English Devolution and Community Empowerment Bill

Lord Bassam of Brighton Excerpts

Committee stage
Monday 9th February 2026 Grand Committee

[Lord Bassam of Brighton (Lab)]

My Lords, I will speak to Amendment 196C. For me, this is a really interesting group because it is quite wide: part of it is to do with wanting to enable local revenue raising and part of it says, “Hang on. Hold on a minute, we need a bit more accountability here. Should we not put up some guardrails?” I am somewhere in the middle of that argument, I guess.

My amendment would allow mayors to levy a business rates supplement to fund local priorities. The first question is: why do that? These mayoral authorities are going to be quite large—perhaps not on the scale of Greater Manchester, West Yorkshire, the West Midlands and so on, but they will be large geographic entities. One would think that they will want primarily to drive projects that relate to bits of infrastructure kit and transport, such as buses, trains and trams, and to ensure that they have adequate local funding to do so. It is welcome that the Government are consulting on a tourism levy but, even following the Bill, established mayoral authorities will still require considerable central funding and approval for major projects.

I do not quite buy the argument that the Bill is about decentralisation, not devolution; I think it is a mixture of the two. It is good that we are looking to decentralise more because that will eventually underpin a greater level of devolution. My amendment would change who can levy the supplement and under what circumstances. It would allow established mayoral areas to levy a business rates supplement without a referendum, as was the case for Crossrail. I am sure that most colleagues will remember that the Crossrail funding was a mix of central funding and local funding. The Crossrail business levy was an important element of that; it also meant that businesses across the capital had to think about what they were going to get out of Crossrail and make their voices well known.

Currently, the relevant legislation says that only the Greater London Authority, county and district councils can do this in England, subject to a referendum of businesses in those areas. My amendment would change this so that only established mayoral areas would be able to do so, but without the requirement for a referendum. This would align the economic growth policies of the mayoral tier with the fiscal incentives from a business rates supplement, as is the case in London. It would mean that the referendum requirement, which was put into the Localism Act 2011, would be withdrawn or would not apply. Crossrail has been a major success—everybody can see that. It has major benefits. I am sure that mayoral authorities, combined mayoral authorities and so on will want to see the sorts of improvement that have been gained from Crossrail spread more widely across the country.

I argue that we should lift those restrictions so that mayors can get on with delivering for their areas. This cuts to the point on central funding that the noble Baroness, Lady Janke, talked about. Most local government services are, in the majority, centrally funded, but that was not always the case. I think back to my time as a borough councillor in the early 1980s, when much more of the revenue was raised locally through business rates and rates on properties. That gave us more autonomy and more freedom, and it meant that local people could see that their local authority was spending their money. That increased the level of interest in local elections, which I believe is a very positive thing. I therefore hope that this will get some favour from the Minister, and that colleagues will find this an interesting solution to local financial support for combined mayoral authorities.

[Lord Fuller (Con)]

My Lords, I am glad that I am following the noble Lord, Lord Bassam, because I could not disagree more with his Amendment 196C. When I was the leader of a district authority, we had control over the business rates, and we were able to get full reliefs to the last pub, shop or community sporting club in a village with a population of less than 3,000. That was the source of a huge community empowerment. The effect of the noble Lord’s amendment would be another nail in the coffin for rural pubs and small businesses, and I reject it on that basis. I will also speak to my own Amendment 256A, which is a rag bag. We are talking about Clause 56 at the moment, but this would go right at the end, beyond Clause 85; perhaps I should have asked for it to be de-grouped, but here we are.

My amendment is consistent with the Government’s Clause 11, which relates to constraining the council tax-raising ability of the larger, newly created mayoral combined authorities. But I am looking at the other end of the spectrum, because I am concerned that, following local government reorganisation, the former district councils, which are currently defined as “billing authorities” under the Local Government Finance Act 1992, will disappear. In Section 39(2), they will become local precepting authorities. In other words, the district council, once abolished, will be converted to a third-tier parish or town council. This will affect places like King’s Lynn, a historic county borough; cathedral cities like Norwich or Oxford; county towns like Ipswich and Chelmsford; and coastal communities like Hastings, Eastbourne and Great Yarmouth.

Some of these places have large populations—for example, Norwich City Council, when it is abolished, will have a population of more than 150,000—and there will be lots of new large locals formed. The problem is that the majors are constrained in their ability to put up council tax—5%—but the locals are not. This amendment would change the definition of “local precepting authority” to include authorities with a population below 49,999. Where a local precepting authority exceeds 50,000, it would become a major precepting authority for the purposes of raising council tax and be subject to the same rules as other larger councils.

