Cities and Local Government Devolution [Lords] Bill

David Crausby Excerpts

Wednesday 21st October 2015 Commons Chamber

[Several hon. Members rose—]

[The Temporary Chair (Mr David Crausby)]

Order. I want to call the Front Benchers at about 2.55 pm. There are still six or more Members who wish to speak, so unless Members keep their contributions below five minutes, we will not get through them all. I would therefore appreciate the co-operation of the Committee.

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[Several hon. Members rose—]

[The Temporary Chair (Mr David Crausby)]

Order. I remind hon. Members that I intend to call the Front-Bench speakers not much later than 2.55 pm.

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[The Temporary Chair (Mr David Crausby)]

With this it will be convenient to discuss the following:

Amendment 40, in page 4, line 18, at end insert—

‘(1A) An order under subsection (1) may only be made with the consent of the relevant combined authority; and that consent must be obtained prior to the creation of the office of mayor in the combined authority concerned’.

The intention of this amendment is that a function of a mayoral authority may only be transferred to the mayor with the consent of the relevant combined authority, which must be obtained prior to the creation of the relevant office of mayor.

Government amendments 5 to 7.

Amendment 60, in page 5, leave out lines 9 and 10.

As it stands the Bill removes the right of the Secretary of State to give borrowing powers to an elected mayor but allows for borrowing powers to be given to a combined authority. The amendment will allow borrowing powers to be given to an elected mayor.

Government amendment 8.

Clause 5 stand part.

Government amendments 23 to 25.

That schedule 2 be the Second schedule to the Bill.

Clauses 6 and 7 stand part.

Amendment 41, in clause 8, page 8, line 20, leave out from beginning to end of line 12 on page 10 and insert—

‘(1) The Secretary of State may by order make provision for a function of the Secretary of State that is exercisable in relation to a combined authority’s area to be a function of a mayor of a combined authority;

(2) An order under subsection (1) may not include provision about the exercise of functions currently exercised by local authorities.’

The intention of this amendment is that the only powers that can be given to a mayor of a combined authority are powers currently exercised by central government.

Amendment 54, page 8, line 27, at end insert—

‘(c) make provision for conferring on a combined authority, upon the request of that authority in relation to its area the full retention of business rates, business rate supplements, council tax, stamp duty land tax, annual tax on enveloped dwellings, capital gains property disposal tax, and multi- year finance settlements.’

This amendment will allow local authorities to retain all of their local taxation, including Business Rates and Council Tax.

Amendment 55, page 8, line 27, at end insert—

‘(c) make provision for conferring on a combined authority in relation to its area discretionary control of council tax discounts, business rate discounts and supplements, and other local fees, charges and subsidies in relation to other retained taxes.’

This amendment will allow local authorities to control all of their local taxation discounts, including those applicable to Business Rates and Council Tax.

Clause 8 stand part.

Clause 17 stand part.

Amendment 48, in clause 18, page 17, line 48, after “consents,” insert

‘and in the County of Somerset, as defined by the Lieutenancies Act 1997, approved by a referendum in the local authority area’.

Government amendment 15.

Clause 18 stand part.

Clause 9 stand part.

Amendment 1, in schedule 3, page 32, line 12, after “persons” insert

‘including representatives of parish, neighbourhood, community and other councils in the area of the combined authority’.

This amendment would allow local representation from parish, neighbourhood, community and other council is to attend combined authority scrutiny meetings.

That schedule 3 be the Third schedule to the Bill.

Government amendment 9.

Amendment 58, in clause 10, page 11, line 26, at end insert—

‘(5) The Secretary of State may by order make provision for conferring powers on a combined authority to set multi-year finance settlements.’

This amendment is intended to offer financial stability to city regions, allowing them long-term planning which is something not currently offered by the finance settlement or the funding of local enterprise partnerships (LEPs).

Clauses 10 to 14 stand part.

Amendment 49, in clause 15, page 14, line 43, at end insert—

‘(d) In the County of Somerset, as defined by the Lieutenancies Act 1997, approved by a referendum in the local authority area.’

Clause 15 stand part.

Government amendment 10.

Amendment 2, in clause 16, page 16, line 6, at end insert—

‘(d) the creation of a Constitutional Convention to discuss further local authority governance, functions and related democratic issues.’

This amendment creates the means by which every UK citizen can participate in a national public discussion on local devolution in the context of the wider renewal of UK democracy.

Government amendment 11.

Amendment 47, in page 16, line 11, after “apply” insert

‘and in the County of Somerset, as defined by the Lieutenancies Act 1997, approved by a referendum in the local authority area’.

Amendment 50, in page 16, line 11, at end insert—

‘( ) In the case of two tier authorities, consent under section 16(3) may also be given where a majority of local authorities in the local authority area have indicated their support.’

Government amendments 12, 14 and 13.

Clause 16 stand part.

New clause 2—Subsidiarity—

‘That Subsidiarity as defined by the Maastricht Treaty 1992 Article 5(3) shall apply to the functions of national and local government.’

