Cities and Local Government Devolution [Lords] Bill

Graham Allen Excerpts

Wednesday 21st October 2015 Commons Chamber

[Mr Graham Allen (Nottingham North) (Lab)]

The Minister is making a rational and cogent argument. I would like to take him back to the question of double devolution, which has been raised with me by many, including the key cities—those that I would perhaps describe as the second-tier cities, rather than the core cities. They are concerned that power should not simply go from Whitehall to town hall, and that there should be an evolutionary process in which power continues to be devolved to neighbourhoods, parishes and other smaller bodies. If the Minister will not accept my amendment, will he give those cities some reassurance that there will be strong Government oversight to ensure that the devolution does not stop at the town hall?

[James Wharton]

Yes, I can give the hon. Gentleman that reassurance. Every devolution proposal will involve a deal between the Government and those local areas that want devolution. As part of those deals, we will look at what further steps can be taken. We recognise the principle, which he advocates, that decisions should be taken at the lowest level of government at which they can effectively be taken. If an area with which we were having discussions wanted that to be part of the deal, and if we could work with it to deliver it, it would be our intention to do that.

Returning to clause 2, it would be easy for some future Government to parade their devolutionary credentials because every one of their Bills had a devolution statement, while in reality they might have done little to continue to meet what I confidently predict will be a continually growing appetite for devolution across the country. I suspect that the hon. Gentleman agrees with me about the existence of that appetite. Accordingly, the Government are opposed to clause 2 standing part of the Bill, and amendment 29 is consequential to the removal of the clause from the Bill, deleting the reference to that clause in clause 1.

The hon. Gentleman has tabled a number of amendments that would have constitutional implications. We will consider most of them later today, but new clause 1 is in this group. It would require the Secretary of State to publish a list of local government competences, having first agreed them with representatives from local government. Once published, the list could be amended only with the approval of two thirds of the membership of the House of Commons and the approval of the Local Government Association.

I understand the reason for new clause 1 but I cannot support it. When codification of the relationship between central and local government has been attempted in the past, it has failed, as was recognised by the Political and Constitutional Reform Committee of this House. In their response to a report from the Committee in 2013, the Government commented that codification fails because it is about processes, rather than about policy intended to improve outcomes. Instead of liberating local leaders, a codified relationship could simply serve to focus energy on theoretical debate, rather than on shared endeavour, problem solving and action.

[Mr Allen]

I will speak about this at greater length later, but may I make one specific point now? Historically, local government has felt uneasy about its relationship of subordination to central Government, and a means of reassuring local government of all political parties would be to entrench the settlement that the Minister is proposing and to find a way in which to reassure local government about its long-term sustainability and its independence from central Government. Will he undertake to have a think about this matter, so that he will be able to ensure even more co-operation from local government?

[James Wharton]

I will of course give the hon. Gentleman that undertaking, and I shall listen carefully to what he says later. I know that he has a great deal of expertise in this area, and I recognise some of his concerns. It is important that we find the right mechanism to address them as best we can in the Bill.

Amendment 59 and new clauses 23 and 25 have been tabled by the shadow Secretary of State, the hon. Member for Hemsworth (Jon Trickett), and his colleagues. Amendment 59 would require a report reviewing the Localism Act 2011. New clause 23 would require the Government to publish a report about the impact on combined authorities of the way in which resources had been distributed through the local government settlement. New clause 25 would require the Government to publish a list of the public authority functions which may be transferred.

We do not consider amendment 59 to be necessary. The Government are committed to a process of post-legislative scrutiny to review the effectiveness of legislation and to inform the development of future legislation. The lead Department submits a report to the Select Committee, usually within three to five years of the legislation receiving Royal Assent, with its preliminary assessment of how the Act has worked in practice in relation to its objectives and benchmarks, as identified during the passage of the Bill. This would inform the Select Committee’s view on whether to conduct a fuller post-legislative inquiry into the Act. The additional steps proposed in amendment 59 are therefore unnecessary.

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[James Wharton]

Although those places are indeed special, the amendment is completely at odds with the generic, enabling provisions of the Bill. To recognise the unique character of an area is not to seek to exclude it from the enabling provisions. Rather, it is through those enabling provisions that we can recognise the particular character of Somerset along with the particular character of any other area. That is at the heart of the Government’s flexible approach—the bottom-up approach—of delivering devolution that is bespoke to the areas that want it.

Secondly, the amendment would rule out the Somerset authorities from having the option of adopting one of the models for strong and transparent governance that is available. Clause 3 enables an area to adopt the model of a combined authority mayor, but it will be for the councils themselves to decide whether they wish to move to this form of governance. We will not impose devolution on anyone, but it should be possible for everyone. I look to my hon. Friend the Member for North East Somerset to withdraw his amendment, but I will listen with interest to the comments that he makes.

I also want to comment on amendments 53 and 56, which are tabled in the name of the hon. Member for Nottingham North. Amendment 53 seeks to extend the Secretary of State’s powers under the new section 107A, so that in addition to providing by order for there to be a mayor for a combined authority area, provision could be made in certain circumstances, following a proposal from the constituent authorities, for some other governance and accountability structures for the combined authority area. Amendment 56 seeks to provide that, where such other governance structure has been provided, the combined authority would be a major precepting authority, as it would be if there were a mayor for the combined authority area.

In general, I have some sympathy with what might be seen as the underlying idea of those amendments, which is to introduce some greater flexibility, but in this case I am not persuaded that this is the right approach. The amendments risk being seen as an attempt to hold out the possibility of some governance arrangement that does not have that sharp single point of accountability. Although we have been clear that the Government wish to impose that accountability on no one, it will be a requirement for those deals that are similar in their scope and ambition to that with Greater Manchester.

