not of the referendum but of the loss of income if there is no determined council tax. There are so many different issues here. I know that the Minister understands from her own experience the intricacies of local government. However, despite having this wonderful set of regulations, if we think about them I cannot believe that they are ever going to be used. It will be an interesting historic document. We should hang on to it and say, “Here are the regulations for council tax referendums which were never used”. It is really not in anybody’s interest, particularly not that of local authorities, to have all the costs not just of the referendum but of the loss of income.

[Lord Beecham]

My Lords, whenever I speak in this Room, the pictures on the wall prompt me to make a connection with the subject we are discussing. Today, we have Moses bringing the tablets down—as I understand it, there was no referendum on the 10 commandments—but we also have Daniel, who I suppose could be described as a bit of a returning officer. Noble Lords will recall that “You have been weighed in the balance and found wanting” was the interpretation he gave Nebuchadnezzar. Such divine and semi-divine inspiration apart, we have today to deal with an important set of regulations.

This Government are addicted to referendums. We have had one, as my noble friend Lord Grocott has reminded us, on AV. They are compelling 11 councils to hold one on elected mayors. They are keen to have one in Scotland, perhaps rightly so, and the Localism Act provides for referendums in the context of local plans. Oddly, the Government have not yet indicated whether they plan one on House of Lords reform—precisely the kind of constitutional issue to which the noble Lord, Lord Rennard, referred when he spoke of the Constitution Committee’s thoughts and recommendations on what would be an appropriate subject for a referendum. Today, however, we debate council tax referendums.

There are, in fact, only two things wrong with council tax referendums and the regulations before us. The first is form; the second is substance and effect. Let me, in my perhaps typically perverse fashion, deal first with substance and effect. Rather than rely on their former powers to cap individual authorities, a power to which local government has always objected—and here I suppose that I ought to follow others in declaring an interest as an honorary vice-president of the Local Government Association—the Government are, in effect, capping every authority by stealth. The Government have determined an arbitrary figure for different classes of authority beyond which a council will be compelled to hold a binding referendum to coincide with the date of council elections in May. By this time, of course—as my noble friend Lord Smith has already reminded us—the bills will have gone out. If the referendum rejects the council's proposal, the council will have to re-bill. This in itself, combined with the cost of the referendum, will, as no doubt intended, deter many councils, especially small councils, from proceeding down that route. I recall an incident—I cannot remember which council it was—where the cost of re-billing exceeded the saving that would have been made in terms of the difference to council tax.

It should be noted that the definition of excessive increases—and, again, I concur with the scepticism of my noble friend Lord Smith about the use of the adjective there—is simple and crude. There is no scope to differentiate between authorities, or groups of authorities, with particularly challenging problems—financial or otherwise. There is no scope, as under the previous system, for any representations to be made to the Secretary of State or any accommodation reached. Instead, there is a flat target—a referendum irrespective of whether there is any local demand for one—and a plethora, as the noble Lord, Lord Jenkin, has rightly described it, of tightly prescribed rules and regulations about how to conduct a referendum. There is page upon page of precisely that kind of prescription. This is all before the so-called localisation of business rates impacts, as it will, differentially between councils and their council tax payers, with its own impact on the level of council tax to be levied.

Consider the background. As Professor Tony Travers pointed out recently, the Government's VAT increase of 2.5 per cent last year cost households 20 times as much as an equivalent percentage increase in council tax. Many council tax benefit recipients will find their council tax going up sharply in the wake of the cut that the Government are imposing on benefit just as council tenants have suffered rent increases of around 8 per cent. However, there is no thought of a referendum about any of those burdens on households. When the department wrote to council chief executives last week, it became apparent that the way the system will actually work is far from the simple, albeit misguided, impression that one would gain from the headlines, as the noble Lord, Lord Jenkin, has pointed out. The rubric looked as though an increase would be excessive if it exceeded 3.5 per cent. It now appears, however, that certain councils could, depending on circumstances, levy a 5 per cent increase without having to hold a referendum. As the noble Lord said, 31 others might find themselves required to hold a referendum if they increase council tax by less than 3.5 per cent; indeed, as he said rightly, if they increase it by less than 3 per cent. Manchester, to which he referred, would have to have a referendum with a 2.05 per cent increase, Sheffield with a 2.7 per cent increase and Newham with a 2.79 per cent increase. All this is after the council tax freeze that we have already had and which, at some point, will have to be made good. In case my noble friend Lord Smith does not know it, I should perhaps advise him that the effective referendum limit in Wigan will be 2.83 per cent.

