Levelling-up and Regeneration Bill

Earl Howe Excerpts

Committee stage
Monday 27th February 2023 Lords Chamber

[Lord Scriven (LD)]

My Lords, I rise to speak to Amendments 51 and 52 in the name of the noble Baroness, Lady Taylor of Stevenage. As the noble Baroness, Lady Hayman of Ullock, just pointed out, these amendments relate to consultant spend by councils and regional director spends, and their roles in the Government’s levelling-up agenda.

Amendment 51 is important, as the noble Baroness just pointed out. A freedom of information request showed that in the 245 upper and lower-tier councils, £26.9 million has been spent on levelling-up bids. That is £26.9 million taken away from social care, housing, cleaning, street cleaning and bin collection at a time when councils are finding things particularly difficult. Of that money, the vast majority went to external consultants. Does the Minister think it right that £26.9 million should be used on a lottery process pitting town against town and city against city to bid for levelling-up funds, only for the Government to move the goalposts at the last second by changing the criteria against which councils are bidding, which means not only that this money could have been spent on other services but that it has been wasted?

On Amendment 52, I wish to start with a general point, and here I do not necessarily share the sentiments of the noble Baroness, Lady Hayman of Ullock. The concept of 12 regional directors controlled out of Whitehall somehow being the panacea for devolution is ludicrous. Let us be clear: what this will turn out to be is a system of crude decentralisation. Those of us who have been around for quite a while in local government know that when we had something similar in the past, the regional directors of the department dispersed to work with local area partnership boards came with “We are here to help and support you” as their mantra. However, they were used as government enforcers and the eyes and ears of government, going back to the department and saying which areas were in the good books and who should be put on the naughty step because they were not carrying out the Government’s agenda.

Reports back from such regional directors decided who got money and what sticks or carrots were deployed. I know that the noble Earl will pour out soothing words from the Dispatch Box, saying that is not the role, but history shows that it is. Look at the job advert issued in November 2022—it kind of gives the game away. It says that they will report progress to the newly established committee for levelling-up, which is exactly the same as the previous directors in the department did.

We are now told that these regional directors are on hold, but that they could be answerable and accountable to the mayors. Let us take Yorkshire as a region, as these are regional directors. We could have four mayors in Yorkshire with different agendas and from different political persuasions. To which mayor will the regional director be accountable—one of them or all of them? It is clear that these roles have not been thought through from a regional perspective but from an office in Whitehall, with a very Londoncentric view of how they can be used as government enforcers.

Talking of Yorkshire, we are a little perplexed—not that we are from Yorkshire, but perhaps the Minister can help with this. Civil Service World on 17 February had an interesting headline, stating that the department

“hires former … No. 10 official as levelling-up director.”

Ed Whiting, David Cameron’s former deputy private secretary has been hired, and he very helpfully tweeted that he has been recruited to the role of levelling-up director in the north, based in and working out of Leeds:

“I’ll be based in Leeds, hoping to be travelling round North”,


working with local councils and others on innovation. He also expects to travel to London often too—ah, yes, that newly established Cabinet committee for levelling-up has to be informed. He goes on, quite incredibly—he has been hired on a six-figure salary—to say that “details” of the new role are “tbc”.

We are perplexed, Minister, and some clarification would be helpful. Is Mr Whiting a regional director for levelling up and, if not, what is his role and how does it fit with the regional directors? When was he recruited, where was the job advert and who sat on the recruitment panel? Why have local authorities in the north not been informed officially who he is and how he is there to help them? Why has someone been recruited on a six-figure salary when their role is still to be confirmed?

That is why Amendment 52 is important. We need transparency and clarity on who the department is using in the regions and what roles they have, to ensure the Government do not establish an expensive decentralized bureaucracy, costing the taxpayers millions, trying to enforce their agenda in local areas.

[Earl Howe (Con)]

My Lords, as we have heard, this group of amendments is related to consultants and the Government’s appointment of levelling-up directors. Specifically, Amendment 51, in the name of Baroness Taylor of Stevenage, would require the Government to publish an estimate of how much local authorities have spent on consultants in relation to Part 1 of the Bill. I fear that requiring local authorities to report in this way would be disproportionate and unnecessary, but let me explain why.