[Mr Graham Allen]

The Minister is being very generous in giving way. May I take him back to the point made by the hon. Member for Bury North (Mr Nuttall) about making arrangements that can be flexible and allow evolution, particularly of the larger areas that will be devolved? I know that Core Cities are particularly interested in this concept. It could be the equivalent of a pre-nup agreement with a smaller authority before it comes into full membership, almost like with the EU where there is a trial period, to see whether people get on before taking it forward as consenting authorities.

[James Wharton]

I hear the hon. Gentleman’s thoughts and recognise the intention behind the amendment. I will listen carefully to his comments later and will look to find consensus where we can to ensure that the safeguards that all Members want to see are included while ensuring that we deliver on this agenda and on the manifesto pledge made by my party at the election, only six months ago.

I am conscious that a number of hon. Members wish to speak, so I shall try to move through some of the other amendments reasonably quickly. Amendment 57 is tabled by the shadow Secretary of State and his colleagues and requests that a gender balance must be considered when the mayor appoints a deputy. I gently remind those on the shadow Front Bench that this approach was considered for the leadership of their party and rejected. The mayor, who will have a democratic mandate to govern, needs to be able to determine who will best assist him or her in delivering on the promises they have made to voters. That person should be the best person, regardless of gender, and I asked that the amendment is withdrawn.

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[Mr Brady]

The hon. Gentleman and I agree in a distressingly large number of circumstances, and I absolutely agree with what he says now. Most of us are very firmly in favour of the devolution of powers from central Government to a level closer to the people, but we are discussing the mechanism for governance and whether people should have the right to consent to changes in that mechanism.

My hon. Friend the Minister says that this is a necessary package. Clearly, the position that the Government are seeking to establish is one where we can have these levels of devolution only with the particular type of accountability that comes through a directly elected mayor. In that case, does he not believe that that can be put to the people of Greater Manchester as a package? If the benefits of the devolution package are sufficiently good to make it an attractive proposition—if enough of the powers that the hon. Member for Blackley and Broughton (Graham Stringer) and I would like to come closer to the people are being devolved—perhaps even those who are sceptical about the elected mayor model might accept it as a whole. I hope that the Minister, in looking at how the Government might more effectively take on board the views of local people, will consider that possibility as well as the one we have put before the Committee in amendment 51.

[Mr Graham Allen]

Before I begin, I should inform the Committee of the breaking news that our good friend Michael Meacher, the right hon. Member for Oldham West and Royton, has passed away. He was a good friend to many people in this House, and I am sure there will be an appropriate moment for us all to pay tribute to a fine parliamentarian and good friend.

This is my first opportunity to put on record my gratitude and the thanks of the House to my hon. Friend the Member for Stockport (Ann Coffey), who seized the opportunity to produce a magnificent report on areas in and around her constituency. I hope she will take great pleasure in the fact that the Government are now actively considering creating a What Works institution to address the sexual abuse of children. It will ensure not only that people are not victimised, but that perpetrators do not repeat their offences. I hope she feels that her work has been rewarded. I know that was not what she was looking for, but she put a great amount of energy and thought into a very difficult subject.

Turning to the Bill, I want us to think about where we might be in 2020. As I said on Second Reading, I suspect there will be at least one more devolution Bill—possibly two—so the Bill under discussion is getting the ball rolling, and as we progress I think that many of the edges to which Members on both sides of the Committee have rightly referred will be knocked off.

If the Government were minded to approve the 38 bids they have received, that would give devolution to about 80% of English local authorities. There is, therefore, not a lot more to do in terms of taking coverage further, but there is a lot more to be done in a number of specific areas. I hope that the Minister, who kindly said he would listen carefully to my remarks on my proposed amendments, will be able to use them and others to ensure that we get a practical devolution settlement that sticks and delivers for people. That cannot happen under this Bill, which is about beginning the evolution of the process. I commend the Government for that.

I am pleased to see present one colleague from the Scottish National party, the hon. Member for Glasgow Central (Alison Thewliss). Whatever our differences with the SNP, it is not the only party that got votes in Scotland at the general election, although one could be forgiven for sometimes thinking that that was the case. In fact, if we were operating under a proportional system, many more Labour, Conservative and Liberal Members of Parliament would be representing Scotland.

Putting that aside, we can learn a great many things from the package given by the Westminster Parliament to Scotland after intense negotiations. It could be used as a template for further English, Welsh and Northern Irish devolution. We should try, with a lot of humility, to understand how the package—which resulted from negotiations prior to the referendum—works, how it came about and how it could be applied to the rest of the UK. The answer to any argument in favour of separatism is that everybody in the United Kingdom should enjoy the maximum amount of devolution and run as much of their own affairs as possible, whether that be nationally—as in Scotland, Wales, England and Northern Ireland—locally, or at the level below that of the local council.

[Jonathan Edwards]

I am grateful to the hon. Gentleman for tempting me to intervene on him. Does he share my disappointment with the draft Wales Bill, which was published with much fanfare yesterday, but which pales into insignificance when compared with the powers made available to Scotland? The ad hoc nature of devolution across the UK is inherently unstable. Of course, my hon. Friend the Member for Glasgow Central (Alison Thewliss) and I want to go further than the Scottish settlement, but surely that is the benchmark we should be working towards.

