Infrastructure Bill [HL]
Debate between Lord Smith of Leigh and Lord Tope(10 years, 4 months ago)
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Lord Smith of Leigh (Lab)
My Lords, in some ways the north-west is ahead of the game in handing over land to the HCA. When the NWDA was abolished by the Government, we had quite a large landholding for that agency, and the question was: what to do with the land? Rather than try to disperse it through a large number of local authorities, it was transferred to the HCA. That worked successfully, first, because these were pretty large-scale plots of land. They were originally designed for economic development and that was the purpose to which they were put. Secondly, the HCA operates on a local basis, so we were dealing with a local branch of the HCA; we were not dealing with any central bases in London. Thirdly, the HCA worked very effectively with local authorities. Therefore, any planning problems could be rapidly dealt with, and the HCA reported back to the North West Regional Leaders Board, which is a local authority leaders board, on what was left of the portfolio.
Therefore, I think that the principle of what the Government are doing is ideal. I do not think that the LGA—I must declare an interest as a vice-president of it—wants to undermine that, but it may be a case of horses for courses. There may be parcels of land which, by their nature, are small in scale and value and which would probably be better for the local authority to work with at its local level rather than the HCA, which operates on a regional basis.
I hope that, in replying, the Minister can reflect on what my noble friend said in introducing the amendment and can see whether there is a way forward on this matter.
Lord Tope
My Lords, the noble Lord, Lord McKenzie, said that this had been introduced as a probing amendment. I recognise that and will certainly be very interested to hear the response. I was particularly interested to hear the comments from the noble Lord, Lord Smith. I am quite prepared to accept that in this respect, at least, the north-west, or more particularly Greater Manchester, leads the way with the combined authority, which some of us think may well be part of the way forward for the rest of the country. The experience in Greater Manchester, to which the noble Lord, Lord Smith, has just referred, is certainly very interesting.
I was not terribly clear whether he was supporting the amendment of the noble Lord, Lord McKenzie, or supporting the probe, or saying that it is something worth exploring. It is certainly worth exploring. I hope that the Minister will agree to take it back and look not at why we do not need it or why it is not necessary, but whether and to what extent it would add to the available permissions for doing this. I think it is true that most local authorities, of whatever political persuasion and in whatever part of the country, are now keen to get on and make their contribution to meeting the severe housing need throughout the country. If an amendment or addition of this sort does anything to add to that, it must be desirable, even if it is not strictly necessary. I hope that on that basis, the Minister—although I suspect that she is not about to accept this amendment—will at least agree to take it back and give some positive consideration to how such an amendment or alteration might add one more weapon to the armoury.
Local Audit and Accountability Bill [HL]
Debate between Lord Smith of Leigh and Lord Tope(11 years, 4 months ago)
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Lord Tope
I begin by reassuring the noble Earl, Lord Lytton, that he may be in a minority of two. I share his concerns and would ask the Minister a question for clarification. Is it the case that, if a referendum on what is deemed to be an excessive levy is lost, that so-called excessive levy will still apply but the local council will have to cut its own budget in order to levy an appropriate council tax to meet the levy demand? Noble Lords opposite are saying yes; that is clearly the answer I am going to get and I want it to be clear and specific on the record. If so, we need to understand the implications of what we are doing. I can pick many examples, but flood defences might be appropriate. One can well understand where a drainage board wishes to put in a so-called excessive levy for particular work in a particular area and the public at large, who pay the council tax, may well feel that they do not want to contribute to that. As others have said, it can lead to unforeseen and undesirable consequences.
In addition to supporting the noble Earl, I also rise because my noble friend Lady Eaton is unable to be here today; she is at the Council of Europe. She has asked me to raise an issue in respect of the West Yorkshire transport fund. I will read into the record the contents of an e-mail she has received from the director of finance of the City of Bradford:
“You asked about the implications of the proposal that rises in levies, as well as Council Tax levels, could trigger a referendum.
The most significant implication for Bradford relates to current plans across the Leeds City Region to create a West Yorkshire Transport Fund. This fund is planned to grow to a total of £1bn by 2025/26 to pay for investment in the transport infrastructure. It will comprise, roughly, £150m from Dept for Transport, £100m from Local Transport Plan, £750m from the participating Councils, each of whom will contribute an increasing amount each year, by way of a levy. The current plan means that Bradford Council would put in £1.2m in Year 1, £2.4m in Year 2, £3.6m in Year 3 etc. The total investment over the period to 2025/26 from Bradford would be £161m.
