Council Tax

Baroness Taylor of Stevenage Excerpts

Monday 3rd February 2025 Lords Chamber

[Lord Rooker]

To ask His Majesty’s Government whether they plan to make council tax more progressive.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, there are currently no plans to reform council tax. I suppose I should sit down now. It is a widely understood tax with a high collection rate and contains a range of discounts and exemptions to reflect personal circumstances. Local authorities are also required to run local council tax support schemes to provide reductions to those on low incomes.

[Lord Rooker (Lab)]

I thank my noble friend, but how is it that a £12 million penthouse in Islington pays £1,000 less in council tax than a £1.5 million manor house in Hartlepool? It is eight times the value, yet it pays £1,000 less. This is why council tax is so regressive, and no tough decisions have been taken for 34 years. When people no longer know what a tax is for or how it is fixed, and they see this unfairness, that risks bringing the whole system into disrepute. It is a major political and social risk. Why are we taking it?

[Baroness Taylor of Stevenage (Lab)]

My Lords, we all know that there are problems caused by outdated valuations and the regressive nature of council tax. However, a widescale reform of the system would be time-consuming and complex, and we are committed to keeping tax on working people as low as possible. The Government will carefully consider the impact on councils and taxpayers before taking any further decisions on council tax.

[Lord Young of Cookham (Con)]

My Lords, the last time we discussed this, on 19 November, the noble Baroness also said in response:

“We all know that problems are caused by outdated valuations and the regressive nature of council tax”.—[Official Report, 19/11/24; col. 118.]


So why are the Government so reluctant to act?

[Baroness Taylor of Stevenage (Lab)]

If there were to be a revaluation, there would be winners and losers. This is one of those issues where whatever we did would cause further problems in the system. It is a widely understood tax and there are high levels of collection. However, the Government are taking part in the fair funding review—we have issued a consultation on that—to make sure we level up the playing field for local authority funding, so that areas which need the money most get the most money.

[Lord Shipley (LD)]

My Lords, council tax is a regressive tax and for the past 10 years, Governments have been loading part of the increasing cost of adult social care on to council tax. Poorer households are therefore having to pay more in council tax than they otherwise would. The Government are going to spend the next three years coming up with a plan for adult social care. Is that delay fair on poorer households?

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[Baroness Taylor of Stevenage (Lab)]

My Lords, we are more than aware of the issues in tackling adult social care funding; however, the best way to resolve them in the long term is make sure that we do the job properly by looking at what is needed. We recognise the important role that councils have in delivering those services. That is why we announced in the provisional settlement a further £200 million for adult and children’s social care, bringing the total additional funding to £3.7 billion.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, does the Minister think that this Government are generally finding it quite difficult to be progressive?

[Baroness Taylor of Stevenage (Lab)]

Absolutely not. The range of legislation we have brought forward has shown just how progressive this Government are being in both fiscal and social policy.

[Lord Grocott (Lab)]

My noble friend, with her long experience in local government, knows well enough that, when there are major reorganisations in local government, you can be absolutely certain they will cost a lot of money, whatever the savings in the long term may be. Can she assure us that in the plans being considered, which are already costing local authorities preparation money to defend themselves or to decide which groups to join, the cost of this will not fall on the council tax payer?

[Baroness Taylor of Stevenage (Lab)]

My noble friend makes a very important point about the cost of devolution. We want to see all of England accessing that devolved power, and efficiencies will be generated in the long term. My honourable friend the Minister will be setting out the local government finance settlement later today, and I am sure he will include the details then.

[Lord McLoughlin (Con)]

My Lords, when the Minister says there will be winners and losers in any reform of council tax, does she not agree with the way in which the noble Lord, Lord Rooker, put it: that the winners are those who, at the moment, are living in high-value properties and the losers are those who live in low-value properties?

[Baroness Taylor of Stevenage (Lab)]

My Lords, the party opposite had 14 years to sort this out and did nothing about it. Council tax levels are decided by each council. We maintain the previous Government’s policy on the referendum levels. We are tackling the fair funding that was started off by the last Government but never finished. That will level the playing field for areas that need more funding support.

[Baroness Lister of Burtersett (Lab)]

My Lords, local authority council tax support schemes are failing to provide adequate protection for many low-income council tax payers, either because of their restrictive nature or because of low take-up. Will the Government therefore consider increasing and ring-fencing the funding for these schemes, and look into introducing an automatic trigger for a council tax support application when a universal credit application is made?

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[Baroness Taylor of Stevenage (Lab)]

My noble friend makes a good point about the link between universal credit and council tax, but there is significant support. All local authorities are required to run local council tax support schemes, which provide council tax reductions for those on low incomes. Some 3.7 million households currently receive this support. There is also a range of discounts and exemptions that reflect personal circumstances. I urge anyone struggling to pay their council tax to contact their local council, because they might be missing out on some of the benefits that are available.

[Baroness Scott of Bybrook (Con)]

My Lords, last year, Labour-run Birmingham City Council imposed a 21% council tax hike on residents over a two-year period after it mismanaged its finances. This year, Labour-run Bradford Council is proposing a 15% hike. Can the Minister explain why it is Labour-run councils that are imposing some of the worst council tax increases on local people this year?

[Baroness Taylor of Stevenage (Lab)]

It is not only Labour-run councils that apply for exceptional financial support. My honourable friend the Minister will be making a Statement later today about which councils have been successful in gaining that exceptional financial support. There are any number of reasons why councils need to apply for that. It is not necessarily poor financial management: it can be the circumstances they find themselves in, particularly those areas that have low funding because the fair funding was not looked after.

[Lord Watts (Lab)]

My Lords, many local authorities are able to raise millions of pounds from their council tax payers from things such as car park charges. Does the Minister intend to take into account the massive amounts of money that some local authorities can raise?

[Baroness Taylor of Stevenage (Lab)]

My Lords, fees and charges form an important part of councils’ income. Whether that is fair or not is for the council tax payers of the area in question to make their minds up about locally. The three strands of council tax funding very much include those fees and charges, and the voters will decide whether they are reasonable or not.

[Baroness Pinnock (LD)]

My Lords, further to the question from my noble friend Lord Shipley, some council tax payers are now paying 12% on top of the council tax bill to pay for social care—the social care precept. Is that a fair and reasonable way to raise money to pay for social care? I remind the Minister that it was introduced by the previous Government.

[Baroness Taylor of Stevenage (Lab)]

The social care precept was introduced by the previous Government. There is an increase in demand for social care in our demographic, and that has to be funded. The Government continue to keep under review how adult social care is paid for. At the moment, it is paid for by an additional precept on council tax for those who need social care. It is very important that we continue to support people in our communities who need it, and I am sure the noble Baroness would want us to continue to do that.

[Lord Jamieson (Con)]

My Lords, under the Liberal Democrat administration, Windsor and Maidenhead Council’s financial discipline has collapsed. The council is now seeking to impose a 25% council tax hike on residents. Does the Minister agree that local residents are paying the price of Liberal Democrat councillors failing to maintain financial discipline?

[Baroness Taylor of Stevenage (Lab)]

When I hear the party opposite criticising Labour and Liberal Democrat local councils, whose main financial problem was the economic mismanagement of the previous Government, they ought to have another think about who they are attacking.

Devon and Torbay Combined County Authority Regulations 2024

Baroness Taylor of Stevenage Excerpts

Wednesday 29th January 2025 Lords Chamber

Moved by

[Baroness Taylor of Stevenage]

That the draft Regulations and Order laid before the House on 26 November and 4 and 11 December 2024 be approved.

Considered in Grand Committee on 27 January.

Motions agreed.

Future Homes Standard

Baroness Taylor of Stevenage Excerpts

Wednesday 29th January 2025 Lords Chamber

[Baroness Hayman (CB)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and I declare my interest as chair of Peers for the Planet.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

I thank the noble Baroness for her Question and for all the work that she does on environmental issues. The Future Homes Standard consultation, setting out proposals for new energy efficiency standards, closed last year. We received over 2,000 responses and we are carefully considering the feedback received. I do understand that the space caused by the election has caused more delay than we had hoped for, and the frustration and the need for creating some certainty here about what we are going to do going ahead. But we will publish our government response to the consultation and lay the associated legislation later this year. Those new standards will effectively preclude the use of gas boilers in future new-build homes and ensure they become zero carbon as the electricity grid fully decarbonises, without the need for any retrofitting.