[Mr Allen]

Unless there is a written settlement, there has to be an evolutionary settlement and someone has to pile in first, make the breakthrough and be a pioneer. In terms of the nations of the United Kingdom, that has been Scotland. All those who contributed to that devolved settlement—including, obviously, Donald Dewar, but also the Scottish Constitutional Convention and many others in civic society—deserve acclaim for their achievements. It is up to the rest of us, whether we are in Wales, England or Northern Ireland, to go through the gap and say, “Devolution is a great thing.” It is not an expedient to buy off Scotland, but a matter of principle that should be applied equally, and at an appropriate pace, to Wales, England and Northern Ireland.

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[Mr Kevan Jones]

My hon. Friend talks about the principles of devolution, but one of the key factors as to whether it will work will be the proper and fair allocation of resources. This Government have a track record of devolving responsibility to local authorities while at the same time top-slicing their budgets. Is not my hon. Friend concerned that this Government, who are committed to a small state, will devolve not only responsibility without resources, but blame for cuts?

[Mr Allen]

My hon. Friend makes a very sound point, of which we should all be wary. We need to break that system so that we are able to go with the begging bowl and say, “We can prove we need a little bit more than anyone else,” and take as much control as possible of our own areas and resources. The amendments I have tabled seek to achieve that. The localities need their own tax base and powers. Those powers also need to be entrenched so that they cannot be sucked back by any Government—by that black hole of magnetic force we call Whitehall—unless they are able to demonstrate that their stance can be defended constitutionally, as explained in a couple of my amendments.

We need not be afraid. As well as the tremendous example of what has happened in Scotland, we have the example of what happens in every other western democracy. People in western Europe and north America take as given the independence of their locality, state, region or länder from the centre. They cannot be told what to do. The idea that the President of the United States could tell the states of New York and Georgia how they should spend their money is laughable, as is the idea that all the money in individual areas in Germany, Italy and Scandinavia should go to the centre and then be redistributed. They would think we were crazy if we proposed that system for them, yet that is the system we operate for ourselves. We are the oddities—we are the odd ones out.

We need to mature as a democracy. Sometimes I think our democracy is a bit frail and feeble, but actually it is underpowered: we do not have enough of what other nations in the western world have and we are unable to take steps forward. That is why I welcome the Bill in general, but I want to propose a number of other steps for the Minister to take either now or, perhaps more realistically, in the next devolution Bill.

[Alison Thewliss (Glasgow Central) (SNP)]

Does the hon. Gentleman agree that the difference between the United Kingdom and many other countries is the lack of citizen engagement with the democratic process in this country, and that if devolution is to be properly embedded and truly work, people must be engaged at grass-roots level?

[Mr Allen]

I do, but I gently suggest that the hon. Lady does not push me too far on that point, because she will push me into talking about what the SNP has done to local government in Scotland. One of my new clauses, which may go some way to meeting her point, would entrench the rights of authorities below local councils—neighbourhood, community and parish councils—so that they too can have clear rights.

The hon. Member for Amber Valley (Nigel Mills) has left the Chamber, but people do get confused if there are lots of different tiers and nobody quite knows who does what. If the parish council looks after grass verges, everybody gets to know that and those who are interested can ask questions at that level. If the electrification of the midlands main line or the refurbishment of the M1 motorway is the responsibility of the combined authority for Nottinghamshire, Derbyshire, Nottingham and Derby, people will get to understand that mechanism. We could spend a lot of time talking about combined authorities. Let us let evolution take place and let us make sure, as part of that evolution, that, if we manage to secure this immense gain and step forward of going from Whitehall to town hall, we also go to the level below the town hall.

Entrenchment sounds like a very technical, dry constitutional question, but it is what just about every other country has. Just in case we ever got an unpleasant or tyrannical central Government of any political party, a local area would have justiciable rights to say, “I’m sorry. You cannot do that. You cannot impose that on us. We are an independent unit, with just as many rights as central Government.” Those rights might include the right to raise its own money, issue bonds or whatever it may ultimately be during the next five or 10 years as we catch up with the rest of Europe. Such entrenchment cannot be obtained, however, even by a Minister as benign as this one or his colleague the Secretary of State, because it is sometimes required to be in writing and to be defended.

The object of my new clause 1 is to defend the progress that the Minister and the Secretary of State are trying to make so that there cannot be changes unless there is consent. There are many ways of doing that. One way is to have a super-majority in the House. If someone came along and tried to terminate the life of a Parliament, just at the whim of the Executive, it could not now be done because there has to be a super-majority. Perhaps local government is as important as the question of how long the life of a Parliament is. Another way would be to have a check and balance, as it were, perhaps with local government itself—with the LGA, or any other institutional arrangement—being able to say, “No. We’re not yet prepared to relinquish that power, so we stand where we are.” It could also be defended behind the Parliament Act 1911, which says that the second Chamber shall not stick its nose into any affairs other than—this is the only one at the moment—five-year Parliaments. We could add that it shall also defend the rights of local government and its independence from the centre. Putting such constitutional or democratic blocks in the way of an erosion of some of the very good work that the Government are doing in the Bill is very important in my opinion. I hope that that will be addressed, if not only this occasion, then in a future Bill.

[Mr Rees-Mogg]

The whole concept of entrenchment in legislation is very interesting, but it is very difficult without a written constitution. Would the hon. Gentleman like to move to a written constitution to be able to entrench such powers?

[Mr Allen]

I would jump at the possibility of moving to a written constitution, because that would make it knowledge we could share with every schoolboy and schoolgirl, rather than having parliamentary archaeologists, such as the hon. Gentleman, tell us the right interpretation of a particular view. We could, however, have a halfway house; sadly, it does not necessarily require a written constitution. There are the means of a super-majority, a self-denying ordinance, a lock by an external body—in the case of local government, I have suggested it could be the LGA—or the 1911 Act. It is absolutely possible: every other western democracy has done it, and there is nothing in the parliamentary water that robs us of the wit to do something comparable.