It’s worth pointing out that the Transport Fund is a central plan in the Leeds City Deal, a key part of the Government's regional policy. While the Transport Fund is not the only element, it provides the underpinning infrastructure investment on which other investment activity builds.
Now, before the proposal to treat the levy by the same referendum rules as Council Tax, this plan held good. For citizens, the plan did of course mean that, while the Council Tax element of their bill would be restrained at below 2%, they would pay an increasing amount for transport investment. (And leaving aside the referendum issue, the decision to create and sustain the Fund ranks among the most significant decisions in the next budgeting rounds for participating Councils.)
The Bill’s proposal means that the Transport Fund can only be afforded in its current form if offsetting reductions are made across other services in the Council. So, by Year 3, for example, savings in other services would need to be roughly £2.4m higher than otherwise, for Bradford to afford its currently planned contribution of £3.6m in that year.
From a financial perspective, the proposal means … If investment in transport remains a priority, and the planned regional-level investment makes sense, there is now much sharper trade-off between transport and other choices. … If investment in transport has to be significantly reined in to satisfy the ‘below 2% rise’ rule, the investment returns will be significantly curtailed, with the reduced economic impact (which in turn would expect to feed through to a weaker taxation base of citizens in work and firms in business paying rates) ... For individual citizens/households, a lower aggregate taxation burden than they otherwise would face”.
That ends the quote from the director of finance at the City of Bradford, which I undertook to raise today. I hope the Minister is able to respond, if not today then later, particularly to the noble Baroness, Lady Eaton, on whose behalf I have raised this.
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.
Growth and Infrastructure Bill
Debate between Lord Smith of Leigh and Lord Tope
Lord Tope
My Lords, my name is also on this amendment, which was so ably moved by my noble friend Lord Shipley and spoken to very eloquently and powerfully by the noble Lords, Lord Jenkin of Roding and Lord Best. That leaves little more to be said other than to repeat what has been said, and I shall try to refrain from doing too much of that.
The noble Lord, Lord Jenkin, referred to the letter in the Financial Times today. I have been able to supply the Minister with a copy of that letter during this debate. I think it is noteworthy to list the organisations that have signed that letter. Reference has been made to there being quite a number, but it would be useful to have the signatories on record. They are: London Councils, which represents all 32 London boroughs and the City of London; the British Property Federation; the Chartered Institute of Housing; the Home Builders Federation; the Local Government Association; London First; the Federation of Master Builders; the National Housing Federation; the New Local Government Network; the Royal Town Planning Institute; Shelter; and the Association of Retained Council Housing.
I read that out, deliberately, to get it on record and to show what a wide range of support the amendment has from local government, planning, and the housing sector. It is hard to think immediately of an appropriate organisation that has not signed the letter. There is now overwhelming support for the lifting of the borrowing cap. As the noble Lord, Lord Jenkin, said, there are overwhelming reasons for doing so and it is hard to see why we should still be resisting it. As he and I recognise, the Minister who has the misfortune to have to reply to this debate is not the person who will be in a position to do anything about this. We all recognise that we are addressing our remarks, not to the Minister who will reply in a few minutes, but to the Chancellor of the Exchequer who has a speech to make next week. He must urgently recognise this need. The noble Lord, Lord Best, has referred to the message he is concerned about sending out. The message the Government want to send out, which is shared on all sides of this House, is that there is an urgent need to get building. That is the important message from this debate. The Bill must recognise the need for more housing. It must also recognise the need for growth which is in the title of the Bill and which many of us feel the Bill is not yet doing enough to achieve.
We therefore urge the Chancellor, through the Minister who will reply shortly, seriously to consider lifting the cap or, at the very least, sending a clear and strong message that that is the Government’s intention. Reference has already been made to the international consideration that the United Kingdom is the only country in the EU not to use the internationally recognised rules. If we were to do so, it would have very little effect in terms of the message to which the noble Lord, Lord Best, referred. I understand that, standing on this side of the Chamber, praying in aid of the European Union is not always to my advantage, but on this occasion the Government should give serious consideration to that. I hope the Minister will surprise us all, stand up and say that the Government are now ready and able to accept the amendment and that the cap will be raised in the way suggested. If that does not happen today, I hope we will see a more positive move in a few days’ time in another place. If that cannot happen now—I would need to understand in the next week or two why it cannot happen now—will the Government at least reassess the borrowing ability under the current cap? Will they speed up consideration of the consultation on the use of other means, such as using local government pension funds?