[Baroness Hayman (CB)]

I am grateful to the Minister for that response. The bit I picked out was “later this year”. We are in January and, as she acknowledged, we have been waiting a long time for this. So I encourage her to have a government response to the consultation as soon as possible. Does she agree that the abandoning of energy efficiency standards that took place a decade ago has caused great damage to many people and has caused great costs to householders, and indeed to the Treasury for the support it had to give during the energy crisis? When the Government do respond to the consultation, will they ensure that the standards set are aimed at providing the lowest possible bills for householders and will avoid their need, to which she referred, for retrofitting?

[Baroness Taylor of Stevenage (Lab)]

I agree that we need to move on as quickly as possible with all of this, for three key reasons. We need to make sure that bills are kept as low as possible, particularly for those in fuel poverty who we are very conscious of, and the move to clean energy will help us with that. We also need to think about our energy security and we need to continue the drive towards net zero. I appreciate the frustration in delivering this, and when I say “later this year”, I want to reassure the noble Baroness that we are working with our colleagues in DESNZ as quickly as possible to deliver this, to set homes and buildings on a path away from the use of fossil fuels and to future-proof homes with low-carbon heating and high levels of building fabric standards, ensuring that they do not require any retrofitting to become zero carbon. We are working very hard on that and it is my mission to deliver that as quickly as possible.

[Lord Geddes (Con)]

My Lords, this is not the first time that I have asked this question: could the Minister advise why it is not mandatory for new-build homes to have at least solar or photovoltaic panels on their roofs?

[Baroness Taylor of Stevenage (Lab)]

I just want to say that we do understand the effectiveness of solar panels in providing a direct and sustainable way to harness renewable energy and to allow homes to generate their own electricity, as well as offering the significant savings that will help with fuel bills. It is my absolute intention that the new building regulation standards that will be introduced this year will encourage the use of rooftop solar panels. I am working very fast with my honourable friend Minister Fahnbulleh to drive this forward as quickly as possible. We need to confirm the technical detail of the standards and we will share more details of them as soon as we are able.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, does my noble friend the Minister agree that, by being ambitious here, we have the opportunity to drive growth in renewable sectors such as the heat pump sector while also delivering homes that will be fit for the future, both for the cold that we expect and the excessively warmer temperatures that are now becoming more normal?

[Baroness Taylor of Stevenage (Lab)]

My noble friend is quite right that, as we set out in our Plan for Change, our growth agenda and our drive towards net zero are not exclusive: there is no conflict between them. I see three major opportunities for us here: great jobs, training, skills and apprenticeships for our young people, both in construction and in retrofitting; manufacturing capability for technology such as heat pumps, solar and maybe many new aspects of that; and building on our country’s fantastic reputation for innovation as we develop the green technologies of the future. These things are totally compatible with our growth agenda.

[The Lord Bishop of Manchester]

My Lords, I declare my interest as chair of a housing association. Housing associations are a key provider of homes for those who can least afford high energy bills. What support will there be for housing associations when they are bidding for grants to subsidise the properties they are building? It does cost that bit extra, maybe £5,000 or £6,000 per home, to build to the standards that we need to.

[Baroness Taylor of Stevenage (Lab)]

I understand the issue; in fact, I met the National Housing Federation just last week to discuss these issues. We want to drive forward the delivery of affordable housing, particularly social housing, and we recognise the costs that will make. We will be considering, once we have set the standard, what that cost might be and what further support we might offer.

[Lord Foster of Bath (LD)]

My Lords—

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[Lord Foster of Bath (LD)]

My Lords, high energy efficiency in new homes is clearly vital, but so is improving the home energy efficiency of existing homes, particularly the 2.6 million substandard homes in the privately rented sector. While the promised consultation is welcome, what plans do the Government have to speed up the retrofit programme to meet the target for 2030? In particular, what plans do they have to improve the situation whereby we have very few people currently available to do the necessary work?

[Baroness Taylor of Stevenage (Lab)]

There were two clear points there. One is about the training, apprenticeships and skills that we need to deliver in order to meet the retrofitting programme. We are working with colleagues in the Department for Education on that. We know there is a big challenge across the construction sector, first, to deliver 1.5 million new homes but also, secondly, in the retrofitting area. We are determined to meet that challenge and offer the new jobs that I spoke about earlier.

The noble Lord spoke about the private rented sector. Next week we will be introducing the renters’ rights Bill. There are significant new powers in that Bill for tenants to challenge their landlords when they feel that the improvements their homes need are not being dealt with as quickly as they should be. We continue to monitor that situation, because it is important that people can have homes that are fit for purpose and are warm, decent and comfortable.

[Lord Deben (Con)]

My Lords, when we finally get the new homes standard, will the Minister ensure that it comes into operation immediately and does not take about five years to roll out, as the previous ones have? Will she also take up with the companies which build houses that, since 2017, they have built 1.5 million houses that are not fit for the future, taken the profits and left the people who have bought those houses to meet the costs of retrofitting? Is it not a scandal? Should there not be a fund which they give to that can repay the people who have bought these houses, so that they can do what needs to be done to them?

[Baroness Taylor of Stevenage (Lab)]

The noble Lord makes some very important points. I have a lot of sympathy with what he says about how we take this forward. I think I was very clear in what I said: the intention of our Government is to make sure that there will be no further retrofitting needed when new homes are built. They will be built to the standard we set as soon as that standard comes into being. The discussions I have had with the construction industry lead me to believe that it is waiting for that standard and will be ready for it as soon as we are able to set it. I hope that will be the case. I will take the other ideas the noble Lord put forward back to my department.

[Baroness Scott of Bybrook (Con)]

My Lords, it was my understanding that this Government had said that rented properties must achieve at least an EPC rating of C by 2030, but I thank the Minister for correcting me on this. However, many listed properties cannot achieve this without substantial investment, which many private landlords simply cannot afford. This will only push more landlords to sell up, further restricting an already strained rental market. What assessment have His Majesty’s Government made on the impact of these new requirements and the impact they will have on the number of rental properties available?

[Baroness Taylor of Stevenage (Lab)]

Just to clarify, we are in consultation at the moment on the new EPC framework, which will require all properties to have an EPC registration of C. I will report to the House later on that issue. In relation to historic buildings, I have met the Historic Houses association and visited at least one historic property to try to discover for myself what the real issues are. There is further work to be done on that, but I am aware of all the issues related to the retrofitting of historic properties.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Baroness Taylor of Stevenage Excerpts

2nd reading
Wednesday 29th January 2025 Lords Chamber

Moved by

[Baroness Taylor of Stevenage]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, on behalf of my noble friend Lord Khan of Burnley, I beg to move that this Bill be now read a second time, and in doing so I send my condolences to my noble friend on the death of his mother.

It is a great pleasure to open the debate on the Non-Domestic Rating (Multipliers and Private Schools) Bill. I very much welcome the interest shown by noble Lords in the matters related to this Bill and for the opportunity for both I and my noble friend Lord Khan to engage on key points of the Bill.

A few months ago, the Chancellor of the Exchequer set out our Government’s first Budget: a Budget to commence a decade of renewal and deliver on the Government’s primary objective of economic growth. The decisions taken in the Budget, some of them very tough, are necessary to enable the Government to deliver economic stability, restore the public finances and deliver our plan for change. It is right that the Government do not shy away from the challenge before us, doing all they can to restore our public services and give businesses the confidence and stability they need to thrive. Stability, certainty and predictability are essential to business decision-making and, while the Government cannot completely remove all the uncertainty that may arise through running a business, there are elements that are within our control.

We have heard from businesses that they have long-standing frustrations with the business rates system. They have said that it is inflexible, that it stifles investment and that it is unfairly skewed against property-intensive sectors such as the high street. The changes we are making to business rates, including through this Bill, will address those concerns.

I think noble Lords will agree that our high streets sit at the very heart of our communities. They should, and do, represent the very best of our thriving and vital community life. They are centres of economic activity so important to the economic health of our country, but they are also meeting places for vibrant communities, whether it is families enjoying a meal together, work colleagues relaxing after a hard week’s work, friends shopping for a new outfit or gadget, or the multitude of other reasons that people use our town centres. The Government have committed to transforming the business rates system to make it fit for the 21st century, an endeavour that will be delivered across the course of this Parliament. That journey starts with this Bill. Through it, the Government have begun the important task of rebalancing the business rates burden faced by our high streets.