I tabled new clause 13 on double devolution. The Minister has been very generous about considering how we can safeguard devolution pressed down below town halls to the localities. The new clause suggests that the Government should make a regular statement to talk through and enable Parliament to debate what happens when powers are given to town halls and to ask whether the powers get down to the people who really need them. There may be many powers that appropriately stop with the town hall or the combined authority. Equally, however, many others would be administered much better at a lower level. It is not about doing that for everything or forcing people into it, but about doing only what is appropriate. That is the way to follow this through and to continue the debate. This is not about trying to prevent the Government from doing what they are doing, but to facilitate the next stage.

My hon. Friend the Member for Sheffield South East (Mr Betts) talked about the need for public consultation and involving the public. It is absolutely imperative to take the public with us on this journey. It should not be seen just as a technical exercise. We should involve them by saying, “Look, we’ve had our devolution for a year or so. Let’s have a little look at what we’ve managed to do so far. What do people outside Government or Parliament think we could do better?” It would be very healthy to have such dialogue, promoted by the Government through a statement to the House or to the general public, and it would help us to move to the next stage of the evolution of devolution, particularly in England.

The Minister referred courteously to my new clause 18, so I will not go over the ground again in relation to parliamentary oversight. Let me, however, mention the other part of the new clause, which is about having an independent body to look at how devolution is going. This is comparable to my point about double devolution. However, they constitute it, the Government could create an arm’s length authority to say, “There are a lot of problems around x, or whatever it may be.” My hon. Friend mentioned cross-border difficulties, where one bit of territory is contested by more than one combined authority or metro mayor. Other colleagues spoke about powers being in one place, but not being relevant to another part of an authority. Many others have spoken about mayoralty.

An independent body—without the vested interests we sometimes have to have in Parliament, sadly—should look at this and say, “Well done, the Government. You’ve got us to first base, but if you want to get to second base, we think you should have a look at these things.” Again, that is not about binding Parliament or telling Ministers what to do, but about allowing ventilation of what is, for us, the very novel concept of devolution and the question of how it can work better.

I have already put a number of other points on the record. Like the Minister, I have spoken to Core Cities, Key Cities, the New Local Government Network and the National Association of Local Councils. They have all raised with me concepts, as well as detailed amendments, about where this ought to go, but I will not go through them. I will not detain the Committee much longer, suffice it to say that as well as getting this Bill through the House, we must look at where we want to be in 2020 and take steps to open a dialogue so that we can get to where we all want to go. We want to ensure that people control much more of their own affairs not only at United Kingdom level, but at national level, at combined authority devolved level and at the grassroots—on the ground in the localities. I hope that the Minister will take my remarks in the spirit in which they are intended and continue such a dialogue over the coming years.

[Several hon. Members rose—]

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[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.

[Mr Graham Allen]

Again, I shall speak about a number of issues that relate to the bigger principles and can perhaps be considered as a warm-up for the next devolution Bill, which must surely come within a couple of years, as I said in my earlier contribution, to knock the edges off this pioneering Bill, which brings serious devolution to England for the first time in my political lifetime. I tabled a number of amendments and I shall speak first to amendment 2, which is about a constitutional convention.

The work that I have been doing on a constitutional convention, which is the policy of my party and others, becomes ever more pertinent. We do not want to do parts of the jigsaw, but never see the bigger picture. Unless we step back and have a constitutional convention, we will not see how voting systems interlock with the role of a second Chamber, with the nations within the Union, and with the role of independent and devolved local government as the agents of devolution in England. This is an important Bill providing one part of that jigsaw, but at some point in the next five years we need a mechanism to allow us—hopefully, all parties—to get together, take a pace back and ask, “Where does this leave us? Where does it leave the Union? Where does it leave our democracy?”

I have spoken about the evolutionary approach to English devolution of the Minister and the Secretary of State, and I have commended both. Where does that necessarily piecemeal approach leave us in terms of the future of our country? That cannot be the property of any one party, nor should it be. The parties here have a role as a midwife, ensuring that this concept has a fair wind and is set up properly, is properly funded and provided for and has proper means of public participation, but that is all.

The political parties should take a step back from any convention, whether on local Government or on our wider democracy, and allow the citizens of the United Kingdom their say, perhaps under the auspices of one of the great and the good—an archbishop, a High Court judge or whoever they want to suggest—as worked so well in Scotland. That led to the smooth—it was also protracted, but necessarily so—development of devolution there, culminating in the Scotland Bill that was before us only a few weeks ago.

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[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I agree with my hon. Friend’s argument on income tax. Might the full suite of property taxes, not just business rates, also be worth considering in this context? I draw his attention to my amendment, clearly not as well drafted as his, suggesting that property taxes should be devolved in full to London. I hope to catch Mrs Main’s eye and say a few words on that later.

[Mr Allen]

Our London colleagues have done some fantastic work on how to localise taxation that is currently held by the centre. That has to be done sensitively and carefully, but as I said earlier—I do not think my hon. Friend was present then—every other western democracy manages that difficulty without a problem. In Sweden, America, Canada, Italy, Germany and Holland, it is second nature to retain money locally from business rates, landfill taxes and land taxes such as stamp duty. They get by pretty well. In fact, because that system is institutionalised, their local government has immense power over and above what we have as vassals. In effect, we do what we are commanded to do according to the crumbs left in the begging bowl after the Chancellor has done his bit for the national economy.