This new clause would build in local government’s independence by using the principle of subsidiarity found in European law.

New clause 4—Local Government Constitutional Convention—

‘(1) A convention is to be held to consider and make recommendations on the constitution of local government in the United Kingdom.

(2) The Secretary of State must make regulations to—

(a) appoint a day on which the convention must commence its operations,

(b) make fair and transparent rules about how the convention is to operate and how evidence is to be adduced,

(c) make further provision about the terms of reference prescribed under section (Local Government Constitutional Convention: terms of reference), and

(d) specify how those who are to be part of the convention are to be chosen in accordance with section (Local Government Constitutional Convention: composition).

(3) The date appointed under subsection (2)(a) must not be later than 31 December 2016.’

This new clause creates the means by which every UK citizen can engage in a national public discussion of devolution local government, governance and electoral systems and make recommendations and receive a response from government and parliament to that national debate.

New clause 5—Local Government Constitutional Convention: terms of reference—

‘The convention must consider the following terms of reference—

‘(a) the devolution of legislative and fiscal competence to local authorities within the United Kingdom,

(b) the reform of the electoral system for local government,

(c) constitutional matters relating to local government to be considered in further conventions, and

(d) procedures to govern the consideration and implementation of any future constitutional reforms in relation to local government.’

This new clause creates the means by which every UK citizen can engage in a national public discussion of devolution local government, governance and electoral systems and make recommendations and receive a response from government and parliament to that national debate.

New clause 6—Local Government Constitutional Convention: recommendations—

‘(1) The Local Government Constitutional Convention must publish recommendations within the period of one year beginning with the day appointed under section (Local Government Constitutional Convention).

(2) The Secretary of State must lay responses to each of the recommendations before each House of Parliament within six months beginning with the day on which the recommendations are published.’

This new clause creates the means by which every UK citizen can engage in a national public discussion of devolution local government, governance and electoral systems and make recommendations and receive a response from government and parliament to that national debate.

New clause 7—Local Government Constitutional Convention: composition—

‘(1) The Local Government Constitutional Convention must be composed of representatives of the following—

(a) registered political parties within the United Kingdom,

(b) local authorities, and

(c) the nations and regions of the United Kingdom.

(2) At least 50% of the members of the convention must not be employed in a role which can reasonably be considered to be political.”

This new clause creates the means by which every UK citizen can engage in a national public discussion of devolution local government, governance and electoral systems and make recommendations and receive a response from government and parliament to that national debate.

New clause 10—Housing devolution to London—

“In any enactment relating to housing, any power or duty of the Secretary of State applicable to any person or dwelling shall be exercisable in the Greater London area only by the Mayor of London, with the consent of the Greater London Assembly.’

This new clause provides for devolution to London of the Secretary of State’s housing powers.

New clause 11—Local property taxes devolution to London—

‘(1) There shall be London Consolidated Fund into which shall be paid each month a sum equivalent to the previous month’s tax receipts in relation to properties in the greater London area accruing from—

(a) the stamp duty land tax,

(b) capital transfer tax,

(c) the annual tax on enveloped dwellings, and

(d) capital gains property disposal tax.

(2) The Treasury must consult the Mayor of London and the Greater London Assembly on what band and rates should be applied in respect of the Greater London area for the next financial year in respect of each of the taxes mentioned in subsection (1).’

This new clause provides for devolution to London of the receipts from taxes on property and for formal consultation with the Treasury on the rates of those taxes to be set for the greater London area.

New clause 12—Local Government Financial Integrity—

‘(1) Local authorities shall be financially independent of central government, save as otherwise provided for by this section.

(2) Central government may not place any restriction on decisions by local authorities about the exercise of their financial powers.

(3) The distribution of central government funds between local authorities shall continue on the basis of existing equalisation arrangements. Distribution will continue to be based on the principle of ensuring fairness and balance between local authorities. The basis on which this distribution is carried out must continue to be made public.

(4) Each local authority shall receive from central government a guaranteed share of the annual yield of income tax, as follows. Central government must in each financial year assign to the Secretary of State responsible for the distribution of central government funds between local authorities an amount of money equivalent to the yield from ten pence in the pound of income tax. The Secretary of State must make arrangements to inform each taxpayer in England of the amount of their income tax which makes up the central government funding distributed to English local authorities as a whole.

(5) The amount of the income tax yield referred to in subsection (4) shall be renegotiated between central and local government whenever service provision responsibilities are transferred between central government and local authorities.

(6) Local authorities may raise additional sources of income in their areas in any way they wish, and with the consent of their electorates as expressed through arrangements to be determined and put in place by the local authority concerned.

(7) Local authorities shall be able to raise any loans, bonds or other financial instruments which their credit rating allows and as independent entities will be exclusively responsible for their repayment. All local authorities shall operate a balanced budget so that in any one financial year all outgoings, including interest repayments on borrowings, shall not exceed income.

(8) Central government may not cap, or in any other way limit, local authorities’ taxation powers.