Of course, it is not just the former billing authorities that will flip into parishes; the former boundaries that flowed from the hundreds, the poor law unions, the urban and rural district councils, and the predecessors of the county boroughs in the Reform Act 1832 will disappear. This is why my amendment proposes a size scale, rather than being limited solely to the former district councils. These places will be joining that benighted club: Salisbury, Shrewsbury and Scarborough, which have all fallen out of previous rounds of LGR and must now stand on their own two feet in the sense that, unlike their predecessor billing authority constructions, they will get no formula grant in the future; they will need to earn what they spend.

We already know already that over 100 councils, existing principal authorities, want exceptional financial support this year as the Government shamelessly tilt the formula away from being population based. That is a denial of the simple truth that people consume services that need to be paid for and that it is more expensive to deliver them in the countryside, but that is a debate for another time.

But, under LGR, there will be a powerful incentive for authorities to cost-shunt the most expensive things to these newly created third-level authorities to get the liabilities off their books and on to the small fry. I am thinking of leisure centres, municipal theatres, parks and open spaces, youth groups, civic activity, and community pride events such as carnivals and festivals.

My wife was a parish clerk for over 10 years in a small parish with 500 souls, spending about £3,000 a year, so I know the value of what these unsung volunteers—real community champions—in parish councils can achieve. But I am focusing on the new large class of parish, town or even small city authority, with plenty of staff, plant and equipment, miles away from that “Vicar of Dibley” stereotype.

These residents need protecting from unconstrained tax rises, cost shunts from principal authorities and the smaller populations being made to afford the costs of facilities that have been previously amortised over a much larger canvas—that hinterland of surrounding parishes where people are able to chip in. This is not an idle concern. The noble Baroness has certainly mentioned Salisbury before, which has let rip. Its precept is up 44% in just four years. Its own website tells long-suffering residents that their council tax is the highest in Wiltshire. At £383 for band D, it is over twice the level of my own district council. I have looked at Shrewsbury. Following LGR, its parishioners’ band D is up 218% in 10 years—although I will concede that, at £87, it appears to be offering slightly better value for money. To those against my amendment, I say: look to Shrewsbury, because limiting council tax in these third-tier authorities can be done.

I have also looked at Stevenage, which is likely to be consumed and subsumed into the larger construct—taking power further away from residents and damaging the distinct identity that came from it being the first post-war new town, alongside all the other accoutrements. It is funny how all my examples begin with an S. In Stevenage, the band D was raised by just 3% to £246.41. If it carries on like Salisbury, a band D in Stevenage would pay £354 by 2030—a raise of nearly 50% or over £100.

We must be clear that these are burdens in addition to the new mayoralties that will be created—the huge new bureaucracies with the ability to raise precepts for things they are not even responsible for. There will be new mayoral CIL on top of existing CIL and new authorities where the effects of council tax equalisation within the canvas have not even been ventilated yet, and the costs of LGR have not been determined. We know it is going be subject to at least a £1 billion black hole from the accelerated pension strain costs.

Do not let the Government tell you there will be fewer layers; there will be more and at more cost. The public will be rinsed by LGR. People will pay more for less—that much is certain—but my amendment would at least seek to constrain those billing authorities that are already principal authorities and are constrained in their ability to raise council tax. That will still apply to them when they are transmogrified into third-tier councils, to make sure they cannot do a Salisbury too. That is right not only by residents but by the authorities, because as they approach this forced reorganisation, which will see a transfer of assets, they will know by this amendment that there is not a blank cheque. It will sharpen the minds.

This is not a dig at parish councils or the third tier. They do a lot of valuable work at a level that is closest to the people, but I have got their back, because it will stop those councils with the broadest shoulders from imposing liabilities and cast-offs on to those with the most limited means. That is an essential safeguard if the community empowerment part of this Bill is not to be undermined. I would be creating equity between the cathedral cities, the market towns, the new towns and so forth, so that council tax after LGR does not become an intolerable burden for those who live within the cities and provide perverse incentives for those just outside to become free riders.

I know the Minister is concerned about this and we have spoken for some time about it. I have suggested a £50,000 threshold in Committee, but as we move to Report I would be open to saying that perhaps there should be a £1 million precept or some other measure. But we have to have a measure between the small and the major authorities to protect parishes from having their leg lifted and, in turn, protect their residents from being rinsed.