It is absolutely open to us to do work similar to that done by my hon. Friend, Professor Tony Travers and consecutive London Mayors to liberate people. Nottingham gets a lot of tourists because of the Robin Hood tradition and the castle, so we could have a hotel tax or a bed tax of £1 a night. That happens in other western democratic countries and the people endorse it. There is a big caveat though: no council should do this unless the people have okayed it and bought into it. Councils should also be able to borrow on the open market on the basis of their credit rating, but they need to have the consent of the people. It is perfectly possible for us to do what my hon. Friend suggests.

[Mr Kevan Jones]

I have been listening carefully to my hon. Friend and, while I do not disagree with him, the proposal to retain 100% of business rates will be a disaster for some poorer areas. It is fine for areas of central London, such as Westminster, to argue for the ability to retain 100% of their business rates. However, business rates in poorer areas of the north-east and elsewhere are never going to generate a great deal. In fact, one large closure can devastate the local income base. There has to be a redistribution mechanism.

[Mr Allen]

My hon. Friend is absolutely right. A proper redistribution mechanism—whether it is based on the amount received from income tax, business rates or any other taxation—must be in place; otherwise the system could be distorted and deeply unfair. That is why my amendments, which my hon. Friend will have read, suggest that equalisation should be central to the process; otherwise we will end up with the disjointedness he mentions.

[Jonathan Edwards]

In addition to the point made by the hon. Member for North Durham (Mr Jones), does the hon. Member for Nottingham North (Mr Allen) think there is a relationship between fiscal decentralisation and the geographical wealth of the countries that he mentioned, including the United States, which is far more balanced than the gross imbalances in the UK?

[Mr Allen]

No, I do not believe that is the case. That happens everywhere. Although I am very much an ardent devolver, I believe there is always a place for the federal level. President Clinton was not denied his wish to introduce Head Start to every state in the union. He did not impose it, but he offered it as a federal programme and virtually every state picked it up. Devolution would not diminish our role in this place to do good things, and it certainly should not diminish our role in insisting on the sort of equalisation that my hon. Friend the Member for North Durham (Mr Jones) has in mind.

[Mr Kevan Jones]

Does my hon. Friend agree, though, that that is not what is being offered by this Government? They are offering retention of 100% of business rates without equalisation, which will have a dramatic effect on those areas with low business rate receipts. It will also be to the advantage of some areas that perhaps do not need extra resources.

[Mr Allen]

I again agree with my hon. Friend. We are not there yet and it is not a done deal yet. We need to make the points that he very ably makes about equalisation. I will say to him, however, that if it is a choice between being instructed by Whitehall how to spend not very much money and having not very much money to spend locally, I would go for spending it locally every time, because we will maximise value and spend the money sensitively. Whatever money is available, it is better spent by those who know what they are doing, rather than by the man in Whitehall. I totally accept my hon. Friend’s points.

[Mr Gareth Thomas]

Will my hon. Friend give way?

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[Mr Allen]

I am very conscious of the time, but I will give way.

[Mr Thomas]

Is not a further argument for local taxes being controlled at local level that it allows local government a full range of policy responses to deal with local problems? I offer the example—I hope to catch your eye on this later, Mrs Main—of the housing crisis in London, where an ability to impose higher taxes on empty homes might be one part of the solution to the housing crisis.

[Mr Allen]

The nuance that I would add to my hon. Friend’s excellent point is that local taxation need not necessarily always be collected locally. Income tax is a very good example. Provided that it is distributed fairly from the centre, it makes a lot of sense for collection to be a central function, with Her Majesty’s Revenue and Customs simply continuing to do what it does, openly and transparently. Other things—he mentioned a hotel tax, business rates and so on—are much more amenable to local decision making, but we are long way from that.

[Graham Stringer]

Will my hon. Friend give way?

[Mr Allen]

I will, but if I may, I will make that the last intervention, otherwise you will start to twitch, Mrs Main.

[Graham Stringer]

My hon. Friend is committed to and searching for radical localist solutions. He mentioned the efficiency of decisions taken locally. My experience is that local government is much more efficient than central Government. Would not the most radical constitutional change be to make central Government responsible to local government, not the other way round?

[Mr Allen]

I would not ever wish to do to central Government what they have done to local government. I will therefore resist the temptation that my hon. Friend puts in my way. Sometimes, however, when we are being lectured about fiscal prudence, I ask myself: who has the triple A rating in this country? It is local government, rather than central Government. Who goes cap in hand to international lenders? Central Government. Who runs tight and balanced budgets? Local government. A central Government of any political colour who lectures local government should look in the mirror first.

I just want to mention one last new clause, new clause 16. It relates to having an institution, created by local government, as one of the What Works institutions that, thankfully, are now springing up across and outside government. They take the best possible practice out there and spread it around. A national-level inspectorate can tell local government what to do, but I am saying that there is a different model. We should draw up from the localities to national level something selected by the localities to spread best practice. We all want to do better and to hear who is doing the good stuff.

I will boast about the fact that the city of Nottingham has just come with the idea of an energy broker. Anybody can phone up and get the best deal—done. It will save people several hundred pounds a year. It is a not-for-profit service. As a Nottingham patriot, I could go on about our trams and many other innovations that we are introducing with two hands tied behind our back.

If we release people in the way I am describing, we can show them best practice and we can see what they are doing. I ask the Minister to consider that point very seriously. The Government have very generously created What Works institutions in policing and early intervention —I played a small part in creating the Early Intervention Foundation—and there are about 10 of them across the board. We need an organisation created by local government and that local government will respect—based in the LGA, the Department for Communities and Local Government or wherever—to give advice, offer evidence and fight local government’s corner. That is something for the Minister to take away and consider, and I hope it will reappear in the next of the two other devolution Bills I anticipate before 2020.