As usual, the authorities worst affected are those most heavily dependent on formula grant, particularly in the north, the Midlands and in some London boroughs. It is a measure of the problems that they face that the cut in formula grant as a percentage of council tax is as high 18.8 per cent in Manchester and 22.7 per cent in Newham, while their permitted increase will be around an eighth of that amount, not that those councils would be envisaging increases big enough to close the gap fully as that would be a very high council tax increase indeed.

However, there is an even more startling potentially perverse outcome, referred to by the noble Lord, Lord Jenkin, for it is possible that, due to the arcane working of the system, a council might have to hold a referendum even if it freezes its council tax. So it would go to the public with the question: “Do you agree that the excessive council tax increase of nil should be supported or not?” What a ludicrous procedure that would be.

As my noble friend Lord Smith has said, no council enjoys increasing council tax or does so willingly. It is noticeable that, this year, even a number of Conservative councils have felt compelled not to observe the freeze that the Government have called for, paid incidentally for those councils that accept it, from money which would have gone to local government anyway in the distribution of formula grant. Those Conservative councils have, no doubt, taken this course because freezing the base will make future financing more difficult. Alas, they have incurred the wrath of Mr Pickles accordingly.

Making a council budget is a difficult and protracted process at the best of times. Making it at a time when demand for services is growing, partly as a function of the state of the economy and the fact that people's capacity to pay is shrinking, is even more difficult, despite local government's outstanding record in increasing efficiency, which is much the best across the whole of the public sector. Extremely hard choices between competing demands have to be made by every council. These are not easily mediated by a simplistic choice between different levels of council tax. The proper way to come to a decision locally is for councils to consult widely on a range of options and then to determine the budget and set the tax. The Government’s covert capping undermines representative local democracy by proposing the veneer of democratic engagement in the form of a single question about the level of an increase. The proper occasion for judgment about a council’s policy and record is at local elections, not in the form of ad hoc referendums.

That brings me to the question of form. The Electoral Commission which, as we have heard, has responsibility for these matters, consulted widely last year and commissioned research on, in particular, the question to be asked. Instead of accepting the commission’s proposed question, the Government produced an alternative, embodied in the regulations, on which they neither consulted nor conducted research. The commission states that it is not possible properly to assess whether the question is clear, simple and neutral. The commission concludes that the question,

“risks introducing an unknown level of complexity and potential bias”,

to these referendums. I note, parenthetically, that the whole problem is caused by reducing complex choices and deliberations to the form of a simple question in the first place. Somewhat disingenuously—of course this is not the responsibility of the Minister—the Explanatory Notes for the regulations refer to the Electoral Commission’s position, saying, that the Government consider that,

“the alternative question proposed by the Commission did not make it sufficiently clear that voters are voting on a council tax increase that has already been set”.

The next paragraph says:

“The commission also offered views on the draft regulations and raised a number of points of detail which informed the drafting of the regulations”.

I find that an extraordinary assertion in the light of the explicit recommendation that the Electoral Commission made in a document circulated recently, in which it says,

“The Government should withdraw these draft Regulations and lay new draft Regulations specifying a revised referendum question which more fully reflects the recommendations”,

which it made in December. It is quite extraordinary that the Explanatory Notes should be published with no reference at all, either in the original or, if the response of the Electoral Commission came in later, by way of a supplementary note.