The Bill before us today seeks to enable the commitments made by the Chancellor at the Budget to introduce permanently lower tax rates for qualifying retail, hospitality and leisure properties with a rateable value below £500,000 from April 2026. This permanent intervention ends the uncertainty of the stopgap retail, hospitality and leisure relief that has been extended year on year since the Covid-19 pandemic. That relief was always intended to be a temporary measure, born out of the extraordinary context of the early 2020s, and necessary for the time but at great cost to the Exchequer. In the challenging fiscal context we now find ourselves in, it is not financially responsible to continue that indefinitely.

Our intention through this Bill is to introduce two new lower multipliers. One multiplier offers a tax cut for retail, hospitality and leisure properties with a rateable value of between £51,000 and £499,999 that currently pay the standard non-domestic rating multiplier. The other new multiplier will provide a tax cut for retail, hospitality and leisure properties paying the small business non-domestic rating multiplier—that is, those with a rateable value of less than £51,000.

I have already spoken of the Government’s responsibility towards the public finances. Of course, any permanent tax cut must be sustainably funded. For that reason, the Bill allows for the introduction of a higher tax rate on the most valuable properties—those with a rateable value of £500,000 and above. This represents less than 1% of business properties in England and captures the majority of large distribution warehouses, including those used by large online businesses, as well as other out-of-town businesses that draw footfall away from our high streets. By introducing this higher tax rate, the lower tax rates for retail, hospitality and leisure businesses can be sustainably funded from within the business rates system—a prudent approach that aligns with the principle of ensuring that any tax cut is fully funded.

I anticipate that noble Lords may raise questions about the delegated powers in the Bill that will enable the Government to introduce these new tax rates from April 2026. Unlike many taxes, which are generally paid after an event, business rates bills are calculated in advance for the whole year and are issued by billing authorities often several weeks before the start of the financial year. Therefore, changes to the multipliers—in other words, the tax rates—have to be made in advance and be in place several weeks before the start of the financial year if they are to be included in demand notices. Therefore, this Bill does not set the level of the tax rates; that will be done later this year at the Budget, taking into account the outcomes of the 2026 business rates revaluation. The Bill instead provides a power to set them.

To put it simply, without introducing delegated powers there would be insufficient time to introduce the tax rates at the Budget and pass the required primary legislation for those tax rates with sufficient time left for billing authorities to prepare for the changes at an operational level. That is why the Bill provides the ability to set these new tax rates through secondary legislation.

Nevertheless, as is expected and good practice, the Government have carefully considered the approach to these powers and constrained them accordingly. The lower tax rate for retail, hospitality and leisure properties cannot be set more than 20p below the small business non-domestic rating multiplier for that year and can be applied only to qualifying retail, hospitality and leisure properties, the exact definition of which will be set out through secondary legislation later this year. However, it is the Government’s intention for the definition to broadly follow that which is in place for the current retail, hospitality and leisure relief. The higher tax rate cannot be set more than 10p above the standard non-domestic rating multiplier for that year and can be applied only to properties with a rateable value of £500,000 and above. It is important to say that these are not the intended tax rates—as I have said, they will be set at the Budget later this year. These are the maximum parameters within which the new tax rates may be set, not the target tax rates.

I appreciate there may be interest from noble Lords with regard to how these multiplier changes may impact on the funding available to local authorities from levying business rates. Since 2013, the business rates retention scheme has allowed local government to retain a portion of the business rates that it collects. The measures contained in the Bill will affect the level of business rates income collected by authorities differently in different areas. I reassure noble Lords that the Government are committed to ensuring that, as far as practically possible, local government income will be unaffected by business rates tax policy changes. It is worth noting that the Government have committed to reform the local government funding system to help deliver this, and, as intended since 2013, business rates growth will be subject to redistribution across the country through a business rates reset in 2026-27.

I am aware that, at the start of my speech, I set out the Government’s ambition that the transformation of the business rates system should go broader than the measures within the Bill before us. Indeed, noble Lords questioned me extensively about our wider plans during Question Time on Monday. I will briefly touch on those plans now.

At the Budget, the Government published the Transforming Business Rates discussion paper, which set out the priority areas for reform and invited stakeholders to co-design a fairer business rates system. The areas of interest within that paper include incentivising investment and growth, tackling avoidance and evasion, the frequency of revaluations, and ensuring that the system is fit for purpose, reflecting our modern, fast-paced economy. I am pleased to say that many stakeholders have already engaged with the Government on these matters, providing valuable insight and expertise. Any changes will be phased over the course of the Parliament, and the Government will publish an update in due course.

I turn now to the second measure set out in the Bill: the removal of private schools’ eligibility for business rates charitable relief. The Government are committed to breaking down barriers to opportunity for all. While we believe in supporting parental choice, we must ensure that every child has access to high-quality education that helps them achieve their full potential and thrive. The Government must concentrate on improving the state education sector, where more than 90% of our children are educated. That is why the Government are ending tax breaks for private schools, to help raise revenue to fund the state education priorities that we set out clearly in our manifesto.

As I said earlier, the Government have had to take very difficult but necessary decisions to restore our public finances and, in doing so, enable the restoration of public services. State education is one such public service that is used by the majority and available to all who require it. At the Autumn Budget, the Government announced an increase of per pupil funding in real terms, with a £2.3 billion increase to the core schools budget in 2025-26. This includes a £1 billion uplift to high-needs funding in 2025-26, providing additional support for the more than 1 million children in the state sector with special educational needs and disabilities. This funding needs to be paid for. To help make that happen, the Government are ending tax exemptions for private schools, as we set out in our manifesto.

I am aware that there has already been a great deal of discussion in this House of the Government’s policy to remove tax breaks for private schools, and the Government genuinely welcome the scrutiny that noble Lords have brought to this matter. I am sure there will be some more this afternoon.

Noble Lords will be aware that the measure relating to VAT is being legislated for through the Finance Bill. Ending the VAT exemption of private school fees and removing eligibility for business rates charitable relief from private schools that are also charities will together raise approximately £1.8 billion by 2029-30. This will help deliver the Government’s commitments to education and young people.

The Bill before us today covers the business rates change only, and that is where I am going to focus my comments. There are over 2,400 private schools in England, of which approximately half are charities able to benefit from business rates charitable relief. This Bill removes that eligibility. It provides a specific definition of a private school as a school that provides

“full-time education … for pupils of compulsory school age … where fees or other consideration are payable for that … education”.

In respect of further education, the institution is one that

“is wholly or mainly concerned with providing education suitable to the requirements of persons over compulsory school age but under 19”,

and where education is provided to those persons full-time which is “wholly or mainly” for a fee or other consideration.

I am aware that noble Lords have raised questions over how this change will affect pupils with special educational needs and disabilities. The Government have carefully considered the design of the policy to ensure that effects on those pupils with the most acute needs are minimised. The Bill provides that private schools that are charities that wholly or mainly provide education for pupils with an education, health and care plan will remain eligible for charitable rate relief. For clarity, the definition of “wholly or mainly” in business rates generally means 50% or more. This will operate alongside the existing business rates exemption for properties that are wholly used for the training or welfare of disabled people. Properties that qualify for this exemption pay no business rates at all, and any private schools that currently qualify for that particular exemption will continue to do so.

Taken together, the existing and new provisions are intended to make sure that the majority of private special schools will be unaffected by this measure. In fact, the Government expect that any private special schools losing eligibility for charitable rate relief will be the exception. It is worth adding that stand-alone nursery schools with their own rates bills are not within the scope of the Bill and, if charities, will retain eligibility for the existing relief. As previously announced, it is the Government’s intention that this measure will come into effect from 1 April 2025. As business rates is a devolved tax, the measures in the Bill will apply only to England; there are different measures in place in Scotland and Wales.

The measures in the Bill partly deliver on two of the commitments within the manifesto on which the Government were elected. The measure to enable the introduction of new multipliers is commencing the Government’s plans to transform the business rates system. It begins our journey to fulfil the ambition to deliver a business rates system fit for the 21st century; one that supports our high streets in a sustainable way, offers stability, promotes investment and drives economic growth. The measure to remove charitable rate relief from private schools will contribute to our overall ambition to break down barriers to opportunity and help all children to receive the high-quality education they deserve and their parents aspire to. I beg to move.

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[Baroness Taylor of Stevenage (Lab)]

My Lords, with the leave of the House, I rise to close the debate. I thank all noble Lords who have taken part in the debate. The great strength of your Lordships’ House is the hugely knowledgeable and informed debates we have, and this has been a great example, with experience from across sectors such as business, education and many other areas—even veterinary practices—so I am very grateful to noble Lords for their contributions. They have demonstrated their enthusiasm and interest for our high streets, the important role they play in our local communities and the small businesses that are their lifeblood, and for ensuring that all children are able to receive a high-quality education. There is certainly consensus on that, if perhaps not on the means of achieving it, but there is a consensus that every child deserves to have all the opportunities that should be available to them.