The Government want to send a message that they are serious about housebuilding. They also want building to start happening and to start getting building completions. If that is to be achieved in the period of office of the current Government, it needs to be happening this year. It is urgent. The amendment proposes an internationally recognised way of achieving that. I hope the Minister can give us some indication of support and that next week we will get a better and clearer indication from the other place.
Lord Smith of Leigh
My Lords, I support this amendment and congratulate the four noble Lords who put their names to it on their contribution. I declare an interest as vice-president of the LGA.
It is difficult to find much more to say, but I want to remind noble Lords of what has been said. The noble Lord, Lord Jenkin, made the point that this is important for its economic impact. As it concerns housebuilding, 92p in every £1 is spent within the UK, making it a very effective way of recycling money within the British economy. It has a strong multiplier effect. This goes to the heart of what the Bill is about. The provision would have a great social impact, because, as noble Lords have commented, we have not produced enough social housing in this country for many years now, with great shortages across the country. We need to do more on that. This provision would achieve it.
The financial arguments, too, are strong, because the provision would be almost cost free for the Government. They would not be committing any tax revenue, but it would impact on deficit reduction. Not only would it produce the tax revenue that the noble Lord, Lord Jenkin, mentioned but it would reduce housing benefit payments, because, as people moved into social housing rather than the private sector, housing benefit payments would go down and fewer people would be stuck in temporary accommodation and so on.
The noble Lord, Lord Shipley, mentioned the bedroom tax. He is absolutely right that, in many parts of the country, the mix of housing is not right to meet the problems addressed by the tax. There will be pressure to build one and two-bedroom properties to do that. However, the bedroom tax will have a greater impact than that. It will have a financial impact on the HRAs of many authorities as people choose not to pay. In my own authority, of the 4,500 households which will have problems with the bedroom tax, more than 550 are in properties on which we have spent a considerable amount of money adapting to the needs of some disabilities. If those people have to move, we reckon that it will cost us more than £1.5 million simply to place them in a smaller property that meets the needs of their disability. Within the pressures on housing revenue accounts, the most flexible side will be new capital builds. Rather than building new houses, we might have to spend the money on adapting properties.
If we do not accept the amendment, or something similar, what will happen to social housing during the next few years? The noble Lord, Lord Tope, read out a list of organisations supporting the amendment, but the key thing is not the presence on it of the usual suspects from the local authority world or the housebuilding world, of whom you might say, “Well, they would support this kind of amendment, wouldn’t they?” but the fact that the CBI has recognised that it would be one of the most effective ways of stimulating growth in an economy which really needs it. That should give it a lot more weight.
I hope that the Government will consider this very carefully as a way forward. If they do not, I hope that my noble friends on the Front Bench will adopt it as a really good way of producing growth.
Local Government Finance Bill
Debate between Lord Smith of Leigh and Lord Tope
Lord Smith of Leigh
My Lords, I support my noble friend’s amendment. I remind colleagues that I am a serving leader of a council and it is therefore my job to introduce a council tax support scheme. We have sent out our consultation, which contains things I can hardly believe I am supporting. We have a gap of £4 million in the amount we can raise through the council tax adjustments. We are already facing £30 million of cuts in our budget, and if I was to put more cuts into the system it would impact only on the same people because it is the poor who rely on our services.
In introducing our scheme for council tax benefits, we tried to work on principles—it was sometimes difficult but we tried to do that—and clearly we wanted to use what we could of any technical changes. We wanted to protect vulnerable groups, but that is not possible in total, and we wanted to make sure that we did not undermine incentives to work. However, that is very difficult with this scheme. I have also set up a discretionary hardship fund because we know that, however we design the system, some people will slip through and I want to be able to do something about it.
Despite the protestations of the Government that they want to help people get back into work, the Bill is an attack on the working poor; it is an attack on people who take low-paid jobs—not because they want to take low-paid jobs but because often they are the only jobs available. If you have low skills or poor education attainment, if you live in areas where pay levels are low or work in industries where profitability is difficult, you are in a low-paid situation. I thought this House wanted to keep people in those jobs and support them.
With apologies to my noble friend Lord Beecham, I wonder sometimes whether the coalition, like Newcastle United, is being sponsored by Wonga.com. The impact of this and the other changes that are taking place is to drive the poor in our community towards payday lenders. It is a growth industry in our country and we ought to be ashamed that a legal lender can charge rates of 4,000% a year on an annualised basis when the bank rate is 0.5%. How can we justify that when it is the poorest who have to pay that amount of money? It is a tragic situation. This change to council tax benefit will force many hard-working, decent families who are trying to do the best for themselves by taking jobs and doing what they thought the Government wanted them to do into the hands of those payday lenders. There are, of course, other lenders in Wigan, Newcastle and Luton who are not legal and whose collection methods are somewhat different. Even so, people go to them.