The noble Lord, Lord Rennard, is quite right to emphasise the importance of respecting the views and recommendations of the Electoral Commission. I concur with him that the setting of questions should be entirely a matter for the Electoral Commission, and that is not the position at present. The Government are within their rights to ask about the question posed. Sticking to those rights does not answer the problem that we are facing and that is posed by the Electoral Commission.

City of Wakefield (Mayoral Referendum) Order 2012

Debate between Lord Smith of Leigh and Lord Beecham

Tuesday 17th January 2012 Grand Committee

[Lord Smith of Leigh]

My Lords, I was intrigued by the Minister’s introduction in which she gave examples of some successful mayors in Spain. I do not suppose that she wants to mention those mayors who are now serving time in Spanish jails for accepting bribes for land usage, or the famous mayoral model in New Orleans when it suffered from flooding a few years ago and the mayor simply dithered and created yet more problems.

I was intrigued by the point the Minister made, with which I totally agree, about the importance of the economic role of cities. The issue that I have with the Government and some people on my side is that we are talking here about cities whose boundaries are historic. I think back to the 1972 reform of local government when most of the boundaries of these places were established, so they are historic to that extent. However, they are pretty arbitrary and do not reflect the way that people’s lives are led now.

The city and region I know best is Manchester, but the Manchester economy is not just that of the city of Manchester. The boundary of Manchester comprises a very strange long sausage shape but its economy spreads not only into the nine districts around it but also into parts of Cheshire and West Yorkshire. That is what is driving the growth that we all want to see. I was slightly perturbed by the Minister’s answer as Manchester is holding successful talks with the Government on the new deal for cities. I welcome the approach that the Government are taking to that. However, that approach appears to be conurbation-wide, not city-wide. It does not actually give things to Manchester City Council. However, we are talking about how we can, through the combined authority, do things better and achieve the joint objectives that we have on economic growth for Manchester, which clearly is part of the Government’s agenda as well.

As I say, there is some genuine debate and discussion going on and I want to place on record how much I support what the Government are doing on this matter. I have met Greg Clark on a number of occasions and he is pushing this devolution well. However, I do not want to see devolution to Manchester—not that I am jealous of Manchester—because, if we are to be successful as an economy, the devolution has to apply to a much bigger area. The economic growth that the Government want will not be achieved unless the Manchester city region does well, not simply the narrowly defined city of Manchester. I know that that is largely the case in other conurbations. I want to refer briefly to West Yorkshire, as I know that area well. West Yorkshire has not really got its act together well. It has three very large and important areas which we know are up for city roles.

My fear in a sense is that once you have become mayor of Bradford or Wakefield or Leeds, your desire is to do well for that part of the conurbation and you fail to understand that, if you want to do well for those three parts, it is the whole conurbation that needs to be successful. Clearly I was at odds with people in my party some time ago who thought that it was a panacea that would solve the problems of local government. Some very good authorities have been set up through the traditional models. I know that the Minister was very actively involved in one of them; we three were on the old Association of Metropolitan Authorities Policy Committee many years ago.

I want, as the Government do, for cities to do well for the whole of Britain, but I am not sure that this is the way in which to achieve that.

[Lord Beecham]

My Lords, the last time when I spoke for the Opposition in this Room, the noble Lord, Lord Smith, also participated in the debate. A couple of days after that, he was taken very seriously ill. I am delighted that he is back with us and in such excellent form. I am sure that we wish him continued good health.

It is perhaps appropriate that we are discussing these orders in the Moses Room, not because I may be distantly related to the gentleman in question but because he is portrayed as coming down bearing 10 commandments. The Minister of course brings 11 commandments to 11 authorities, and they may receive a similar reception to that which the originals received. I know not—we shall see.