[John Stevenson]

I am grateful for the opportunity to say a few words about amendment 50, which I tabled. I will be interested to hear what the Minister says, but it is not my intention to press it to a vote.

As the Minister is well aware, I fully support the Government’s overall aims and intentions. It is sensible that this is an enabling Bill and that it allows the maximum possible flexibility. I think that it will lead to innovation and fresh thinking not just at the national level, but at the local level. Indeed over the past few years, local authorities have demonstrated that they are innovative and that they can change.

I appreciate that the Government want to reform local government with the support of local government. The Bill gives local government the opportunity to step up to the plate and embrace these opportunities. It gives local authorities the chance to take responsibility, to take on more powers and to achieve an awful lot more for their communities. I understand that the Government do not want to impose things on local authorities, but to discuss and negotiate with them in order to come to a deal that is beneficial for central and local government.

A key part of this change is not only about powers, but about governance and structure. There has been an extensive discussion about elected mayors, of which I am an enthusiastic supporter. Indeed, I believe that elected mayors should be the default position for all councils throughout the country. I will continue to support and encourage that idea. However, I accept that the Government want local areas to come up with their own solutions and ideas for change on both governance and structure. I understand the thinking behind that.

I do, however, have some concerns. If I may take this opportunity to be rather parochial, I would like to talk a little about Cumbria. I suspect that other areas face similar circumstances, but I will just discuss my own county. Cumbria has been described as a county that is over-governed and under-led. We have more than 380 councillors and seven councils, yet we have only half a million people. That system was created in 1974 and is now clearly not fit for purpose. It is recognised by everybody locally, including all the political parties, industry, business, the health service and local people, that it has to change, and that it has to do so soon if it is to be part of the devolutionary changes that are happening and to take the opportunities that are available to local government.

However, there is a potential problem. That is why I tabled amendment 50. I believe that it is wrong in a two-tier area for one authority effectively to have a veto over any change, even if it is a sensible and well-supported proposal made by the rest of the county and all the other districts. That allows one authority to stop popular and vital reforms going ahead. Anyone who understands Cumbrian politics will know that that is a distinct possibility.

Amendment 50 is not about allowing central Government to impose their will over what happens in Cumbria—I want to emphasise that. It is about stopping one authority denying progressive change that is in the interests of people throughout Cumbria. Cumbria is an obvious example of this problem because six of its authorities could be prevented from bringing about badly needed and well-supported reform by one maverick authority.

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[Peter Dowd (Bootle) (Lab)]

As a former leader of a council and a member of a combined authority and local enterprise partnership, I welcome the thrust of the Bill. There is no question about that. I said in a previous debate that the train is going out of the station—the cat is out of the bag, to mix metaphors. Whichever description we use, this is the reality.

I do not deny that the governance structure in local regions is important, but whatever that structure is we must move the debate on. Local government has changed over centuries. In the 19th century, it changed to reflect the industrial revolution. It changed at the beginning of the last century and at the end to reflect the patterns of population, demography, business and so on. It has changed over time. London changed in the early ’60s, we changed again in the 1970s and it is now time to change once more. People might have concerns, but that is life. It has to move on.

My hon. Friend the Member for Bassetlaw (John Mann) made a point about having too many councillors, but I am pretty agnostic on that. The United States have significantly more councillors proportionately than we do, and they get on okay, and the same applies to the French. It is part of the heart of a community that there might be lots of councillors. I am not arguing for that, but I do not think that it is a reason for not going ahead with changes.

I support the comments made by my hon. Friend the Member for Nottingham North (Mr Allen) about the principle. There will be changes to local government and devolution in the coming years, and we might as well recognise that while we are in this transition and get on board with the constitutional convention. That does not stop things happening now, but we really need to get on with it, and I ask the Government to consider that seriously.

I also support what my hon. Friend the Member for Sheffield South East (Mr Betts) said. He referred to some of the specifics. It seems remarkable that a mayor would not have the borrowing powers he described. I hope that is just a mistake—a lacuna in the legislation—that will be put right. It is important that the detail is picked up.

There is a danger that this debate will get a bit too esoteric. Do I think that devolution will be good for my city region of Liverpool? Yes, it will. Why? This is not unique to us, but we have a thriving visitor economy. For many years, that has been our direction of travel and Liverpool is now the fourth most popular city in England for national and international visitors. That could link into the point made by my hon. Friend the Member for Bassetlaw about hotel taxes and the ability, if that many people are coming into the city from abroad, to use that revenue if we so wish. I am not saying that we should, but we should have that flexibility if we want it. The visitors are coming to my city, not to anybody else’s, and that is important.

At the moment, the visitor economy brings in £3.8 billion and 40,000 jobs, and it is a major growth sector. Do I think that the city region would manage that, grow it and progress it better? Yes, I do. There is no question about that. If we wait for Whitehall to help us, we will be waiting until the cows come home, and I mean no disrespect to Whitehall.

[Mr Graham Allen]

My hon. Friend reminds me that Thomas Jefferson once said that were people to wait for Washington to tell them when to reap and when to sow, they would soon go hungry. The same probably applies if we wait for Whitehall to figure out how to do some of these things. Will my hon. Friend also comment on local government borrowing and social investment bonds? In America, there is a multi-trillion dollar local government capital market. People borrow, they return, they use their liquidity and they stash money overnight. That would be a fantastic source of revenue that is currently denied to local government.

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[James Wharton]

We have had an interesting and wide-ranging discussion. I recognise the comments made by hon. Members across the Committee and the range of amendments that have been tabled.

