Cities and Local Government Devolution Bill [HL]

Lord Brooke of Sutton Mandeville Excerpts

Monday 29th June 2015 Lords Chamber

[Baroness Hollis of Heigham (Lab)]

I, too, support the amendment tabled by the noble Lords, Lord Shipley and Lord Storey. I declare an interest. As I am sure Members of your Lordships’ House may know, I was leader of Norwich City Council, but also I was a member of the Press Council for a number of years under Louis Blom-Cooper. So I come at this from both ends.

At no stage in my time on the Press Council do I recall receiving a complaint about the regional press because it was accountable to its local community for everything from advertisements to news, from fetes to weddings, funerals, baptisms and the like. All the complaints that were sensitive or difficult were about the national press, which was essentially promiscuous in the 19th century sense of the term as it was not accountable to a readership, which fluctuated from day to day and of which it had no intimate knowledge. So the regional press served its community in a way that the national press did not, and served it faithfully.

When I was leader of Norwich council an issue started boiling up while I was in Australia. The Eastern Daily Press would not run with the story until it had contacted me in Australia to get a countervailing view. That would have been unthinkable with the national press. That is why the amendment is so important. If we do not support the amendment and encourage the regional press to scrutinise mayoral and other meetings, as it does meetings under the existing local government structure, I fear that reportage of local government, much like reportage of court proceedings, will die on the vine. Twenty years ago we could expect our court proceedings, local council meetings and some of the important committee meetings to be reported. The press would expect to be briefed on them in advance. What we get now—in national newspapers as well—is sketches rather than reports of debates.

Political coverage is shrinking in this country because it is not regarded as sufficiently amusing for people with only 30 seconds’ attention span. The regional press has held on, trying to make both Westminster and local authorities accountable and transparent to the members of their community, to whom it also feels accountable.

At the moment, the leader of a local authority will be monitored by his or her group, the opposition or the press and also by the chambers of commerce and local pressure groups and lobby groups such as the local branch of Age UK, the National Rheumatoid Arthritis Society or whatever, for example, on access to buildings. There must be stringent protection of the right of access of the press. We must not accept one person’s view of what counts as confidential or private, or what he or she would rather was not made public because it might be faintly awkward or embarrassing. Without that protection, I fear that the regional press will continue to opt out of the coverage that we absolutely need if we are to grow a healthy democracy in our localities.

[Lord Brooke of Sutton Mandeville (Con)]

My Lords, as the speeches so far have come from the opposition Benches, I gently remind your Lordships’ House that the first legislation to allow the general public to attend council meetings in committee was introduced by my late noble friend, Baroness Thatcher. I would not wish my noble friend the Minister to feel lonely at this moment. It is a notable piece of history to which I allude. The Minister for Housing and Local Government at the time was my late noble kinsman, Henry Brooke, who encouraged the new Member of Parliament for Finchley to become involved at an early stage in introducing legislation. It was her first legislative achievement, and he sat on the Front Bench throughout when she took the Bill through the House. I would not wish the metaphor to be misunderstood, but it was a good case of picking out a dark horse before it got into the limelight.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, Amendment 42A seeks to insert a new clause regarding access for the press and public to combined authority meetings. Whatever the whys or wherefores of the press’s engagement with council meetings, I am happy to confirm that legislation already exists on these issues. As my noble friend Lord Brooke has pointed out, the Local Government Act 1972 provides that all meetings of a combined authority must be open to the public except in limited, defined circumstances.

A meeting of a combined authority, as with other council meetings, may be closed to the public in only two circumstances: if the presence of the public is likely to result in the authority breaching a legal obligation about the keeping of confidential information; and if the authority decides, by the passing of a resolution of its members, that exempt information—for example, information relating to the financial affairs of a particular person—would likely be disclosed.

The Conservative-led coalition Government made new regulations in 2014 to make it absolutely clear that a combined authority is required to allow any member of the public or press to take photographs, film, audio record and report on all public meetings. This openness helps to ensure that combined authorities are genuinely accountable to the local people they serve. It also ensures genuine transparency in this digital age, where our democracy can be enhanced by the use of social media and blogging to communicate widely and, as the noble Baroness, Lady Hollis, said, to capture the market that does not want to spend more than 30 seconds reading such matters.