Since the Prime Minister’s arguably somewhat clumsy intervention the other day, referendums have become almost the issue of the day, at least in the minds of the political class. I suspect that the majority of people are rather more concerned with issues such as the faltering economy, unemployment and the fate of the NHS—and, to judge by today’s e-mails, the Welfare Reform Bill and perhaps the legal aid Bill. Many of us have been deluged with e-mails about that; I am bound to say that I have never received a single e-mail suggesting that we need referendums for elected mayors. But 11 authorities will now face compulsory referendums, not because as in Scotland there is a public demand for it but because the Government are determined to pursue this agenda.

It is interesting that the Explanatory Notes affirm that the Government believe that local authorities and the communities that they represent are best placed to reach decisions on how their local authority should operate and be governed. They say that the 2000 Act provides for local people to have a say on the governance model adopted by their local authority via a referendum. But it is one thing for people to have a say and another to require them to vote or at least hold a referendum, as the Government are now doing. Yet 5 per cent of the electorate in any of those 11 cities, or any other local authority, could at any time over the past 10 years have requisitioned a referendum—and, of course, the vast majority have not done so. A number of referendums have been held, 38 in all; 13 of them agreed that they should go ahead with the mayoral system and 25 rejected it. Some of those authorities called a referendum, as they were allowed to do; there was nothing wrong with that. That included Tower Hamlets and Leicester. In other cases there was a petition.

My noble friend Lord Grocott questioned the turnout in referendums; in only one case apart from three referendums held on the same day as the general election did the turnout exceed 40 per cent. Incidentally, one of the authorities with a referendum subsequently decided to abandon the mayoral system. The turnout in the five authorities that voted for an elected mayor ranged as follows: 16 per cent, 18 per cent, 21 per cent, 25 per cent and 27 per cent. That is hardly a ringing endorsement of the concept. Yet the mayoral system was supposed to lead to a great upsurge in local democracy.

I was present when this concept was floated. It was at a meeting—I do not think that it is wrong for me now to reveal it 15 years on—of the joint policy committee of the Labour Party, a somewhat cumbersome, bureaucratic piece of machinery, which consisted of members of the then shadow Cabinet and of the national executive of the Labour Party. I was representing local government and some other unfortunate was representing the Labour MEPs. Tony Blair announced to the apparent consternation of Frank Dobson, who was the environment spokesman of the day, that we were going to have an elected Mayor of London. The only person who asked a question about that, in a somewhat sceptical vein, was me.

The discussion lasted five minutes and that then became Labour Party policy, which you may think is an interesting way to formulate policy, but there it was. The constant theme of those advocating this was that it would strengthen local democracy and lead to greater involvement. That has not been the case, as my noble friend, Lord Grocott, has rightly pointed out, either in terms of the turnout at the referendum or in terms of the turnout in mayoral elections. In London, the first two elections showed a turnout lower than the average local authority election. At the last mayoral contest, gladiatorial as it was and as it no doubt will be again, with all the coverage proffered by the Evening Standard—noble Lords will remember coming out of tube stations and seeing the placards about the latest Ken or Boris pronouncement—the turnout was around 45 per cent, marginally higher than a council election in a major authority: it did not necessarily command huge interest.

Over and above the propriety of requiring the holding of the referendum—and I think that there is a serious flaw in the Government’s approach—there is a question of what is at stake here. We are talking about the conferring on a single individual of very wide-ranging powers combined with very little accountability. It is not as if a majority of the council can overturn a decision of the mayor. On hugely important matters, from the budget, the children’s panel, and the strategic panel of the authority and over a whole range of issues, the mayor will prevail unless two-thirds of the elected members of the council overturn him. This is a little better than the Mussolini formulation for general elections in Italy in 1923, when 25 per cent of the votes were sufficient to give 75 per cent representation in the chamber; we are not quite in that league. Nevertheless, it is a formidable degree of power concentrated in a single pair of hands. The noble Baroness, Lady Hanham, adduced Barcelona as an example of a mayoral authority, which indeed it is, but as she put it—perhaps without quite realising the implications of what she was saying—Maragall, who was the outstanding mayor of Barcelona, was elected as head of his party’s list. In the same way, a Prime Minister—although not as it turns out the present Prime Minister—is elected as the leader of his party: his party obtains a majority, not a single individual running for office. That is quite a distinction, yet by any standards Maragall was an outstandingly successful mayor.