I will make a few general comments on remarks made by noble Lords, and then I will attempt to answer most of the questions, but I expect I will run out of time long before I get there. I assure noble Lords that anything I do not get to, I will reply to in writing.

Both the noble Baronesses, Lady Scott and Lady Barran, referred to the overall policy, in relation to some of the really tough decisions we have had to take. I understand that these are tough decisions and why people think they are. However, yet again in this House we have had a bit of a swerve around the reason why those decisions were necessary; it is the inheritance we picked up when we came into government. We have to balance the books and get the fiscal picture straight so that we can deliver the reform to public services that we want to see, and tackle some of the cost of living issues that everybody faces.

I have another general comment on a point raised by a number of noble Lords. The Bill is not intended to achieve the comprehensive reform of business rates that we have set out as our intention. We are working on it and there is a consultation paper out at the moment, and I hope all noble Lords who have contributed this afternoon—and anyone else who has an interest in the business rates system—will make a contribution to the ongoing work on business rates. Having been a councillor for many years and listened to many complaints from both the public and private sectors about how business rates operate, I am in no doubt that we need comprehensive reform.

I hope that has picked up some of the general points and I will turn now to the specific points that noble Lords made.

There were, rightly, a number of questions regarding the impact of the proposed new multipliers. The noble Baronesses, Lady Scott, Lady Pinnock and Lady Barran, and the noble Lords, Lord Fox and Lord de Clifford, all mentioned this issue. As I explained in my opening speech, the actual tax rates to the new multipliers will be set at the 2025 Budget, taking into account the effects of the 2026 business rates revaluation, which we have to do, as well as the broader economic and fiscal context at that time. It is for my right honourable friend the Chancellor to make those decisions at the right time. Tax policy and legislation are not subject to the same requirement for an impact assessment that accompany other non-fiscal policy decisions. Nevertheless, the Treasury is committed to publishing an analysis of the effects of the new multipliers at Budget 2025, taking into account the broader factors that I just mentioned. I hope I set out clearly in my opening speech why we need to take these steps.

On the VOA and its property rateable values, which were mentioned by the noble Baroness, Lady Scott, the noble Lord, Lord Fox, and the noble Earl, Lord Lytton, on 5 February the VOA will publish an ad hoc release relating to properties with a rateable value of over £500,000. That will provide a breakdown by category of property type by local authority for all those properties with a rateable value above and below £500,000, so we will be able to see clearly which properties are impacted by which parts of this reform.

On the issues around the multipliers policy approach, I have heard the message that noble Lords may think this is a blunt tool for dealing with this matter—the noble Baronesses, Lady Scott and Lady Pinnock, the noble Earl, Lord Lytton, and the noble Lord, Lord Jamieson, mentioned this. The permanent tax cut for retail, hospitality and leisure properties, including those on the high street, from 2026-27, will ensure that much-needed certainty and support. That tax cut has to be funded, so we intend to introduce that higher rate on the most valuable properties. The Government’s view is that it is the fairest approach to ask all properties with a rateable value of £500,000 and above to pay a higher tax rate to support the viability of our high streets. It is the fairest way and, as I said in my opening speech, the higher rate will apply to less than 1% of all properties, and we will know which those properties are once the VOA has published its assessment.

The noble Baronesses, Lady Scott and Lady Pinnock, raised the approach being detrimental to anchor stores. I understand the concern around this. Unfortunately, we lost our Marks & Spencer store in Stevenage town centre; luckily, we managed to attract it back, and it is operating there very successfully, and it is much appreciated by our residents.

The Government intend to introduce two permanently lower tax rates for retail, hospitality and leisure properties, which will give certainty. I understand concerns that the higher multiplier may catch some of the largest and most valuable retail businesses. However, we think that the fairest approach is to ask all properties above £500,000 to pay that. This is a property tax, so whether large stores are based on the high street or in retail parks, it will still have the same impact. I remind noble Lords that the upper rate will impact on only 1% of businesses.

Retail, hospitality and leisure relief was extended year by year by previous Governments, but it has been a stopgap measure. The noble Baroness, Lady Scott, and the noble Lords, Lord Fox and Lord Jamieson, raised the issue of our process being a temporary measure. This is a permanent measure which will give certainty to those businesses. Before the intervention we are taking now, retail, hospitality and leisure relief would have ended entirely in April 2025, creating a cliff edge for those businesses. We have decided to offer that 40% discount to retail, hospitality and leisure properties up to a cash cap of £110,000 per business in 2025-26. By extending that retail, hospitality and leisure relief instead of ending it entirely, the Government have, for example, saved the average pub with a rateable value of £16,800 more than £3,300. We are doing our best to support the sector, in spite of the difficult fiscal picture that we see.

On wider business rates reform, raised by the noble Lord, Lord Fox, the noble Baroness, Lady Pinnock, and many other noble Lords, the discussion paper has been published. It builds on our plans announced at the Autumn Budget to support high streets by further highlighting areas for reform, incentivising investment and modernising the system so that it is fit for the 21st century. A number of noble Lords mentioned business rates avoidance. We will shortly publish a consultation on adopting a general anti-avoidance rule for business rates in England.

The noble Lord, Lord Fox, raised the issue of the small business rates relief which is in place to support all of our small businesses. I want to highlight that that provides 100% relief to small businesses which occupy only one property with a rateable value of £12,000. A taper of relief down from 100% is available to such ratepayers with rateable values up to £15,000. That scheme ensures that over a third of all properties, or about 700,000 ratepayers, are not paying any business rates at all. The Government have no plan to remove small business rates relief, which is permanent and set down in legislation.

The noble Earl, Lord Lytton, raised the issue of business rates being too high overall and I understand those concerns. We all know only too well that economic and fiscal stability is critical to business confidence. At the Budget, the small business multiplier for properties with a rateable value under £51,000 was frozen at 49.9p, meaning that, together with the small business rates relief, over 1 million properties will be protected from a 1.6% inflationary increase.

The Budget honours the manifesto commitment not to raise corporation tax. The UK has the lowest corporation tax in the G7, the joint most generous plant and machinery capital allowances in the OECD, and the joint highest uncapped headline rate of R&D tax relief in the G7 for large companies. I will come on to the noble Earl’s other points later, but I thank him, as usual, for his expertise, which we experienced during the levelling-up Bill and have once again had the benefit of this afternoon.

Supporting the high street and the broader government approach was mentioned by a number of noble Lords, including the noble Baroness, Lady Scott, and the noble Lord, Lord Fox. We are committed to rejuvenating our high streets and town centres. The measures in this Bill to introduce permanently lower tax rates for RHL properties will help, but they are only part of our work. In December, we introduced the high street rental auctions, a new power which allows local authorities to auction off the lease of persistently vacant commercial units. The new regulations will make town centre tenancies more accessible and affordable for businesses and community groups, while helping to tackle the vacancy rates on our high streets.

In addition, through the English devolution Bill we will introduce a new strong right to buy for valued community assets, such as shops, pubs and community spaces. That community right to buy will give local people the power to purchase community assets that go up for sale, helping to keep assets in the hands of the community. I have seen the great benefit of this in the Station Pub, in Knebworth, which the community has taken over and made a great success of. Like the pub mentioned by the noble Lord, Lord Waldegrave, it is a great place, and if noble Lords are ever in that area, they should visit. The Government continue to invest in a number of initiatives to boost town and city centres, including our high street accelerators. As part of our plan for change, we are working hard to support our high streets, and the measures in the Bill are part of that.

I thank all noble Lords for their comments on private schools, and in particular on special educational needs. The noble Baroness, Lady Scott, and other noble Lords mentioned pupils who do not have an ECHP. I used to be the education spokesperson at Hertfordshire, so I am very familiar with the sometimes lengthy delays in obtaining EHCPs. The approach adopted in the Bill has sought to ensure that the impact on pupils with the most acute special educational needs is minimised.

The Government are aware that some parents may make a choice for their child to attend private school, but this is a choice, like that made by any parent using the private sector. For most pupils with a special educational need, support is provided within a mainstream state school, and all children of compulsory school age are entitled to a state-funded school place if they need one. We support local authorities to ensure that every local area has sufficient school places for children who need them, and that appropriate SEND support is available, if needed. I recognise the issues around obtaining an EHCP. I am concerned by what the noble Baroness, Lady Scott, said about stigma around obtaining an EHCP, and I will discuss that with my noble friend the Education Minister.