The new burdens doctrine, established and maintained by successive Governments, requires all Whitehall departments to justify why new duties, powers, targets and other bureaucratic burdens should be placed on local authorities, as well as how much these policies and initiatives will cost and where the money will come from to pay for them. This provision already ensures that the Government must properly consider the impact of their policies, legislation and programmes on local government and fully fund any new burdens arising.

Further, local authorities are already bound by the Local Government Transparency Code, which mandates local authorities to publish data on all expenditure over £500 in open and accessible formats. I will come back to that point in a second, but I have a great deal of sympathy with the points made by the noble Baroness about expenditure by central government on consultants.

[Baroness Hayman of Ullock (Lab)]

Will the Minister clarify something? When he says that the Government fully fund any new burdens, does that mean that the Government are reimbursing local authorities for the cost of creating their bids?

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[Earl Howe (Con)]

It would depend on the circumstances. It would depend on whether the expenditure on consultants was classified as a truly new burden or not, and that is an arcane science on which I do not pretend to be expert. Perhaps I may provide the noble Baroness with clarification in writing on that point, because I recognise that it is of relevance.

As I was saying, I have a great deal of sympathy with the noble Baroness’s points on expenditure by central government on consultants. As a matter of principle, I think all Secretaries of State across government would agree that they should impose a self-denying ordinance on their departments where skills can be developed in-house. Where that can happen, it should. The problem is, I suggest, twofold. First, the skills needed are very often highly specialised; secondly, if one looks across government as a whole, it is very difficult to make general statements about the needs of individual departments. However, I think the noble Baroness and I are aligned in our antipathy to expenditure that may turn out to be unnecessary—certainly expenditure that turns out to be wasteful. No department wants to go down that road.

On expenditure, transparency, as so often, is key. I note the comments of the noble Lord, Lord Scriven, about consultancy expenditure by local authorities in preparing their bids. I would just say to him that the decision by some local authorities to appoint consultants in their bidding process was a decision for them, and such decisions will doubtless have reflected in part the point that I just made: that the necessary skills are not always on tap locally. I think that is all I can say about that, but I will write on his questions about Mr Whiting, as I do not have the necessary briefing on that in front of me.

[Lord Scriven (LD)]

I want to ask a specific question, which I think the noble Baroness, Lady Hayman of Ullock, also asked. Has any regional director been appointed? That is the key question, particularly about Mr Whiting.

[Earl Howe (Con)]

I am coming to Amendment 52 in a second. It might be helpful if I added a few comments about local government funding more generally, because we recognise that the sheer number of different funds has become onerous for some councils to navigate and deliver. We have taken initial steps to address this complexity in the funding landscape. For example, the levelling-up fund provides cross-departmental capital investment in local infrastructure, and the UK shared prosperity fund provides resource-focused investment to support people, boost pride in place and strengthen communities. However, the levelling-up White Paper made it clear that we can do more, and we will set out a plan on funding simplification shortly.

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[Lord Berkeley (Lab)]

My Lords, I have listened to this debate very carefully. The noble Lord, Lord Scriven, talked about Yorkshire, which he clearly knows well. Apparently, this new director will be based in Leeds. Several times “the north” was referred to—but does “the north” include west of the Pennines or is that a different area? What is the geographical boundary of these things, or is it still fluctuating?

[Earl Howe (Con)]

It is open for decision. We want to see local areas taking the initiative themselves. Where there is a functioning economic hub, for example, or a whole county, they may wish to apply for CCA status, but it is up to them to make those decisions. One can talk in general terms of “the north”, but until we know that the appetite is in those northern areas for taking advantage of the opportunities that we are trying to create, I cannot be more specific.

[Lord Scriven (LD)]

For clarity, the issue with Mr Whiting, to whom I referred, is that, as the Minister helpfully said, no regional director has been appointed so far. However, Mr Whiting describes himself as a regional director for the north and not for a particular region. Therefore, it is important that, when the Minister writes to me, he clarifies exactly what Mr Whiting’s role is and how it fits with the regional directors.