New clauses 2, 4, 5, 6, 7 and 16, and amendment 2, tabled by the hon. Member for Nottingham North (Mr Allen), are about the constitutional position of local government and putting in place arrangements for a constitutional convention to review this and implement any constitutional reforms considered necessary. I recognise his consistency in pursuing this issue; indeed, he also has a private Member’s Bill related to it. No one would deny the importance of constitutional matters. The traditions of this country are that we approach these matters in a pragmatic, evolutionary way. Our constitution has evolved over the centuries and continues to do so to meet the real needs of our people across the United Kingdom and to reflect the changes that are taking place in the wider world. I absolutely recognise the hon. Gentleman’s intentions and interest in this area, but I feel that this approach has served us well and I am confident that it will continue to do so.

The thrust of the hon. Gentleman’s amendments is that, for the first time in our history, we would put our constitution on a more rigid basis, seeking to codify issues and, in a sense, to set them in stone. Although they recognise the importance of constitutional issues and strongly support the passing of power down to the lowest practical level that this Bill will enable—the essence of devolution—the amendments are unnecessary and would be out of step with our traditions. They are also somewhat outwith the scope and intention of this particular Bill. However, I recognise his desire to put these matters on the agenda and his belief that they need to be addressed. I am sure it is not the last time that they will be discussed across the Floor of the House.

[Mr Graham Allen]

If the Minister thinks the system is serving us well, may I gently remind him that six or seven months ago we came within 6 percentage points of the Union breaking? We have all the shambles around English votes for English laws, and there are many other issues where people are clearly, given voter participation levels alone, disenchanted with politics. Does he not agree that the great work he is doing on English devolution could be the spark to re-engage a lot of people who are very jaundiced about our politics?

[James Wharton]

As I said, I recognise the hon. Gentleman’s interest and expertise in this area, and I am sure that we will have the opportunity to discuss it further across the Floor of the House, whether in relation to this Bill or other areas of policy. He tempts me to go further than I am willing to go in my comments today.

My hon. Friend the Member for Carlisle (John Stevenson) tabled amendment 50, which would give the Secretary of State powers to establish unitary authorities even if not all the councils concerned in a combined authority area agreed to the change. Our approach is that if a governance change is to be made, there needs to be a level of consensus about the choice over the whole area. We are not in the business of imposing change on anyone. However, I recognise my hon. Friend’s desire to raise this issue. He is not the only Member to have done so. The hon. Member for Bassetlaw (John Mann) has spoken about similar issues today and has met me to speak about them separately. We are about to engage in ongoing correspondence on the matter. I am of course happy to meet my hon. Friend if he would like to discuss this further, and I am pleased that he will not press his amendment to the vote.

My hon. Friend the Member for North East Somerset (Mr Rees-Mogg) tabled amendments 47, 48, and 49, which make a special case for Somerset. Just to be absolutely clear and to put it on the record, Somerset is a very special and exceptional place, but I explained earlier why I do not consider it appropriate to treat it differently in terms of this Bill. Nor do I believe that the substance of the amendments, which are about how the principle that changes in an area’s governance are a matter for local choice should be applied, are necessary given the existing safeguards. Somerset, or indeed any council, could be not required to join a combined authority or be conferred new central Government powers if those democratically elected to represent the people of the area did not consent. The councils of Somerset—or, indeed, the councils of some place less special—can themselves decide how they want to take their residents’ views into account. Those who have been elected should decide these matters. That is four square with our traditions of representative democracy, and therefore I hope my hon. Friend will not press his amendments to a vote.

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[James Wharton]

In line with my desire to retain my reputation as a benign velvet glove, I have already written a note to my officials asking that we write to Members following this debate, to ensure that we fully clarify those matters. I will, of course, write to the hon. Gentleman, and if he has any concerns, I would be delighted to discuss them further with him.

Amendment 55, tabled by the hon. Member for Nottingham North, would enable control over decisions on business rates and council tax discounts to be devolved, if that is what is wanted locally. We have always said that we are interested in hearing proposals from authorities and that nothing is off the table for conversation. The Government have signalled their intentions and enabled a large degree of the sorts of financial flexibilities sought by the amendment. We recently announced that, by the end of this Parliament, local government will be able to retain 100% of its business rates. Through the existing powers that govern the business rates retention scheme, we can already give mayoral combined authorities their own share of local rates income and ensure that they benefit from the local growth that that will help to establish. Of course, any decision to make use of the existing powers to extend the rates retention scheme would be taken alongside that on any wider transfer of powers and functions to mayoral combined authorities.

[Mr Graham Allen]

Does the Minister accept that the Scotland Act 2012 gives the Scottish Government the right to retain not only 10p in the pound of income tax, but, from April, the proceeds of landfill tax and stamp duty, which are two significant amounts of money? Is there some reason why local authorities in England should not be able to have similar retention of those taxes?

[James Wharton]

The hon. Gentleman is consistent with his theme of wanting to go further to take devolution to what I have no doubt he genuinely believes to be its logical next level. I acknowledge his comments, and I am of course happy to meet him after this Committee sitting to discuss them further. However, I do not want to hold out the false promise that a Bill that already goes so far and does so much will be amended in line with his desires. I am happy discuss with him his longer-term desires for constitutional change and for devolution to take what may well be its next steps at some point.

We made it clear in our 2015 manifesto at the last election that we would continue to help local authorities keep council tax low for hard-working taxpayers and to ensure that residents can continue to veto high rises in council tax via a local referendum. New clause 15, tabled by the hon. Gentleman, would abolish the system of council tax referendums put in place by the coalition Government. The referendum threshold is not a cap. Councils can set any council tax increase they like, provided they obtain the consent of their local electorate when they go over the threshold. We see no reason to take away the protection and the final say of local voters over excessive increases.