The noble Lord, Lord de Clifford, spoke about what will happen to pupils with an ECHP when a school loses its charitable relief. Business rates are a tax on property; it is not possible to differentiate at the individual pupil level. Where a private school has only a few pupils with EHCPs, it will lose its eligibility for charitable rates relief. However, where a private school has been named on a pupil’s EHCP, the local authority funds the pupil’s place. Therefore, in the event that a private school loses eligibility and chooses to pass through some of that additional cost to fees, these pupils and their families will remain unaffected. In private schools, including private special schools, just 5.7% of pupils have an EHCP, predominantly in private special schools, and 97% of such pupils have their place at a private school funded by their local authority. I hope that helps clarify that point.

The Government are committed to reforming our SEND provision overall to improve outcomes and return the system to financial sustainability. We have provided a £1 billion uplift in high-needs funding for the next financial year. We know that that will not solve all the problems, but it will make a start. As part of our plan for change, we want to make sure that we are doing our very best to provide those opportunities that SEND children need, as with all children. This Bill is part of the process of driving that forward.

The noble Lord, Lord Jamieson, spoke about SEND and the state sector, and said that this approach will increase costs. We are absolutely committed to improving inclusivity and expertise in mainstream state schools, restoring parents’ trust so that their children will get the support they need to flourish. If an EHCP assessment concludes that a child can be supported only in a private school, the local authority will fund that place.

The noble Lord, Lord Lexden, whose great knowledge on this subject I respect, spoke about the Government not caring about pupils in private schools. The Government believe in parental choice, but we are determined to fulfil the aspiration of every parent to get the best education for their child. To eliminate barriers to opportunity, we need to concentrate on the broader picture and the state sector, where most of our children—93%—are educated.

Ending the tax breaks on business rates—and VAT—for private schools is a tough but necessary decision. We need to secure vital additional funding to help deliver those commitments to education and young people. As I said, there is a consensus on what we need to do, but perhaps not on the means of getting there.

The noble Lord, Lord Lexden, also mentioned the impact on faith schools. Again, the Government value parental choice but all children of compulsory school age are entitled to a state-funded school place if they need one, and schools are required to follow the Equality Act and requirements relating to British values. We expect them to foster and promote an environment that encourages respect and tolerance of children and families of all faiths. The Government have listened carefully to arguments on this matter and have decided that a carve-out for faith schools cannot be justified. However, children can attend faith schools and have their faith respected in the state sector.

The noble Lord, Lord Lexden, referred to private school closures. We expect those numbers to remain relatively low and they will be influenced by various factors, not just the removal of VAT and business rate tax breaks. Parents can seek places in other private schools or find a state school place through their local authority. There has been a traditional number of around 50 private schools closing each year, including independent special schools, but we must also note that private schools have continued to open, even after the Government announced that they would end tax breaks for private schools. The register of independent schools shows that 77 independent schools have opened between January and October 2024.

The noble Lord, Lord Lexden, felt that the timing of this was poor. Ending tax breaks on VAT and business rates for private schools is—I will say again—a tough but necessary decision, and we have had to take some measures to fill the gap in the budgets. Delaying implementation of the business rates policy would forgo around £140 million a year that is intended to fund the Government’s investment in state education and young people.

[Baroness Scott of Bybrook (Con)]

But if I remember rightly, the decision about the taxation of independent schools was made well before the Chancellor got into place and saw anything in the books.

[Baroness Taylor of Stevenage (Lab)]

Knowing the Chancellor as I do, I am sure she was extremely well prepared for taking on the commitment and had some idea of what was going on well before she came into office. I am sure that that was her being well prepared.

The noble Baroness, Lady Scott, and the noble Lords, Lord Waldegrave and Lord Maude, raised the impact on charitable activity if schools stopped or reduced their activity. They will continue to operate as charities and there will be no other tax changes specific to their charitable status.

I see I am running out of time, so I will close. I have a number of other points, including on several points of detail made by the noble Earl, Lord Lytton.

[Lord Fox (LD)]

I will read the noble Baroness’s statement in Hansard with great interest but does she recognise that, far from clarifying the issue, which has a number of moving parts, she has thrown some more moving parts into the bag? For us to have a sensible and reasoned approach to Committee, we really need some more clarity. I hope she will take that back with her from this debate. We are willing and ready to engage but it is very difficult, with the degree of murk we are currently encountering.

[Baroness Taylor of Stevenage (Lab)]

I hear the noble Lord’s remarks, and of course I will take that back. I and, I am sure, my noble friend Lord Khan will be happy to undertake any further engagement that noble Lords wish to have before we go into Committee.

The two key points seem to be that this was not a general review of business rates, which we know it is not—a further, wider review of business rates is going on—and the clarification of the VOA valuations, which will set out what categories properties over and under £500,000 will come into. Of course, we will do our best to clarify any further questions that noble Lords have as soon as we can.

I thank all noble Lords who contributed to the debate. This is our first step on the road to transform the business rates system. We want to provide certainty and support to our high streets by enabling the delivery of a permanent tax cut that is sustainable and levels the playing field between the high street and the online giants. It will also help break down barriers to opportunity and support all parents to achieve their aspirations for their children. All parents have aspirations for their children, and it is right that we do our best to support them in delivering and achieving them by raising additional revenue to support the more than 90% of children who attend a state school.

Bill read a second time and committed to a Grand Committee.

Local Government: Funding

Baroness Taylor of Stevenage Excerpts

Monday 27th January 2025 Lords Chamber

[Lord Whitty]

To ask His Majesty’s Government whether, before or alongside changes in local government structure in England, they will undertake a thorough review of the sources of funding, basis, and equity of local government financial resources at all levels, having regard to both the responsibility of individual councils and the balance of responsibility between central and local government.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, before I answer my noble friend’s Question, I note that, 80 years ago this month, soldiers of the Soviet 60th Army of the First Ukrainian Front opened the gates of Auschwitz-Birkenau. It has been so moving today—Holocaust Memorial Day—to hear in our media the first-hand accounts of those who may be visiting Auschwitz for the last time. That infamous camp has become the symbol of the Shoah. Today, we remember the Jewish lives, and all lives, lost to genocide, and we remind ourselves that it is more important than ever to keep our humanity and respect for human dignity at the heart of all we do.

In answer to my noble friend: alongside our proposals to widen devolution and streamline local government structures, this Government are making good on their promise to reform and improve the local government funding system. From 2026, funding will be directed to where it is most needed, through the first multiyear settlement in a decade. By fixing the foundations, we will give better value for taxpayers and empower local government to provide high-quality services and support the delivery of the Government’s missions.

[Lord Whitty (Lab)]

My Lords, first, I am sure that the whole House endorses my noble friend’s opening words. It is indeed a moving day.

On my Question, the biggest problem for local authorities is not structure or assessment. This Government and every other Government depend on local authorities’ ability to deliver many of their most important policies and strategies, and yet local government depends on an archaic system of local taxation—both council tax and business tax—and uncertain grants from central government. I hope the assessment that my noble friend refers to will begin to change that system, but does my noble friend not agree that a fundamental assessment of what local authorities need should be introduced so that we can start to improve the financial position of local authorities before the end of this Parliament?

[Baroness Taylor of Stevenage (Lab)]

I thank my noble friend. For 12 of the last 14 years, I was a local government leader, so his words definitely strike home to me. The Government are committed to local authority funding reform, with the updated approach that I spoke about from 2026 to 2027. We need to fix the foundations that he spoke about, so this will be developed in partnership with the sector and based on the principle of giving councils early certainty of their funding and a much fairer funding picture across the country. We are inviting views on our principles and objectives for funding reform through a consultation. We want to do this in consultation with the sector, and that consultation closes on 12 February. We will move towards an updated system and possible transitional arrangements to determine how local authorities reach their new funding allocations.

[Lord Wallace of Saltaire (LD)]

My Lords, we on these Benches share the view of the importance of remembering the Holocaust on this anniversary.

The Minister will be aware that centralisation of taxation in this country is far greater than in any other advanced democracy, and if finance is centralised, decisions will continue to be centralised. Is it not time for the Government to consider fundamental tax reform, in particular of the way local councils are funded? Will the Minister also consult her colleagues on whether we need a cross-party approach to tax reform for local authorities rather than having a tourist tax here and parking charges there, and otherwise depending on the Treasury to dole out funds?