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Therefore, if combined authorities do not have prior public debate and prior consultation and approval, what we get is the creation of another remote institution making decisions for local areas without direct accountability for them. Can the Minister explain what policies and proposals of combined county authorities can be questioned and challenged before final decisions are made? Currently, scrutiny arrangements in combined authorities are of the implementation and outcomes of decisions. I am keen to hear from the Minister whether the Government support the idea of pre-decision scrutiny to help to improve outcomes and involve more elected representations. In that way, more local people—or, certainly, their elected representatives—will have a say in any policies and priorities that are set out by the combined authorities. I support these two amendments and look forward to the reply.

[Earl Howe (Con)]

My Lords, this group of amendments relates to the area of a combined county authority, the new type of local government institution being provided for in Part 2 of this Bill. Provisions in this part support the delivery of the local leadership mission of the levelling-up White Paper, to enable by

“2030, every part of England that wants one”

to

“ have a devolution deal with powers at or approaching the highest level of devolution and a simplified, long-term funding settlement.

[Baroness Pinnock (LD)]

I am sorry to interrupt so early in the Minister’s response, but could he define more clearly what the “highest level of devolution” actually means?

[Earl Howe (Con)]

If the noble Baroness will bear with me, I shall do my best on that.

Noble Lords will be aware that 10 combined authorities have been established since 2011 in our city regions. However, we recognise that such authorities might not be so appropriate for non-metropolitan areas. The new model of combined county authorities is more appropriate for non-metropolitan areas, many of which have two-tier local government. It enables the establishment of a single institution covering a functional economic area, or whole county geography, which would be a suitable institution to provide effective leadership over an appropriate geography to qualify for a devolution deal.

I take on board the comments of the noble Baroness, Lady Taylor, about local government funding, but it might be helpful if I added a little to the information I gave the Committee in the last group of amendments. Our intention is to set out a plan for streamlining the funding landscape, as I mentioned, to provide greater flexibility for local authorities and make it easier to navigate opportunities for growth. This will include streamlining local growth funds, reducing inefficiency and bureaucracy and giving local government the flexibility it needs to deliver for local economies. As part of this work, we expect that there will be fewer small competitions. Where competitive funds do exist, we will look to streamline bidding and support greater alignment between revenue and capital sources. We will also consider the monitoring and evaluation requirements to ensure that places have robust, proportionate, ongoing monitoring and evaluation plans for the impact and delivery of investments and spending.

Amendment 60, tabled by the noble Baroness, Lady Taylor, seeks to allow part of a two-tier county council area to be included in a combined county authority, rather than the whole county council area. This would not be consistent with the policy we set out in the White Paper, whereby we will devolve to an institution covering a whole county geography or functional economic area. I will come on in a moment to the rationale for that model. In a combined county authority, such as the intended East Midlands CCA, the upper-tier councils within the area covered by a combined county authority are the constituent members of the CCA. There is no upper-tier council that covers part of a two-tier county council’s area; the only upper tier council is that two-tier county council, whose area covers a wider geography. As such, as the two-tier county council will be the constituent member of the combined county authority, the whole area that the council covers must be part of CCA’s area.

Moreover, allowing part of a two-tier county council’s area to be part of a combined county authority would not be consistent with the levelling-up White Paper’s principle of devolution being to institutions covering functional economic areas or whole county geographies, over which a number of functions should be exercised for maximum effect. Splitting the responsibility for such functions could also lead to discrepancies—

[Baroness Pinnock (LD)]

Can the Minister explain, then, where the geographies of a county area do not coincide with the geographies of an economic or travel-to-work area? Often, they do not. What I have heard is that you can either have a functioning geography of a county and its two tiers, or the alternative, but not a mixture of the two.

[Baroness Taylor of Stevenage (Lab)]

May I add to what my noble colleagues have said? This goes to the heart of this amendment. We struggle to say how you can have a county with more than one functioning economic area included in that county. To take my county as an example, the south of the county largely relates to London, because some of the boroughs almost are London boroughs, whereas the north of the county relates much more to Cambridge and Bedfordshire. There are definitely two distinct, functioning economic areas within one shire county. The shire counties go back centuries: their economic geographies have changed very considerably since then. If you take the economic geography of my noble friend Lady Hayman’s area, people in Cumbria may even relate to an economic area that includes parts of Scotland. This is not a simple picture around the country.