New clause 12, tabled by the hon. Gentleman—he has just raised this issue—would provide that income tax receipts amounting to 10p in the pound should be assigned to the Department for Communities and Local Government, which would then pass the money on to councils. We are already committed to boosting local growth: by the end of this Parliament, the local government sector will retain 100% of local taxes to spend on local government services. The new arrangements we are already committed to delivering will give the sector greater long-term certainty over its income. No longer will local authorities be reliant on central Government telling them how much money they will receive for the year ahead only weeks before they set their annual budgets. I recognise the hon. Gentleman’s desire to go further and I am very happy to discuss that issue further, but I ask him not to press the new clause to a vote at this time.

[Mr Allen]

On the Minister’s language, it is not so much a desire to go further as a desire for England to catch up with Scotland so that we can have a properly devolved settlement in the United Kingdom.

[James Wharton]

The hon. Gentleman is articulate and persuasive, but he will not tempt me to elaborate further.

New clause 11, tabled by the hon. Member for Harrow West, provides for the devolution to London of the receipts from taxes on property. I know the Mayor’s ambitions for London and we have announced the local retention of business rates, but devolving taxes such as stamp duty to London could create a distortive effect. There would be a significant increase in administration costs for both the Greater London Authority and businesses that purchase properties both in and outside London. I have heard what the hon. Gentleman has said, and I will consider his comments further, but I do not want to give him the false expectation that they are likely to be reflected in the Bill or to make a commitment that I cannot fulfil at this time. He has, however, made his case very effectively.

[James Wharton]

I hear the hon. Gentleman’s comments. The announcement that we will devolve business rates was made in the way it was exactly because we wanted to ensure that we talked to local government about how it should be done to make sure it works properly and effectively and meets our policy desires. To devolve certain taxes to just one area is a different proposition. He clearly supports it and argues for it effectively, but it does not have a place in this Bill at this time.

Amendment 1, which was tabled by the hon. Member for Nottingham North, clarifies that the persons who may be invited to attend an overview scrutiny committee meeting may include

“representatives of parish, neighbourhood, community and other councils in the area of the combined authority”.

I understand the hon. Gentleman’s intention and commend him for pursuing openness in the process, but the Bill already allows people to attend. To define them in a list risks the provision being narrowly interpreted, rather than broadly interpreted, which is what we want.

[Mr Graham Allen]

The intention is to ensure that those who operate below the council level at neighbourhood or parish level feel involved and engaged, rather than going along as members of the public, so that they can take the next step of pushing devolution down into double devolution. Surely engaging those people would be a very good thing to do.

[James Wharton]

I agree with the hon. Gentleman that that engagement is important. My contention is that the Bill provides for it with the power to allow persons to attend and invite persons to be present to scrutinise the process. My argument is that defining a list of particular types of persons or bodies risks narrowing the interpretation. However, I understand what the hon. Gentleman desires to achieve.

I will now discuss the amendments that relate to requirements on the exercise of mayoral powers. Amendments 40, 41 and 45, which were tabled by my hon. Friends the Members for Altrincham and Sale West (Mr Brady), for Hazel Grove (William Wragg) and for Bury North (Mr Nuttall) would place requirements on mayoral powers. Amendment 40 provides that a function may only be specified as a function of the mayor with the consent of the combined authority prior to the creation of the post of mayor. We have concerns over the latter part of that amendment, because it appears to rule out a further transfer of functions to a mayor once the position has been established. It seems to mean that the deal that is reached initially is the deal, full stop.

Amendment 45 underlines hon. Members’ concerns that the constituent councils must be content with the list of functions to be exercisable by the mayor. I understand hon. Members’ concerns and agree that no local authority functions should be conferred on a combined authority, with or without a mayor, without the consent of the councils involved. We make provision for that in clause 5. I am happy to continue the dialogue with the hon. Members who have raised this point and I understand the deeper points that they wish to address. I hope, therefore, that we can reach a consensus that allows us to pursue the matter in a different manner to the amendments that we are discussing.

Government amendments 5, 6, 7, 8 and 26 will provide greater flexibility in how a mayor will be able to undertake their functions. The amendments are reasonably straightforward. Amendments 5 and 6 will provide greater flexibility and create greater capacity to enable a mayor to be supported in undertaking functions, where that is wanted locally. Amendments 7, 8 and 26 enable mayors of combined authorities, if it is specified by order, to exercise any of their general functions jointly with other authorities or combined authorities with the same functions, if they so choose. They enable a joint committee comprising the mayors of two combined authorities or a combined authority mayor and local authorities to exercise jointly shared functions across the area, thus providing greater flexibility in how mayors, combined authorities and local authorities can work together.

Finally, I will mention some minor and technical Government amendments. Amendments 30 and 31 insert provisions that enable an order to specify that local authority functions must be exercised jointly by the councils and the combined authority. Amendments 23, 24 and 25 relate to police and crime commissioners. They clarify the timing of an order that transfers PCC functions to an elected mayor; ensure that drafting on PCC functions is consistent; and ensure that, in line with the provisions for PCCs generally, a person acting in place of a mayor with PCC functions temporarily cannot carry out particular strategic functions, such as issuing a police and crime plan. Finally, Government amendment 15 will mean that the power to make regulations under clause 17 includes a power to make incidental, supplementary and consequential provision. Those are tidying-up amendments that are not controversial. I certainly have not detected that they are from the debate.

I hope that right hon. and hon. Members, in the light of those explanations, will not press their amendments and will feel able to support the Government amendments.