These requirements apply equally to any committees or sub-committees of a combined authority, including any overview and scrutiny committees. Subsection (1)(a) of the proposed amendment refers to a meeting between a mayor and the relevant combined authority. I should clarify that the mayor will be a member of the combined authority—indeed, will be the chairman—so such a meeting would simply be a meeting of the combined authority and is covered by these rules. Similarly, a meeting of the leaders of a combined authority, if I understand the noble Lord’s meaning, will be a meeting of the members of a combined authority, who are most likely—although not always—to be the leaders of the constituent councils.

The noble Lord, Lord Shipley, asked about Schedule 3. This is an enabling provision which ensures that there is flexibility to decide which information can be appropriately disclosed or must be discussed. For example, certain information may be commercially confidential or contain sensitive personal information.

I hope that, with these reassurances, the noble Lord will agree to withdraw his amendment.

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[Lord McKenzie of Luton]

My Lords, we agree with the noble Baroness, Lady Janke, that we should give some thought to this issue, although I hope she will understand if we are unable to support the amendment as it stands. I will spell out some of the technical issues in a moment. But it does provide an opportunity to probe the Government’s intention on the devolution of fiscal resources to local authorities, including combined authorities—that is, where they are going on their journey.

My noble friend Lord Beecham will set out shortly the policy position we reached before the election on the growth of business rate retention. It accords with Amendment 43 in supporting multiyear finance settlements, for the obvious reason of enabling more effective long-term planning. However, we might consider fiscal devolution over three areas. First, we should look at the current funding arrangements: business rates, council tax, revenue support grants and specific grants. Secondly, we should look at how devolution budgets are to be made available—if functions are being transferred, what is happening to the money? Thirdly, we should look at whether any national taxes are to be devolved to local authorities and combined authorities. We seek to understand the Government’s policy on each of these matters.

National taxes are the thrust of Amendment 43, which appears to focus on property taxes, which have an unambiguous attribution to a specific area. This would appear to be perfectly possible for stamp duty land tax, which is levied on the purchase of residential and non-residential land and property, and for the annual tax on enveloped buildings, which applies to UK residential property put in a corporate wrapper. But capital gains tax appears to be more problematic because a tax liability could arise from netting off losses against gains—for example, a loss on a building in Birmingham against a gain on a building in Manchester—and making it more specific would be difficult. Similarly, the use of an annual allowance that is available generally against gains, and the taxation of corporations in relation to capital gains and how that is identified within an overall assessment, could also be problematic.

It would doubtless be possible to introduce rules to govern all of this, but with further significant complications to the tax system. On compliance, these taxes are geared to a national system and it would be necessary to disaggregate such matters. What is the rationale for attributing these taxes to a combined authority: is it the practicality of a ready additional source of revenue being made available, or because the focus of the combined authority’s activity can positively influence the tax outcome? It is presumed, of course, that the proposition is not to change the tax rates.

Nationally, stamp duty land tax raised just short of £10 billion in 2013-14 and capital gains tax just shy of £4 billion. I do not have the figure for corporation tax on capital gains. But these taxes can be volatile. Stamp duty land tax increased that year by 36%. Of course, it is not easy to predict. Is the growth in stamp duty land tax a good thing? The volume of property transactions in an area might be indicative of a thriving local economy—which could attract investment—but in so far as it is attributable to rising prices, it might simply reflect a failure to tackle supply.

We know the total spending power of local authorities in 2014-15 was in the order of £49 billion, including—though we do not have the precise figure—£10 billion-plus in revenue support grant. If the revenue support grant were, effectively, to be at least replaced by directly accruing property taxes and all business rates were to be devolved, what would be the mechanisms for dealing with the differing needs and resources of the local authorities? Presumably, business rates would continue to have tariffs, top-ups, levies and safety nets, which would help, but it is a little unclear whether the proposed full retention of business rates would be at individual authority or combined authority level. Is the noble Baroness suggesting that this could be done by pooling or by another mechanism? I think it could be done by pooling. The amendment refers to “business rate supplements”. Do these not already accrue to the relevant county or unitary district councils? Does the noble Baroness’s amendment contemplate that additional, erstwhile national revenues would substitute for devolved budgets, or eliminate the revenue support grant?