[Earl Howe (Con)]

Some extremely sensible and logical points have just been made. Perhaps I could address them by pointing out the contrast to what we have seen up to now. Devolution deals, up to now, have typically been put in place in city regions, where they cover the functional geographies in which people travel, commute, work and live.

The Government absolutely recognise that functional economic geographies are far less clear-cut in rural and semi-urban areas, and that the strategic scale and cultural and political resonance of county identities can act as a useful proxy. One can work only on the basis of best endeavours when trying to decide what a sensible area looks like. On a best endeavours basis, deals should be agreed over a sensible geography of a functional economic area, with a single institution in place across that geographic footprint to access more powers. That is the aim.

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[Lord Scriven (LD)]

I am sorry to interrupt the Minister, but he keeps talking about complexity. This is complexity of boundary, not of reality. I will give him a situation where complexity may hold back the levelling-up agenda. Let us again take the top end of the east Midlands and South Yorkshire. If both the South Yorkshire combined authority and the Derbyshire and Nottinghamshire combined authority have control of the skills money, the fact that probably about half the people from the north end of the east Midlands come up into South Yorkshire means that the skills required should be funded for jobs available in the South Yorkshire combined authority. If the Derbyshire and Nottinghamshire combined authority decides not to invest in that type of skill, the issue is that the flow of labour will not be there for South Yorkshire businesses. How does that kind of problem get solved? It is not an administrative issue but the reality of having the skills where real people and businesses travel and work together.

[Earl Howe (Con)]

I take the noble Lord’s point. The experience we have had with combined authorities is that local authorities’ natural tendency is to co-operate with each other. We have seen this all over the place: they do not want to operate in silos and they look outside their boundaries. Yes, there may well be cases where at the beginning there would seem not to be a particularly good fit, but that does not preclude two authorities, such as those he mentioned, getting together and finding a way through, if they possibly can, to address the mismatches of the kind he mentioned.

Amendment 99 seeks to amend Clause 23 to require a public consultation before any proposal to change the area of an existing combined county authority. We agree that those with an interest in the area should be consulted before a combined county authority is changed. As I said, we will have more to say about this in the debate on the next group of amendments.

Clauses 45 and 46 set out a requirement for a public consultation on any proposals from the local area on changes to the area of a CCA. Where a combined county authority has been established and subsequently seeks to change its boundary, Clause 23 enables the Secretary of State to make regulations for areas to achieve that. The Secretary of State may make regulations changing the area of a CCA if that is something the area consents to, the Secretary of State agrees and Parliament approves the necessary secondary legislation.

We fully recognise the crucial importance of residents in the local area having a say; that is common ground between us. That is why any CCA or local authority seeking to submit a proposal to the Secretary of State to change the area of a CCA must carry out a public consultation, as set out in Clause 45(3). This consultation must take place in the area covered by the CCA. This enables local residents, businesses and other interested parties to have a strong input into any such proposals. A summary of consultation responses is then to be submitted to the Secretary of State alongside the proposal.

Clause 46 provides an additional safeguard to ensure that there is sufficient public consultation. This enables the Secretary of State to undertake a consultation prior to making any regulations to enact these changes if they feel that there has been insufficient public involvement in their development.

We completely agree with the sentiment of Amendment 99, but I suggest that we already have provisions later in the Bill to address this; we will debate some of these in a few moments. I therefore hope that the noble Baroness feels able to withdraw Amendment 60 and not to move Amendment 99 when it is reached.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I am pleased we tabled these probing amendments, because they have brought out some of the discussion we needed to have in these areas. I am grateful to the noble Baroness, Lady Pinnock, for her comments. She said that “combined county authority” is a misnomer, and I think she is absolutely correct.