In Wigan, the average increase in council tax benefit is £3 a week. To noble Lords that sum may represent a glass of champagne in a bar so it is not significant, but if you are among the poor in places like Wigan, it is. It can tip people who are able to survive financially over the edge, and poor families will be put in that position. I should remind noble Lords that the low paid are already suffering under the Government because of the impact of inflation. Since the coalition came to power, the rate of inflation has been 7.1% for the average person. However, food prices have risen by 8.5% and household costs including fuel by 11%, and now even more with what British Gas and the others are up to. When we look at household budgets, we can see that the poor spend disproportionately more on food and household items. The average percentage of income spent on food is 13.2%, but the poorest 10% spend 16% of their income on food, while the richest 10% spend under 10%. The average spend on household items is 19.1%, but for the poor it is 25%—and that on items which are going up by 11%. Again, that is a further squeeze on a low budget. The rich only spend under 10% on household items. It is clear that the working poor are already suffering, and we ought to be helping them more, not targeting them with this increase in council tax benefit.
From my perspective, as my noble friend said, we have already put our consultation out only to discover suddenly at this stage that the Government have found in their back pocket or behind the sofa £100 million that can be put into the system. That is cynical politics and it will not work, because I will make sure that the people who I represent know who is causing this problem and know whose fault it is. We are not going to let them get away with it.
Lord Tope
My Lords, the reference to cynical politics has finally brought me to my feet. Remarkably, we are now on the second to last day of your Lordships’ consideration of this Bill, but we are in fact having a Second Reading debate. I want to give us a bit of a reality check because those listening who have not been part of the proceedings of the Bill through Second Reading, the Committee stage and so on will have much sympathy with all that has been said. I certainly do.
The 10% reduction, which most of us recognise in reality is actually going to be more than 10%, is not part of this Bill. It was one of the deficit reduction measures announced some time ago. It certainly sets the context for the Bill, but it is not a provision of the Bill. The noble Baroness, Lady Hollis, has said many times that she would prefer a national scheme and for council tax support to be part of universal credit. I said at Second Reading, “so would I”, because I believe that that is the sensible way forward. But Parliament has decided otherwise and it has passed the Welfare Reform Act. It may be that in years to come a future Government will change that, but it is not going to happen during the passage of this Bill. That is the reality check I am talking about. We have to deal with the situation as it is, not as we might wish it to be.
We all share the concerns that have been expressed by the speakers to this amendment. I would just say that, recognising where we are rather than where we wish to be, the next amendment we are going to debate provides a very much better solution to all problems that have been described by every speaker thus far. I look forward to the debate, and I particularly look forward to support for that amendment from all sides of the House.
Local Government Finance Bill
Debate between Lord Smith of Leigh and Lord Tope(12 years, 4 months ago)
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Lord Smith of Leigh
I remind the noble Lord, Lord Palmer, that the Olympic Games’ security problems were caused because of the outsourcing of security. As the noble Lord, Lord Jenkin, reminded us, much of the council tax administration is also outsourced, so that may not augur well for us to get a successful conclusion.
I was interested in the point made by the noble Lord, Lord Tope, about his authority already being out to consultation. I question whether the timing is right. Amendment 73 proposes a change to the consultation, and other amendments might come through, so that the consultation that his authority has undertaken might not be the right one when an amendment is passed. That is the danger of rushing it too early.
I would welcome from the Minister in responding to the debate, in addition to answering the questions asked by my noble friend Lord McKenzie, a timetable for the publication of the Government’s default scheme. That would be helpful.
Lord Tope
I agree with the noble Lord, and frankly I was surprised when I saw it in the committee papers back at the beginning of June. However, the way in which my authority worked—and I played no direct part in this—was on the basis that the scheme had to be finalised by the end of January. Therefore, working back from that date, given the committee system that we have now adopted thanks to the Localism Act, it was necessary for the draft consultation to be agreed in committee in June. I am not arguing that it is desirable, and I accept that in the course of the consultation there may well be changes. I am quite sure that at the end of the consultation there will be changes as a result of the consultation, never mind any other changes, but unless local authorities start to get on with it now, they will get into difficulties with the timing. I say to the noble Lord that he may need to look at the timing in Wigan as well.