Cities and Local Government Devolution Bill [HL]

Lord Whitty Excerpts

Monday 8th June 2015 Lords Chamber

[Lord Whitty (Lab)]

My Lords, the widespread support for the central concept of the Bill is proof indeed that something fairly drastic needs to be done. The Bill is a very thin Bill, but it covers a very big concept. It attempts somehow to tackle two very big problems in our society and in our nation. One is the disjunction of economic development—the south-east against the rest—and the other the general alienation of citizens and businesses from the degree of centralisation of decision-making that we have seen from Governments of all hues over the past few decades.

Those two problems are distinct. The latter suggests that this ought to be part of what many of my colleagues are calling for—a constitutional convention—as it addresses the same problem that devolution to Scotland, Wales and Northern Ireland addresses: the remoteness from decision-making here in Westminster and the administrative centralisation in Whitehall. That is felt not just in our metropolitan cities. As I have put it before in this House, it is felt in Cornwall and Cumbria as much as it is in Birmingham and Bradford. The populations in the regions of England have much the same feelings as those in Scotland and Wales, which have been so obvious in recent years. This is an attempt to do something structurally and politically in England that addresses those twin problems.

The structure of English local government remained, broadly speaking, the same for a long time—from William the Conqueror to the noble Lord, Lord Heseltine. However, since then we have changed the structure quite significantly in terms of powers and the way that we expect local authorities to do business. That was in a context where central government took more and more decisions to itself and restricted the freedom of local authorities more and more—whatever their boundaries, size and structures—to take decisions for their communities. Against that background—even with the current Government or the previous coalition Government—we have seen more centralisation, with things effectively being taken off local authorities, education being the obvious example. Housing is also no longer a clear and effective local government responsibility.

To reverse that, we need to take the initial steps that the Bill suggests. I understand why it has to be a framework Bill, but, as my noble friend Lord Snape suggested, the danger is that we then have a plethora of secondary legislation specific to the individual areas covered, which will not receive adequate scrutiny in this House or in the local authority area that it is supposed to cover. A bit of history again: this is the exact opposite approach to that adopted when I was a Minister in this House, under the general direction of my noble friend Lord Prescott, when we set up the GLA. The noble Lord, Lord Tope, clearly remembers this. The then GLA Bill was the largest in living memory —larger than any other non-financial piece of legislation apart from the Government of India Act 1935, which was never fully implemented. To give the Government a few hints, we got the GLA Bill through the House of Lords only because we split the Opposition: the Liberal Democrats wanted an assembly without a mayor and the Conservatives wanted a mayor without an elected assembly. We got the structure and everything else that went with it through that way; the glory we now see at City Hall is as a result of that very detailed Bill. Some of that detail, or the issues that it raised, will have to be faced up to when we legislate or administrate for Greater Manchester, the West Midlands, Merseyside, or whatever we are going to call the new combined authorities.

In the great days of municipal innovation from the 19th century through to perhaps 50 years ago—from Joe Chamberlain, if you like, to Herbert Morrison—local authorities at that level operated with much greater freedom than they have now. Local authorities themselves drove a lot of economic development and were entrepreneurial, comprising gas, light and coke companies in the 19th century, transport bodies at the beginning of the 20th century and housing bodies from the 1920s onwards. The assumption was that, provided they could raise the money, local authorities could do pretty much what they liked or what was not expressly forbidden by statute. However, key to that was, of course, the ability to raise their own money. They could determine their own domestic and business rates at that point and could go to the private market and borrow money on various terms, and did so to a greater extent than many sovereign states during that period. They were not subject to the detailed Whitehall restrictions on ring-fencing how they spent that money or even determining what the basic standards were.

Now local authorities are not even able to borrow against investment and certain future incomes without coming up against the Treasury rules. That means they cannot address some of the basic problems of housing and infrastructure within their own areas, let alone take steps in partnership with the private sector to revive their local industry. We need to get back to a degree of freedom which is not quite that of the 19th century—we require different forms of accountability—but one which we have abandoned to our cost over the last half century.

Incidentally, I was also responsible for taking through this House the Local Government Acts of 1999 and 2000, which provided the options of structuring local government in a number of ways, including for elected mayors. As others have pointed out, the option of elected mayors did not prove hugely popular. Indeed, it was not popular in Manchester, among other places.

[Lord Prescott]

Or anywhere.

[Lord Whitty]

Pretty well anywhere, but not quite anywhere. However, I have my doubts whether the concept of a directly elected mayor at a combined-authority level will prove any more popular. One of the problems with the rhetoric on the Bill, particularly from the Chancellor and those who are briefing on his behalf, is that it is suggested that the full range of powers will go only to those combined authorities opting for a directly elected mayor. Some of the comments that the Minister made in a briefing meeting and today suggest a bit more flexibility in that regard. As we go through the Bill, I should like to ask how much flexibility we have area by area.

It will be important for us to recognise the different requirements and priorities area by area, but also to recognise the different existing structures area by area. As my noble friend Lord Snape said, it is not just a question of whether you call the relevant area “Greater Birmingham”, to everybody else’s offence, but rather of looking for a combined authority and a directly elected mayor to cover the cities of the East Midlands. We have an elected mayor in Leicester. That is fine. However, Nottingham very firmly rejected the elected-mayor principle. If we were to bring those together with the counties surrounding them, we would experience some difficulty if we were seen to be imposing a particular structure as distinct from particular powers, responsibilities and resourcing.

Questions will be raised on the Bill as we go through Committee but I think the central one is: in what context will it operate? Will it operate in a context in which we free up the financial flexibility and availability of funds for local authorities, or one in which we try to compensate in some way for ever-squeezed formal public expenditure commitments, but not by allowing local authorities to raise their own resources to deliver the economic development we are looking for through innovative partnerships with the private sector and the financial sector?

London does not seem to be covered by the Bill. The London councils say that they could do with some of the powers in the Bill. Will the Minister indicate, either now or in Committee, what powers could be devolved to a combination of London boroughs and the GLA?

My last, and perhaps flippant point, concerns Wales. This is called an England and Wales Bill yet virtually none of it applies to Wales because local authority structures are a devolved matter for Wales. However, as I say, it is called an England and Wales Bill in the appendix. When we discuss English votes for English laws, I would like to know whether this is indeed an English Bill or an England and Wales Bill. That is a minor point in some ways but probably not considered so in Wales. The bigger point is: will the powers and resources really match the rhetoric that surrounds this Bill?