Previous responses indicate that we could include unitaries and counties all within a two-tier area. It is not clear in the Bill what that might mean. In the example of Nottinghamshire and Derbyshire, with the overlap of economic areas and travel-to-work areas, et cetera, the geography is far more complicated than back in whatever century it was when the county shire boundaries were devised. The purpose of my amendment was to determine whether parts of a two-tier area would be required to join a CCA if it did not work for them. It is really important that we do some more probing around this and think about it more.

We did not get on to the subject of population, which I will come to in a minute. My concern with this is that we have the phrase that the Secretary of State can determine “by regulation” what a combined county authority will look like. That does not seem to me to be in the spirit of devolution in any way whatever. If it is for the Secretary of State to determine that by regulation, I would be interested to know the noble Earl’s view on how that would be conducted in relation to the partners in the local area.

I am grateful for the noble Earl’s extensive response on this, which is an indication that we are moving the debate forward somewhat. I will come back to the issue of the functional economic area. These are not neatly contained now within county council areas. We have heard a few examples of that. We need to focus on that and think about how we might amend the Bill to recognise that.

The noble Earl spoke about streamlining funding. I was grateful for those comments and I am sure they will be welcomed across local government, but when will we see the detail of how that streamlining of funding will work? If he has any more information on that, it would be helpful.

I have a lot of sympathy with what the noble Earl said about city regions. They make a lot more sense—I spent quite a lot of time with colleagues in the city region in Manchester looking at how that works. However, that does not mean that that model can be lifted and put down in areas that are very different in this country. The difficulties that we have set out underline exactly why there must be flexibility for local areas to consider for themselves what the appropriate geography might be for them.

I return to the issue of population size. In previous iterations of these bids for devolution, we were told that any bid under 600,000 population would not be considered. My county of Hertfordshire has a population of 1.2 billion—sorry, 1.2 million; I am exaggerating—which is a very different issue from a rural county that might have a population of only 300,000. That is why this is much more complicated in shire areas. Will the noble Earl comment on whether population issues will be taken into consideration in relation to the size and constitution of combined county authority areas?

[Earl Howe (Con)]

It may be helpful to the noble Baroness if I comment on that specific question. We expect upper tier local authorities with a population of less than 500,000 to collaborate with their neighbouring authorities to agree a sensible geography for a devolution deal. Where neighbouring local authorities wish to join a deal which has been negotiated and have the same level of ambition, we will expect other authorities to take this seriously in order to secure devolution and to avoid areas being stranded. Once again, I come back to the point I made earlier that our experience with combined authorities has shown that this kind of co-operation takes place quite readily. That is the position we have taken currently.

[Baroness Taylor of Stevenage (Lab)]

I am grateful to the noble Earl for his clarification. It covers one side of the picture with the smaller county areas. However, larger county areas, where the population may not lean towards a single county authority, should still be a subject for discussion.

I agree that we have several amendments relating to consultation processes and that the other amendment in this group probably sits better with those, so I am happy to postpone discussion of that until the future group. However, the principle of consultation, and recognising the importance of local areas having a say, seems to be enshrined for all the other issues around the setting up and dissolution of a CCA. If it is right for those, it must be right for a change of boundaries too. That is the point we were trying to make with Amendment 99. That said, we have had a useful discussion and I am happy to withdraw Amendment 60 at this stage.

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[Earl Howe (Con)]

My Lords, as we have heard, this group of amendments covers preconditions for establishing, and indeed disestablishing, a combined county authority. This process is locally led and it aligns with the process for a combined authority that we have seen successfully used in many areas to date.

Amendment 61, tabled by the noble Baroness, Lady Taylor of Stevenage, seeks to insert a requirement into Clause 7 that the Secretary of State can establish a combined county authority via regulations only if they deem there to be at least 60% support from local residents in the area to be covered by the CCA. In a similar vein, Amendment 127, tabled by the noble Baroness, Lady Bennett of Manor Castle, seeks to insert a requirement into Clause 44 for there to be a referendum before the Secretary of State may make regulations to establish a combined county authority, and for this question to be approved by a majority of local government electors.