[Baroness Taylor of Stevenage (Lab)]

The noble Lord makes a very important point about working on a consensus, which is why we have launched the major consultation on how we should take this forward. In addition, our English Devolution White Paper, which we published in December, sets out our plans to reset that balance between central and local government. That includes both funding and powers, and it is a new framework for English devolution that attempts to move power out of Westminster and back to those who know their areas best. That is the whole purpose of the devolution agreement. We want to see that done on the basis of it coming from the local areas upwards. We are committed to fixing those foundations, and we will do that with the people in our local areas and not to them.

[Lord Young of Cookham (Con)]

My Lords, on that devolution framework that the noble Baroness just referred to, the Minister in the other place said:

“That is why we are moving power out of Westminster and putting it back into the hands of those who know their area best”.—[Official Report, Commons, 16/12/24; col. 36.]


But power involving money was not devolved, leaving local authorities, as the noble Lord, Lord Whitty, said, dependent on a council tax which is regressive and 30 years out of date and business rates which are killing the hospitality and retail industries. Do we not need a much more fundamental review than the one the Minister just referred to?

[Baroness Taylor of Stevenage (Lab)]

The English Devolution White Paper sits at the heart of the reform we want, and that will involve both funding and money. I understand the pressure for urgent reform of council tax, but we have to be committed to keeping taxes on working people as low as possible. It is for local authorities to decide where they set their council tax. The Government will consider longer-term options to improve council tax billing and all those things, but council tax is a well-understood tax and it has very high collection rates. In terms of business rates, we published a discussion paper, Transforming Business Rates, which set out the priority areas for reform. We have had very good engagement on that and we will publish our update in due course.

[The Earl of Clancarty (CB)]

My Lords, what guarantee can the Minister give that the most locally funded arts and cultural services—including libraries—such as at district council level, will not be further lost in this reorganisation, against a background where, it has to be said, cuts to such services are continuing in many localities?

[Baroness Taylor of Stevenage (Lab)]

As the noble Earl said, arts and leisure services took an absolute bashing as local government funding was successively cut over recent years. The purpose of devolution is to put control for that back into local hands and to make sure that more of the money spent in Westminster gets spent in the local areas to protect the services that people really care about and feel are important to them. I hope that will include those key leisure, arts and cultural services that make life around this country so rich and wonderful.

[Lord Jamieson (Con)]

My Lords, I associate these Benches with the noble Baroness’s comments earlier.

I refer to my interests as a central Bedfordshire councillor. A recent survey published by Southwark Council revealed that 61% of councils have already cancelled, paused or delayed housebuilding projects and more than one-third have cut back on repairs and maintenance of council homes due to pressures on their housing budgets. In light of this and given the Government’s ambitions for housebuilding, will the Minister tell the House how this Government will support councils to build?

[Baroness Taylor of Stevenage (Lab)]

I have to say that it is very difficult to take lessons from the Benches opposite about local government funding, particularly in relation to council house building. The noble Lord will be well aware of the steps we have already taken to increase overall funding for local government but also that we have taken big steps to alter right to buy so that local authorities can keep 100% of the receipts they get from right-to-buy properties. We are changing the position on new properties built by local councils so they do not have to sell them at less than they built them for. We are fixing the foundations of a very broken system that we inherited from 14 years of the noble Lord’s Government.

[Lord Watts (Lab)]

My Lords, the last Tory Government spent 14 years taking money from the poorest local authorities and giving it to the richest ones. Will the Minister guarantee that the system that comes forward will be fair and be based on the need to spend?

[Baroness Taylor of Stevenage (Lab)]

My noble friend is absolutely right. The review that we are undertaking as part of the spending review in the spring will do just that. We made some steps forward in this year’s settlement; we need to take further steps in that regard, and the local government funding formula will be reset to take account of need.

[Baroness Eaton (Con)]

My Lords, I declare my interest as a vice-president of the Local Government Association. With Labour’s increase in employer national insurance contributions, LGA analysis confirms that the cost to local government will be around £1.7 billion next year. The provisional local government finance settlement confirms that councils will be compensated to the tune of £515 million for 2025-26, well short of the £1.7 billion. Can the Minister confirm from the Dispatch Box whether this compensation funding is a one-off, or will it be continued in future financial settlements? How does she expect local authorities to compensate for the shortfall?

[Baroness Taylor of Stevenage (Lab)]

As I said, the decision that we took around national insurance contributions was to fill the gap from the £22 billion black hole that was left by the Government of the Benches opposite. We continue to work on fixing those foundations and making the economy stronger. The noble Baroness asked specifically about the £515 million of support that we have provided to local government. That is in addition to other sources of funding that we gave to local government. Whether that will continue into future years will be the subject of the spending review in the spring. We will look at all aspects of local government funding so that we continue to fix and sort out the mess that we were left with.

Devon and Torbay Combined County Authority Regulations 2024

Baroness Taylor of Stevenage Excerpts

Monday 27th January 2025 Grand Committee

Moved by

[Baroness Taylor of Stevenage]

That the Grand Committee do consider the Devon and Torbay Combined County Authority Regulations 2024.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, I shall also speak to the Hull and East Yorkshire Combined Authority Order, the Greater Lincolnshire Combined County Authority Regulations and the Lancashire Combined County Authority Regulations.

Regulations were laid before Parliament on 26 November 2024 for Lancashire, as well as for Devon and Torbay. The Hull and East Yorkshire Combined Authority Order was laid on 4 December and the Greater Lincolnshire regulations on 11 December. The other place debated these instruments on 21 January 2025. Knowing how much noble Lords appreciate brevity, I hope they agree—while recognising that combined authorities and combined county authorities are distinct legal bodies with different types of enabling statutory instruments—with me simply using “combined authorities”, unless there is a reason to be specific, over the course of our debate. I hope that that is okay with everybody.

In December 2024, the Government published the English devolution White Paper. At its core, the White Paper sets out how the Government will widen and deepen devolution across England as part of our central mission to drive economic growth and improve living standards. These instruments deliver on that ambition and are significant steps in the devolution journeys for these four areas. The instruments provide for the implementation of the devolution agreements confirmed on 19 September 2024 between the Government and the upper-tier councils in each of the areas concerned. On 18 November 2024, all the respective constituent councils consented to the making of these instruments.

The three sets of combined county authority regulations will be made, if Parliament approves, under the enabling provision in the Levelling-up and Regeneration Act 2023. If approved, the combined authority order will be made under the enabling provision in the Local Democracy, Economic Development and Construction Act 2009. The combined authorities will be established on the day after the day on which the instruments are made.

The Hull and East Yorkshire Combined Authority and the Greater Lincolnshire Combined County Authority have chosen to adopt a mayor for their combined authorities, with the inaugural elections to take place on 1 May 2025. The elected mayors will take up office on 6 May with a four-year term. The instruments make provision for the governance arrangements of the combined authorities. In each case, the constituent councils nominate one or more of their members to form the combined authority, alongside the elected mayor where a mayor is being adopted. Each place has specific arrangements, enabled by either the 2023 Act or the 2009 Act, as set out in these establishing instruments.

For the three combined county authorities, district councils will play a key role in ensuring the success of devolution in these areas. District representation and input to the combined county authorities is determined locally within the framework provided by the 2023 Act. The instruments confer public authority and local authority functions on the respective combined authorities, as agreed in their devolution agreements and set out in each area’s proposals.

Alongside the regulations, we have laid reports under Section 20(6) of the 2023 Act and, for the order, Section 105B of the 2009 Act providing details about the public authority functions being devolved to the combined authorities. These functions include Homes England’s concurrent regeneration functions and powers over transport, as well as mayoral development corporation functions for the mayoral combined authorities.

The agreements include the devolution of certain education and skills functions, together with the adult skills fund. The Government will devolve the adult skills fund to the combined authorities from the 2026-27 academic year. The Department for Education will work with the combined authorities to support their preparations and ensure that they meet the necessary readiness criteria; it will legislate in due course when the Secretary of State for Education is assured that the combined authorities are operationally ready and is satisfied that the required statutory tests have been met in each area.

--- Later in debate ---

Given that certain transport functions in some of these authorities will remain with the constituent councils during the transition period, how do the Government plan to ensure effective co-ordination between the new combined authorities and the councils, and what mechanisms will be in place to prevent any gaps in service delivery or policy implementation? Finally, can the Minister assure the Committee that this is part of a genuine devolution and that the Government will continue to seek to devolve more to local areas and away from the centre—the UK being one of the most centralised countries in the OECD? As has been mentioned earlier, can he assure the Committee that the proposed local government reorganisation operates seamlessly with these changes?