(9) The financial transparency standards that apply to central government shall apply to local authorities.

(10) Central government and local authorities may contract with each other in order to pursue their own policy objectives.’

The intention of this new clause is that receipts from income tax should be assigned to the Department for Communities and Local Government who will then pass it on to councils.

New clause 14—Power to create new council tax bands—

‘(1) Section 5 of the Local Government Finance Act 1992 is amended as follows.

(2) In subsection (4) omit “The Secretary of State may by order, as regards financial years beginning on or after such date as is specified in the order” and insert “A local authority may for any future financial year”.

(3) Omit subsection (5).’

The intention of this new clause is to devolve to councils the power to create new council tax bands.

New clause 15—Abolition of referendums relating to council tax increases—

‘(1) In Part 1of the Local Government Finance Act 1992 (council tax: England and Wales) after Chapter 4 omit the Chapter set out in Schedule 5 to the Localism Act 2011.

(2) Schedule 6 to the Localism Act 2011(council tax referendums: further amendments) ceases to have effect.’

The intention of this new clause is to end the council tax referendum system.

New clause 16—Effective devolution committees—

‘(1) The functions of local authorities include the formation of committees to collect and analyse data on effective performance by local authorities of powers and functions devolved to them.

(2) The Secretary of State must not give any directions to such committees.’

The intention of this new clause is to enable Local Government to set up its own “what works” organisation on devolution to examine what’s effective, either independently or in partnership with, but separate from, the Department for Communities and Local Government.

New clause 17—Scale of devolution—

‘(1) The extent of the devolution of powers and functions to local authorities must not be dependent on the size of the population of the local authority.’

The intention of this new clause is to provide flexibility for devolution on varying scales and foot prints instead of linking the amount of devolution to the size of the recipient.

Government amendments 26, 30 and 31.

[Mr Brady]

I shall be brief. Amendments 40, 41 and 45 relate to a variety of questions regarding the precise powers that are to be transferred under a devolution settlement, including whether powers can be devolved down from Government and whether there is any danger or any possibility that might preclude the danger of powers being pulled up from local government and vested at a level further from the people, which I believe to be the case under the Bill as it stands.

Essentially, amendment 45, by providing a veto for any one authority in a combined authority or mayoral authority area over any decision, would establish what, in the context of the Prime Minister’s negotiations on the EU relationship, we would refer to as sovereignty. It is the opposite of the arrangement in the Bill, which we would, I suppose, call qualified majority voting. The current provisions would clearly allow a majority position in the mayoral authority to prevail over a serious objection from one, two or perhaps three authorities. If I read the Bill correctly, in fact, I think that most of the vetoes in the Greater Manchester agreement would require two-thirds opposition to a measure to prevent it from proceeding.

Amendment 45 makes it very clear that although we are pleased to participate in the new arrangement, or to enhance the existing arrangement of a combined authority, which works very well, we believe that the fundamental power in this relationship ought to reside with the local authority or with each of the local authorities in the area. If the amendment were to be agreed, it would provide that protection. As with the amendments we discussed in the earlier group, which I did not press to a vote, I do not intend to press these amendments to a Division in Committee, in the hope that Ministers will reflect on them and consider whether there are more effective ways in which these guarantees and safeguards could be provided.

Similarly, amendment 40 seeks to establish what one might call a “foundation status”. It would give a special status to the original devolution agreement, which has been acceded to by the leaders of the local authorities in Greater Manchester, which is obviously the instance I know best. The intention is that it would limit the transfer of powers from local authorities, in particular, to any transfer that might take place before the establishment of the mayoral authority and would therefore prevent any further transfers. The amendment might not be perfect, and there might be flaws in how it is drafted, but I hope that my hon. Friend the Minister will accept that there is a real and important point that at the moment of the inception of the mayoral authority there is a degree of consent from the local authorities, but that consent might be less certain at a later stage.

Finally, amendment 41 seeks to provide an explicit guarantee. Ministers are very clear in their statements and Members on both sides of the House have been quite enthusiastic about the principle that we are seeking to move decision making and spending closer to people, taking functions away from central Government and moving them to a more local or regional tier. The hon. Member for Nottingham North (Mr Allen) spoke previously to his amendments seeking to establish a principle that could allow powers always to cascade down to the lowest level—something with which many of us feel a natural sympathy.

However, the Bill as it stands provides the possibility for powers to move in the opposite direction—for a local authority in any one year under any political control to decide that it wishes to cede decision making to the mayoral authority level. It is conceivable that the present Conservative Government will last for no more than another three or four Parliaments, and at some point in the future there could be a Government of another party in place. It is conceivable that a Minister less benign and less wise than my hon. Friend on the Front Bench may seek to lock into a mayoral tier of government powers sucked up from the local level.

Amendment 41 would provide a guarantee that what Ministers say they intend to achieve through the Bill and what most of us would like to see—the transfer of powers down from central Government—will indeed be the effect of the Bill, and not the reverse, the danger that the process will lead to decisions being taken further away from people, rather than closer to them.