The Independent Commission on Local Government Finance set out the reasons why local government in England and the services it provides are no longer sustainable in the current form. It called for urgent devolution of powers, funding and taxes to groups of local authorities. We know from the Manchester agreement and our debates the main policy areas that central government appear to be willing to negotiate deals on for transferring functions, but we do not know whether they are willing to do anything on fiscal devolution. Is anything being contemplated, particularly with regard to existing national revenue streams such as stamp duty being devolved to local government? To what extent do the Government plan to adopt the recommendation of the noble Lord, Lord Heseltine, in brigading key national budgets and passing these as single parts to combined authorities, to do with as they see fit? In his No Stone Unturned report, the noble Lord argued the need to bring together separate funding streams which support the building blocks of growth into a single funding pot for local areas. He said that the model could be applied across England, but could not be introduced before 2015-16. We are now there. What are the plans? Is the noble Lord’s advice being rejected?

Will the Minister also tell us whether, as part of the devolution agenda, any fundamental change is contemplated to the current business rate and council tax regimes? Will the reset of the business rate retention scheme not happen until 2020? What is the latest position on the revaluation, which had already been deferred by the previous Government?

On fees and charges, it is estimated that local authorities raise some £10 billion a year. Some of these are locally determined and some are not. Is work under way to remove central government’s control over some of these? What scope would there be for a combined authority to seek increased freedom in this regard as part of a devolution deal? Addressing these fiscal issues is a test of how much central government trust local authorities and combined authorities.

[Lord Brooke of Sutton Mandeville]

My Lords, this is a brief intervention. One of the most attractive features underlying this legislation is the restoration of local pride up and down the country in the communities and neighbourhoods involved. I have always regretted from my time as Higher Education Minister that the relationship between universities and their surrounding communities, which had been very strong in the 19th century, gradually declined as the years went on and were not nearly as effective as they had historically been.

In the light of the amendment which has been moved, I wish to make a generic remark rather than a technical one. I can recall the circumstances in which decisions were taken at national level to reduce the amount of money retained by a local authority in terms of the resources raised within it. The local authority’s powers to have that retention were diminished. I recall that those circumstances arose because of the view of local business that it was perfectly possible for the economic situation in which it had to work to be changed overnight by a large switch in the power of an authority. I shall therefore be interested in what sense emerges from the Government, when my noble friend comes to reply, of not going backwards on that consequence of the circumstances which they replaced.

[Baroness Williams of Trafford]

My Lords, our intention is to devolve far-reaching powers where strong, accountable and transparent governance, delivery and capability can be demonstrated. We are open to discussing proposals from all places, including towns and counties, where there are clear lines of accountability and decision-makers can properly be held to account. Amendments 43 and 44 suggest giving mayoral combined authorities access to a wide range of important taxes and charges. We have always said that we are interested in hearing proposals from authorities, and that nothing is off the table. We have also included provisions in the Bill for a council tax precept to meet the costs of functions undertaken by the mayor. This will be subject to the normal referendum principles as part of the council tax for the area, ensuring that not only will the mayoral combined authority be properly resourced but local council taxpayers will be protected.

Moreover, the Bill will mean that, in future, mayoral combined authorities will become major precepting authorities for the purposes of the local government finance regime. This means that through the existing powers that govern the rates retention scheme, to which the noble Lord, Lord McKenzie, referred, we will already be able to give mayoral combined authorities their own share of local rates income and ensure that they benefit from local growth. We do not need powers to put in place multi-year settlements for authorities; we can already do this administratively, as part of the wider local government finance settlement. Of course, any decision to make use of the existing powers to extend the rates retention scheme or put in place multi-year settlements would be taken alongside part of the wider transfer of powers and functions to mayoral combined authorities.

To devolve the wider basket of taxes referred to in Amendment 43, however, goes further and would represent a significant change to the existing tax landscape, with potentially significant legal, economic and fiscal implications. The other taxes mentioned play an important part in reducing the deficit and restoring the nation’s finances to a more secure footing, so it would not be right to include in the Bill powers to direct these taxes to mayoral combined authorities.

Additionally, such far-reaching powers would have potential consequences not just for the combined authorities but for other authorities, large and small businesses, and taxpayers up and down the country. Given the importance and fiscal character of such matters, we would need to consider whether any proposals would receive the correct level of scrutiny if provided through secondary legislation. I am not convinced, therefore, that it would be appropriate for these matters to be the subject of powers in the Bill or considered outside the Government’s normal fiscal and budget-planning cycle. Nevertheless, we are open to proposals for the transfer of resources as well as power and would give detailed consideration to any scheme that strikes the right balance between encouraging growth and protecting taxpayers.

The noble Lord, Lord McKenzie, asked about any proposals to remove central Government influence on local fees and charges. It would depend on individual deals. The noble Lord also asked about brigading national budgets. I cannot read the writing—