Devolution: English Cities

Lord Beecham Excerpts

Wednesday 17th July 2019 Grand Committee

[Lord Beecham (Lab)]

My Lords, the noble Lord, Lord Heseltine, and I go back a long way. I was the leader of Newcastle City Council during both periods in which he was Secretary of State at the Department of the Environment with responsibility for local government. We were by no means always in agreement, but his interest was genuine. I recall being invited by him to dinner on one occasion. I accepted with some trepidation: the venue was the Tower of London—not, I hasten to add, in the Beauchamp Tower. His concern for English cities is long-standing and welcome, but I have to say that I have reservations about some of his proposals.

One major component of the noble Lord’s programme is the requirement of elected mayors for what in many areas would be not just individual cities but city regions. Newcastle was one of a number of councils required to hold a referendum in 2012 on whether to have an elected mayor. As in a number of other places, the electorate rejected the idea. Now, we have an elected mayor for the North of Tyne Combined Authority, established this year as the price for what is a modest step towards a measure of local government reform, to which our neighbouring authorities south of the Tyne declined to subscribe.

The reward for the creation of this new body is very limited from a financial perspective; a much vaunted £600 million over 30 years amounts to little more than £6 million a year for each of the constituent authorities. As I have frequently pointed out, Newcastle alone has suffered a financial loss amounting to £280 million a year since 2010, rising to £330 million by 2022, from a combination of government cuts in funding and rising costs. As in other places, this is a 60%-plus cut in the council’s budget.

Nationally, since 2010, government core funding for local authorities will have been cut by £16 billion a year by 2020. Welcome though the Transforming Cities Fund is to its recipients, the amounts referred to in the noble Lord’s report are, to put it politely, modest, ranging from £250 million for the West Midlands to £59 million for Tees Valley. In addition to the Transforming Cities Fund, the Government have announced a Stronger Towns Fund. Perhaps the Minister could tell us whether a “supporting villages fund” is envisaged. The Stronger Towns Fund will dispense all of £1.6 billion up to 2026, with amounts ranging from £281 million for the north-west to £25 million for the east of England. That is hardly likely to make a significant impact. The very fact of there being two separate funds raises questions about the Government’s approach. It implies a two-tier approach to addressing the needs of our regions, instead of looking at the issues across whole areas such as the north-east, let alone between regions.

We hear references to the northern powerhouse, but there appears to be very modest progress in improving the appalling trans-Pennine rail route connecting the north-east to Yorkshire and the north-west, with the emphasis on HS2 coming at enormous expense and with highly questionable benefit to the north-east. Newcastle MP Catherine McKinnell, who chairs the East Coast Main Line All-Party Group, has pointed out that,

“there is no confirmation from the Government that the line north of York will be upgraded, which will make parts of the north even further away from that national infrastructure investment, rather than benefiting from HS2”.—[Official Report, Commons, 5/3/19; col. 331WH.]

Local councils estimate that the line needs at least £3 billion to provide a good service and be ready for the arrival of high-speed trains. This suggests a failure on the part of relevant government departments to work together on developing a strategy. It also underlines the need for local government to be engaged in the process. This could, of course, include elected mayors, but should not depend on an enforced change to adopting that mode of leadership.

Devolution should not be confined, critical as it is, to matters affecting the local economy. There should be an enhanced role at the regional level at the least in the oversight of health and further and higher education, transport and the impact of climate change and of custodial services, but devolution must go beyond merely delegating the responsibility for the provision of local services and the health of the local economy to local government in general or to cities in particular. It is essential to ensure that adequate financial resources are available.

The plight of local councils is also exacerbated by the local government finance system. The savage cuts of the past nine years have clearly damaged the capacity of councils to address the needs of their residents and protect and promote the local economy. In fairness to the noble Lord, Lord Heseltine, he replaced the Thatcher poll tax with council tax, but after 27 years, including, I regret to say, during the years of Labour Government, little has been done to update it. Thus the residents of a small house in the ward I represent as a councillor in Newcastle will be paying for a band A property worth £40,000 one-third as much as the residents of homes worth more than £1 million.

It is impossible to empower English cities without ensuring that they have the resources to tackle the problems they and their citizens face and, importantly, to promote the local economy. A system in which council tax increases are limited to the same percentage, albeit yielding widely different sums between a council such as Newcastle and its counterparts in the south-east, is inherently unfair since the gap is not closed by central government support. The noble Lord makes a welcome call for more capital funding for local government and a power for mayoral authorities to raise local taxes and charges, interestingly including a tourist tax. Such changes in my view should not be confined to mayoral authorities.

I welcome the noble Lord’s proposal to establish a department for the English regions and his call to reinstate the government regional offices, abolished by Vince Cable during the coalition, and the suggested dispersal of government offices into the regions. We always found the regional office to be extremely supportive and helpful, while it existed. I confess that I am less enthusiastic about proposals to transfer responsibility for schools’ performance to combined authority mayors. It should be returned to local councils, from which it has been effectively removed for many years and where local councillors have a significant interest. This indeed reflects a concern among some of us who strongly support the case for a regional approach to such issues as economic development and transport but have reservations about other services which are closer to local communities and which need to be accessible to local elected councillors as well as to residents. The concentration of multiple roles in the hands of elected mayors could be problematic, as we are likely to see in the potential forthcoming elevation of one, at least, noble former holder of the position.

I should declare an historical interest in Richard III, a most maligned English monarch, who presided over the Council of the North formed by his brother Edward IV. It would be good to see the revival of such a body and the creation of similar ones, not to displace existing councils but to ensure that the needs and aspirations of the regions and their constituent authorities are adequately reflected in and through their local government structure.