We do want to ensure that the local public, in the broadest sense, are consulted on a proposal to establish a combined county authority in their area. This desire on the Government’s part is already captured by the requirement for a consultation provided for in Clause 43. Clause 43(4) states that, prior to submitting a proposal for a combined county authority to the Secretary of State, the local authorities proposing the establishment of a CCA must undertake a public consultation on the proposal in the area that the CCA will cover.

The noble Lord, Lord Shipley, asked, perfectly reasonably, what a proper consultation would look like. One important element is that it would have to cover the waterfront, as it were, in terms of stakeholders, to get a real sense of the strength of feeling and the climate of opinion in an area, and the extent to which an authority has taken the trouble to represent the scope of that opinion and feeling in the submission it makes. Once the consultation has happened, the authorities must submit a summary of consultation responses to the Secretary of State alongside their proposal.

When deciding whether to make the regulations to establish a combined county authority for an area, one of the tests the Secretary of State must consider is whether the area’s public consultation is sufficient. That is a judgment the Secretary of State must make in the light of the information presented, but if they conclude that it has not been sufficient, Clause 44 provides that the Secretary of State must undertake a public consultation before any regulations can be made.

I noted the point made by the noble Baroness, Lady Hayman, and will take advice on why that clause is worded as it is. I suggest to her that there is nothing sinister in it—it is the way that these legal provisions have to be drafted—but the net effect is as I have described, because what we wanted to introduce was a safety net, as it were, of a further Secretary of State-initiated consultation if that was deemed necessary. I hope the fact that we have done that demonstrates the importance which the Government attach to the consultation process.

We believe that the existing clauses provide for sufficient local consultation. I hope the way I have outlined the provisions and what we intend them to do in practice has persuaded the noble Baroness, Lady Bennett, that a referendum would be unreasonably burdensome. What we want, above all, is transparency of local opinion and that I hope we will get.

[Baroness Bennett of Manor Castle (GP)]

Many examples are flashing through my head, but I am thinking about one particular local government consultation that I saw, which happened to be around the city of Chester. The consultation asked, “Do you want to build on the green belt in areas A, B, C, D or E?”. Many local people pointed out to me that they wanted to say, “None of the above”, but there was no space in the box or provision to do that. So can the Minister reassure me that part of the Secretary of State’s examination of the summary of consultation responses will look at whether the consultation truly gave the space for local opinion to be expressed?

[Earl Howe (Con)]

That is certainly the aim. I do not know whether the noble Baroness would agree with me that one of the downsides of referendums that we have seen in the past is that people are asked to take a binary decision. That very often does not allow for the nuances and subtleties of an issue to be presented in the question, to put it at its mildest. So we think the consultation model is more appropriate for this type of situation, particularly as the different constituent elements of a community will have different interests and viewpoints on the issue in question.

[Lord Scriven (LD)]

It is clear that, even barring a referendum, under Clause 44(3)(c) the Secretary of State will ask for further consultation if they consider that it is required. I assume that the Secretary of State will not have a subjective opinion on that and that there will be some objective criteria. It therefore comes back to what my noble friend Lord Shipley said: would it not be wise for the objective criteria about what good consultation is to be shared and, potentially, to be in the Bill? That would stop the position where local authorities had to rerun a consultation because it had not met the criteria which the Secretary of State was looking for in the first place.

[Earl Howe (Con)]

Yes, I take the noble Lord’s point. It comes back to one that I think the noble Lord, Lord Shipley, made about minimum standards in this area. It might be helpful if I took advice on this and wrote to noble Lords who have taken part in this debate, to see whether I can add some clarification.

Turning to Amendment 62, tabled by the noble Baroness, Lady Taylor of Stevenage, the levelling-up White Paper clearly states the Government’s ambition for devolution, including the devolution framework, which is underpinned by four principles. One of these principles is sensible geography. The White Paper clearly states that future devolution deals should be agreed over a sensible, functional economic area and/or a whole-county geography, with a single institution in place across that geographic footprint. We have already debated that issue on the previous group. The combined county authority model is being established in the Bill to provide a single institution that can cover such functional economic areas, or whole-county geographies, where there is existing two-tier local government and multiple upper-tier councils. As such, I reassure the noble Baroness that combined county authorities will be focused on single economic hubs.