The Labour Party in its wisdom once sent a delegation over to Holland. They have mayors in Holland and it was thought it would be instructive for innocent and naive Labour councillors to see what was done in Holland. They had overlooked that mayors in Holland were not elected at all by anybody. They were Crown appointments at that stage. At least the Government have not gone that far yet, but there is that huge issue of power. Equally, as the noble Lord, Lord Cormack, pointed out, there have been distinguished local government leaders, not least in the great city of Birmingham, to which the noble Lord, Lord Rooker, alluded. They have had not merely Joseph Chamberlain but his brother; he was described by Lloyd George, it will be recalled, as a “good mayor of Birmingham in a bad year”, but he was a distinguished local government figure. Successive leaders of Birmingham of, certainly, two political persuasions have been well respected. We have seen similar figures leading other councils. So while the power exists for either a council or a small percentage of an electorate to call for the holding of a referendum, it seems entirely unnecessary to prescribe that such elections should take place.

Of course, the Bill will give the Government the power to impose this system of referendum on any authority. It would be interesting if the Minister would indicate the Government's thinking on these matters. Is it likely, if a number of these referendums are successful, that they will then seek to roll out the holding of referendums elsewhere?

In relation to cost, it is reassuring that Mr Pickles has been able to find yet more money secreted in the coffers of the Department for Communities and Local Government—in addition to maintaining the weekly waste collections—to fund these referendums, although most of us would prefer to have the money for more productive purposes. In addition, there will be the cost of mayoral elections, which will be at least as much and presumably a little more than the cost of holding a referendum in the first place. I apprehend that those costs will be met by the local council if the electorate choose to go down the mayoral route.

It will be gathered that the Opposition are not entirely sympathetic to the orders that are laid today and we will be moving a Regret Motion when the matter comes before the House. I understand that there will be similar proceedings in the Commons. I am confused by the timetable. I understand that we have the statutory instruments before House of Commons, but so be it. We are looking for these matters to come before the House in February.

No doubt the Government will stick to their guns. I can only hope that people in these 11 authorities, should these referendums go ahead, have the good sense to stick with the tried and tested system of local democracy and not vote to confer huge powers into too few hands.

Local Authorities (Conduct of Referendums) (England) Regulations 2012

Debate between Lord Smith of Leigh and Lord Beecham

Tuesday 17th January 2012 Grand Committee

[Lord Smith of Leigh]

My Lords, I declare an interest as leader of Wigan council and chairman of the Association of Greater Manchester Authorities and the new Greater Manchester Combined Authority. I was going to wait until later, but I would like to respond to some of the comments made by my noble friend Lord Rooker. It is in the background papers. He is mistaken to compare what is being offered here with what is going on in London. The London mayor is mayor of a whole conurbation. There are 32 London boroughs. What is on offer here is a mayor for a single local authority. In the conurbation of west Yorkshire, we are offering three cities. I am sure that Kirklees and so on must feel a bit out of it if they are not to be in the system. In the West Midlands, there are two, so they are not conurbation-wide. There are no additional powers coming to these individuals compared with those that the leader and cabinet model can exercise. The importance of the mayor of London, whoever it is, in terms of transport, police and so on, will not be there in any of the cities. In fact, as my noble friend Lady Farrington reminded us, in my area, we will have an elected police commissioner who will take responsibility for those areas. In transport, I can assure whoever is the new leader or mayor of Manchester that they will have no more influence over what goes on in transport for Manchester than any of the nine authorities. They will be one of 10. That is it.