[Baroness Taylor of Stevenage (Lab)]

I thank noble Lords for all those thoughtful points and for the general support that we have received for the instruments this afternoon. As noble Lords who have heard me speak on this topic before know, and to misquote a phrase terribly, I have always believed in devolution, which is more effective than revolution. I hope we will take this programme forward successfully, but there is a lot of water to go under the bridge—hopefully not so much for these local authorities, which have already taken some very important first steps towards the changes they want to see.

I will take this opportunity to address noble Lords’ contributions and questions, starting with the contribution from the noble Baroness, Lady Pinnock. First, she asked whether meetings and scrutiny committees would be held in public. Meetings of the combined authorities will be in public and, under the Combined Authorities (Overview and Scrutiny Committees, Access to Information and Audit Committees) Order 2017, amended in 2024, combined county authorities have overview and scrutiny committees with the usual call-in powers—so they will have call-in powers. I hope that is helpful from that point of view.

The noble Baroness asked whether the disparity between areas had been considered. She was referring particularly to Devon and Torbay, and the noble Lord, Lord Jamieson, also referred to this. Devon and Torbay were already in the process of establishing their non-mayoral combined county authority prior to the publication of the White Paper and the announcement of the devolution priority programme. We see these steps as foundational. A list of all those that have applied for delays to their elections has been published on GOV.UK—no decisions have been taken yet—and Devon County Council has requested to delay those elections.

Matters to do with the distribution of funding, responding to disparity or the potential disparity between different constituent councils in an area, are for those constituent councils. It is for them to work out how they will work. That is devolution, but they will work it out between them. If they use that as a foundation step, they may wish to build on their authority in the future. Who knows? We will wait and see what happens with Devon and Torbay but, for today’s business, we are putting through the programme that was set before us previously.

The noble Baroness asked whether the change in Hull and East Yorkshire was a positive move from the residents’ standpoint. It is the Government’s ambition that all parts of England ultimately have a mayor. We recognise that non-mayoral devolution can be an important foundational step for areas, which would see the benefits from devolution in the short term as they assess all options to unlock deeper devolution. The instruments before the Committee to establish mayoral combined authorities and a mayoral combined county authority provide that some functions conferred on those will be mayoral functions.

I think the noble Baroness was particularly concerned with transport issues in Hull and East Yorkshire. I will point only to the significant steps forward that have been made in existing mayoral authorities. Manchester of course is always flagged up as the example of this, but it has done an exceptional job to create a transport infrastructure that, so far—touch wood—works much better for the people of Manchester than the situation they had before. I hope that that continues in these new areas as they continue to use and develop their powers. The combined authority will have responsibility for improving and maintaining local transport and for the creation and implementation of a new area-wide local transport plan. We will see what happens with that.

The noble Baroness asked about funding, I think in the context of transport. Funding is conveyed for transport issues in their area, including those that I just mentioned.

The noble Baroness knows that, in the past, I have spoken widely in the House about district councils and their role. When you look at this, you see that there is clearly an appetite for reorganisation in parts of England. I have seen that in my work with district councils and now in government. In the past, Governments have often not been brave enough to follow through and make this programme really work across the country, but we just need to get on now with delivering what areas need.

We expect all two-tier areas and smaller or failing unitaries to develop proposals for reorganisation. We are going to take a phased approach to that delivery, because not everyone is in the same place at the same time. We will have our priority programme for people who feel ready to move more quickly, taking into account where reorganisation can unlock devolution, where areas are keen to proceed at pace, or where they can be helped to address certain issues that they may have failed with in the past. For those that want to take a bit more time, we will do it at their pace. But it is important that this is driven by local areas, so we are working very closely with our colleagues in local government to make this work properly.

The noble Baroness asked about mayoral precepts, and I think the concerns of the noble Lord, Lord Jamieson, also related to that. Mayors can use their mandate for change to take the difficult decisions needed to drive economic growth. As I said, the Government’s ambition is for all parts of England to have a mayor of a strategic authority. They will have the standing and soft power to convene local partners and tackle shared problems, but it is also important that they have this additional ability to raise funds in a number of ways, of which the precept is only one. The Government will work with them as we devolve funds out of Westminster. This is not necessarily about new money; it is about money and decision-making going from here out to local areas. It is important to stress that about the programme we have set out.

I thank the noble Lord, Lord Lucas, for his point about hereditary Peers and having a regional element there. That is above my pay grade; I am not going to go there. But I will say that we already have a very effective chamber of national and regional leaders, which is now convened, and mayors from England attend. It is very important that all areas have a say in the Council of the Nations and Regions, as it will increasingly make a large contribution to what goes on in our country.

The noble Lord specifically mentioned Sussex in relation to local places. I think there is a genuine way of strengthening the role of local places within these wider authorities, where they have existed for a while. I do not want to keep citing Manchester, but there is still a very distinctive identity in Oldham, Rochdale and wherever you go around the Manchester area. Those areas still have their distinct identities. I know Sussex a bit and there are some wonderful places there. I am sure they will continue to be their own places, with their own strong identities. If mechanisms need to be put in place to do that, by strengthening local community councils and improving and strengthening the role of community councillors, the Government are there to assist with that. Boundary issues must be driven locally, but the Boundary Commission stands ready to do what it needs to do to help.

The noble Lord spoke about cherished assets, such as downlands, and how to protect them. There is always a place for a local voice. Mayors have been real champions of these types of local assets, and they will continue to be champions in those local areas. The noble Lord also spoke about independent local panels. We are currently conducting a whole review of standards issues. I have a round table tomorrow, I think, and another at the end of the week, with partners from across local government and outside. We are doing that work as we speak and, if the noble Lord would like to contribute to it, I would love to hear from him.

On the AI issue, I will have to refer to a specialist answer, because it is not my area of expertise. I will find it in a moment.

I thank the noble Lord, Lord Taylor of Holbeach—whom I always think of as Lord Holbeach, because he is Lord of Holbeach—for his huge contribution to Lincolnshire, in both business and horticulture. I agree with him about local government being the most important institution; I have spent most of my life in it. When you walk out of your front door, it is what you see, and what will you the impression of whether or not things are right with the world. That is the way I look at it; that is how important it is. The noble Lord spoke about the confusion between councils. I live in a two-tier area and it is very common to have that confusion between councils. That is one reason why we need to sort this out now: just get on with the job and do it properly.

The noble Lord asked whether there was flexibility with the 500,000 figure. There certainly is. We set the 500,000 figure to give a guideline about what we see as strategic. If something slightly less or more than that works better for the local area, that is fine. I am also grateful to the noble Lord, Lord Porter, for all the work that he has done. The federational, or shared, services that the noble Lord spoke about will form a good foundation for these bigger authorities.

On UK Food Valley, seafood farming, and flowers and bulbs, mayors are there to create the infrastructure that will make that work better than it does at the moment. They will have oversight of a strategic spatial plan and I hope they will do a great job on that.

I turn to the points made by the noble Lord, Lord Jamieson. I agree about the unique nature of local areas. I know that the noble Lord has made a huge contribution to central Bedfordshire, so I am grateful for that. Devon and Torbay and Lincolnshire have both applied for election delays, so they are obviously thinking through their next steps very carefully. Hull and East Yorkshire and Lancashire are going ahead with their programmes, as set out in these instruments.

The noble Lord spoke about mayoral precepts and asked whether they were for genuine additionality. That is certainly the idea; they are not there to fill gaps in local government funding but to drive the mayor’s priorities and ambitions for the area. As we have seen, the areas that already have mayors drive forward their own priorities—and they are very strategic priorities. Mayors are not there to run the councils that sit underneath them; they are there to drive the strategic capability of the area concerned.

I hope that I have covered everything. If I have not, I shall write to noble Lords—and we will look through Hansard to make sure that we have covered everything. These instruments deliver the commitment made in the devolution agreements with Devon and Torbay, Greater Lincolnshire and Lancashire to establish combined county authorities for their areas and with Hull and East Yorkshire for a combined authority. I beg to move.

Motion agreed.

Hull and East Yorkshire Combined Authority Order 2025

Baroness Taylor of Stevenage Excerpts

Monday 27th January 2025 Grand Committee

Moved by

[Baroness Taylor of Stevenage]

That the Grand Committee do consider the Hull and East Yorkshire Combined Authority Order 2025.