The other thing that my noble friend Lord Rooker seems to think will happen is that getting a mayor for Birmingham might create some cohesion between the other local authorities in the West Midlands. That does not happen. He is right that Manchester works better than many other conurbations—I take some credit—but that is because we have worked at it for a long time and each authority has understood that if you want to gain collectively you have to give up some power as a local authority.

Will someone coming in as the elected mayor of Birmingham say straight away, “I’ll be elected mayor of Birmingham but I want to give up things to the West Midlands council so that we can work better together with Coventry, Wolverhampton and the other authorities”? That will probably not happen. We do not know whether it comes down to personalities in Birmingham because, of course, you do not have any successful football managers in Birmingham so clearly the chance of one of those standing does not apply, whereas it does in Manchester. The current law allows each of these authorities to choose to have an elected mayor if they want to. None has chosen to do so. However, if we were offering something like the London model, there could be a real debate.

[Lord Beecham]

My Lords, I resist the temptation to reply to the noble Lord, Lord Rooker, with whose views on the principle of elected mayors I could hardly disagree more strongly. I shall reserve comment on that issue until we reach the next group of orders. However, I strongly agree with the two noble Baronesses—that sounds like the name of a rather superior public house. The two noble Baronesses and I welcome the regulations which facilitate a choice being made. We will come on to how that choice arises in the next round, as it were. However, I am particularly glad that there is an opportunity for councils which wish to do so to revert to the committee system—not that I am personally in favour of that system as opposed to the leader and cabinet model. My own experience consists of having served for 17 years as leader of my authority and five years either side of that as a committee chair. When I went voluntarily to my Siberian power station in 1997, leaving the front bench of my council and going to the back benches, I chose the arts and recreation committee as a place of sojourn. The reality of life as a back-bench member of a committee became apparent when, having missed a meeting, I came to the next meeting and noticed that the minutes solemnly noted that a member had raised a question about birds eating grass seed at the Leazes Park allotments—this in a council with goodness knows how many problems and a budget of £800 million. It did not seem to me that the committee system was necessarily designed, or was working, in a way that addressed significant issues and facilitated members making a significant contribution. However, if members choose that system, it is a matter for them and we now have a scrutiny system which, if properly resourced, can make the system much more effective.

I revert to the Motion moved by the Minister, which will be approved. However, I have a reservation about the regulations in relation to the questions to be asked in the referendum. It is perfectly true that this is not something which has been dictated by the Government. The Electoral Commission has drafted it and has consulted on it although I do not know how many responses it received to the consultation. I doubt whether it was deluged with responses from the public but that is a matter for the commission. The question to be asked is in my view rather curiously and, arguably, tendentiously worded. It is: how would you like your authority to be run, by a leader who is an elected councillor chosen by a vote of the other elected councillors—this is how the council is run now—or by a mayor who is elected by voters—this would be a change from how the council is run now? It seems to me that “run” is a fairly loaded word. It does not really describe how I felt I was running the council when I was the leader of a council. The council is run by a leader and councillors, not by the leader elected by councillors. I think that rather colours the view that people might well take. They might think that if an individual is running the city, he or she might as well be accountable—if accountability is what they are interested in and if it is realisable—to all of us. In fact, a leader and cabinet model means a leader working with councillors to lead and run a council, not doing it personally. Although there is nothing we can do about it, I rather regret therefore that the question is posed in that way. However, we are where we are and doubtless if there are to be referendums in future, that is the question which will be put. It will be for those of us who take a different view of these matters to explain that it perhaps gives a somewhat misleading impression.

Either at this stage or a little later, perhaps the Minister could respond to the implicit question which I think that the noble Baroness, Lady Maddock, raised about when a mayoral election would take place, pursuant to the orders which we are to debate later, if they are approved. It is suggested that it is intended that these elections will take place in November of this year, on the same day as the police commissioner elections. I do not know whether that is right and I would have some views about it, but the Minister may be able to enlighten us with a little of that information before we debate those orders.