Motion agreed.

Lancashire Combined County Authority Regulations 2024

Baroness Taylor of Stevenage Excerpts

Monday 27th January 2025 Grand Committee

Moved by

[Baroness Taylor of Stevenage]

That the Grand Committee do consider the Lancashire Combined County Authority Regulations 2024.

Motion agreed.

Greater Lincolnshire Combined County Authority Regulations 2025

Baroness Taylor of Stevenage Excerpts

Monday 27th January 2025 Grand Committee

Moved by

[Baroness Taylor of Stevenage]

That the Grand Committee do consider the Greater Lincolnshire Combined County Authority Regulations 2025.

Motion agreed.

Homelessness

Baroness Taylor of Stevenage Excerpts

Tuesday 21st January 2025 Lords Chamber

[Baroness Kennedy of Cradley (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and in doing so declare my interest as a trustee of the Nationwide Foundation.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, we are facing a homelessness crisis in every part of the country, with record levels that have become nothing short of a national disgrace. This Government acknowledge the devastating impact that homelessness has on so many lives. The current situation did not happen overnight; it is the result of long-standing neglect. We are addressing these failures head on with an injection of cash—allocating an extra £233 million to councils directly for homelessness, taking total funding to £1 billion next year—and through the long-term approach of working with mayors and councils across the country. The Government have set up an interministerial group chaired by the Deputy Prime Minister to develop a long-term strategy to put us back on track to ending homelessness.

[Baroness Kennedy of Cradley (Lab)]

My Lords, today marks 1,000 days since Royal Ascent was given to repeal the Vagrancy Act. Repealing this outdated law, which punishes people experiencing homelessness and pushes them further away from support, had overwhelming support from every party and every section of your Lordships’ House. Despite this, the last Government, and to date this Government, have not yet commenced repeal, citing concerns over the need for replacement powers, even though the latest report from MHCLG shows that this Act is being used less and less by police forces and that nearly half of them do not use it at all. I ask my noble friend one simple question: when are the Government going to commence the repeal of the Vagrancy Act?

[Baroness Taylor of Stevenage (Lab)]

I thank my noble friend for her campaigning around homelessness and on this issue. The Government view the Vagrancy Act 1824 as antiquated, cruel and no longer fit for purpose. No one should be criminalised for sleeping rough on the streets. I share her passion for ensuring it is confined to history, where it belongs. We want to ensure we avoid criminalising those who are most vulnerable, while ensuring that police and local authorities have the tools they need to make sure communities feel safe. As we move towards our steps on the Vagrancy Act, we are working closely with the Home Office and local partners. I was pleased that my honourable friend Minister Ali was able to announce yesterday an additional £20 million to deal with severe winter pressures, taking the total to £30 million.

[Lord Bird (CB)]

Are the Government going to address the fact that we have never learned to turn the tap off? We have more and more people falling into homelessness from different sectors of society—people are having problems all over the place, as the noble Baroness said. My concern is this: we are always going on about the emergency, but where in the background are this Government or the next working on reducing homelessness by turning the tap off and getting rid of the inheritance of poverty, which is what produces most homelessness?

[Baroness Taylor of Stevenage (Lab)]

The noble Lord is quite right in what he says. He will know that we have set a target of building 1.5 million homes over the course of the Parliament, which in the long term is the answer to tackling this issue. In the short term, we need to tackle the issue of many children spending years in temporary accommodation, when they need space to play and develop, at the same time increasing the funding to tackle the long-term causes of homelessness and poverty, which, as he rightly says, sit at the heart of this. The Renters’ Rights Bill, which is coming before this House very shortly, will tackle some of the causes of homelessness.

[Lord Jamieson (Con)]

My Lords, I declare my interest as a councillor in Central Bedfordshire. As the Minister has identified, the primary cause of homelessness is a lack of homes. London has nearly 70,000 families living in temporary accommodation—over half the total in England. Of those, almost half—33,000—live out-of-borough compared with one in seven for the rest of the country. Does the Minister agree that this is largely down to London having failed to build the homes that its residents need? What will this Government do to get London building?

[Baroness Taylor of Stevenage (Lab)]

The noble Lord will be aware that new targets have been set for building homes across the country, and in London no less. Local authorities use out-of-area placements to provide temporary accommodation, as he rightly mentioned. We are enabling more funding to go into London so that we can reduce the level of temporary homelessness accommodation. However, the long-term solution is to get more houses built, which is why we have increased the housebuilding target for London.

[The Lord Bishop of Lichfield]

My Lords, according to data from the Ministry of Justice, the proportion of all prison leavers who were released homeless in 2023-24 was 13%. Considering that people are 50% more likely to re-offend if they are homeless, what steps are the Government taking to reduce rates of homelessness among prison leavers?

[Baroness Taylor of Stevenage (Lab)]

The right reverend Prelate is right to highlight homelessness for ex-offenders. Since 2021, more than £33 million has been awarded to local authorities to support nearly 6,000 ex-offenders into their own private rented accommodation. The number of individuals still enrolled on the programme and sustaining tenancies is nearly 3,000. The funding provided allows schemes to offer a range of support. It is very important that, alongside housing, we get that support, consisting of rental deposits, landlord incentives, and dedicated support staff with landlord liaison and tenancy support officers. That complements the MoJ’s community accommodation service. The right reverend Prelate is right that housing is key to preventing re-offending.

[Baroness Thornhill (LD)]

My Lords, worryingly, the total spend on homelessness is unknown, largely due to a loophole in what we call exempt accommodation, which I am sure the Minister is aware of. The usage of this is not tracked, and it is now evident that it attracts some of the worst providers. Can the Minister assure us that this Government will get to grips with this unquantified and uncontrolled spending, and with those who are exploiting some of the most vulnerable people in society and the public purse?

[Baroness Taylor of Stevenage (Lab)]

The noble Baroness is quite right. It is outrageous that people choose to exploit the individuals concerned in this situation and the councils that have to fund their accommodation. We are doing everything we can to discover the extent of this and to tackle it head on. We recognise the increasing costs of that temporary accommodation and the pressure that it places on council budgets. As well as the homelessness prevention grant, councils are expected to draw from their wider local government finance, as the noble Baroness is aware. The overall local government settlement made extra provision for that, as well as the additional homelessness funding. It is totally unacceptable for homeless people to be exploited. We continue to track that down everywhere we can.

[Baroness Hughes of Stretford (Lab)]

Does my noble friend agree that we have a crisis now with the number of children and young people trapped in bed and breakfast accommodation, in totally unsuitable conditions, which will have an important and deleterious effect on their well-being? On the strategy she outlined, can she say more about the priority that the Government are giving to reducing the number of children and young people trapped in homelessness and to taking them out of that temporary system?

[Baroness Taylor of Stevenage (Lab)]

My noble friend is quite right. There is a short-term and very long-term effect on young people who get trapped in temporary accommodation. Councils must make sure that temporary accommodation is suitable for the needs of the household. Households can request a review of their accommodation if they feel it is unsuitable and it an applicant is not satisfied with how the council has handled their case. We have launched emergency accommodation reduction pilots, backed with £5 million, to work with the 20 local authorities that have the highest use of bed and breakfast accommodation for homeless families. Through the Renters’ Rights Bill, we will be applying the decent homes standard to the private rented sector; this includes a clause to bring temporary accommodation into the scope of the decent homes standard.

[Lord Best (CB)]

My Lords, the Minister may have seen the Sunday Times article by Martina Lees with the headline:

“Our grotty B&B bedroom costs taxpayers £2,383 a month”.


Can the Minister update us on the local authority housing fund, which enables the purchase of rundown properties for use on a temporary basis for temporary accommodation, which will save an enormous amount of money? In the long-term, with ownership by the council or a housing association, those properties can be used for years to come, providing vastly better value for money than the £283 a month for really grotty accommodation in the private sector.

[Baroness Taylor of Stevenage (Lab)]

The noble Lord is correct to flag up that issue, and I thank him for his work on housing and homelessness. The funding that the Government have introduced—the £450 million third round of the local authority housing fund—will support local authorities to get better quality temporary accommodation for homeless families. The third round is expected to deliver over 2,000 homes by 2026; funding will then be provided over the next two years, and will include revenue funding to support councils to deliver that fund. We are putting our money where our mouth is, but trying to resolve a problem that has occurred over many years is taking a great deal of effort. We will continue to strive to make sure that we put an end to the chronic homelessness we have seen in this country. It is time that we made sure everyone has a decent home to live in.