Combined Authorities (Borrowing) Regulations 2018

Lord Jones Excerpts

Tuesday 1st May 2018 Lords Chamber

[Lord Jones (Lab)]

My Lords, I thank the Minister for his exposition. He knows far more than I could ever know about these matters, even though long ago I served in three Administrations. Can he look at the helpful Explanatory Memorandum, at paragraph 3.3:

“The instrument does not give rise to minor or consequential effects outside England”?


I cannot cavil at that—surely it is exact. However, the Minister will know, because of his distinguished service in the National Assembly for Wales, that there are sub-regional economies that cross borders. I refer to my entry in the register of interests, and I instance the Mersey Dee Alliance in north-east Wales, Wirral, Cheshire and Ellesmere Port. It is a unique set-up, which seeks to advance the only cross-border economy in Britain. It is a successful economy, and those local authorities in north-east Wales and greater Chester want to advance matters.

I have a question for the Minister, who was a leader in the National Assembly for Wales over many years. Can he explain—if he can, after my tangential reference —why these measures are not appearing in Wales? Is he able to mention one equivalent in Wales of, say, the Mayor of Liverpool or the Mayor of Manchester?

[Baroness Pinnock (LD)]

My Lords, I draw Members’ attention to my interests in the register as a councillor in the borough of Kirklees in West Yorkshire and as a vice-president of the Local Government Association.

The regulation is a natural extension of the powers of the mayoral combined authorities, and in that light it is to be welcomed. The functions that will benefit from investment where the authorities choose to use the additional borrowing powers are significant and of strategic importance to the development of those combined authority areas.

I say all that because I am not criticising the fundamental issue of the borrowing powers. However, I am concerned that additional borrowing by the mayoral combined authorities will result in additional costs being passed to the constituent local authority. So will the prudential borrowing code of the constituent authorities be affected by the additional borrowing permitted under these regulations?

The direct accountability between the spending body, which is the combined authority, and the tax-raising bodies, which are the constituent local authorities, will be fairly obtuse. If these powers are extended in this way, how will local council tax payers and businesses have a clear and transparent explanation of the use of the revenues of local authorities by the combined authorities if, for instance, there is no direct benefit for that particular part of the combined authority area?

The Minister mentioned Sheffield City Region, which will be in the fortunate or unfortunate position on Friday morning of having elected a mayor who will have no powers and no resources because that agreement has yet to come to Parliament and before your Lordships’ House. It will be an interesting conundrum for the Minister and his department as to what the newly elected mayor of the Sheffield City Region—he or she—will do.

I have a final comment for the Minister. The extension of powers to the mayoral combined authorities in this way is positive, with the addendums that I have already referenced, but it begs the question as to the continuing divergence of the powers of local authorities that do not have these additional powers because they do not have combined authorities and metro mayors. That is beginning to grow. The differences are beginning to be obvious and there will be an issue that will have to be addressed by the Government in one form or another. Has the Minister any thoughts to share on that issue?

[Lord Bourne of Aberystwyth]

My Lords, I thank all noble Lords who have participated in the debate on these important borrowing powers. I welcome their participation; it is most helpful and reflects the general support we have had for the Government’s approach and the flowering of these combined authorities and mayoralties—particularly in the north and the Midlands—to seek to redress the great growth of the economy in the south and, to some extent, East Anglia. It reflects the importance that we attach to ensuring that there is strong economic development elsewhere.

First, I turn to the points made by the noble Lord, Lord Jones. I thank him for his kind words and reflect on his distinguished service over a considerable period of time in Wales and, more broadly, in the Government in Westminster. He is right that these provisions are England-only, because the department is England-only, but he is also right that exciting and important things are happening in Wales and across the border between Wales and England, around the River Dee and Chester. Also, the North Wales Growth Deal looks to links with the northern powerhouse and the Borderlands Growth Deal encompasses southern Scotland as well as Northumberland and Cumbria. Working with the devolved Administrations in Edinburgh and Cardiff is very much on our agenda. I can reassure the noble Lord that I was in Wales just last Thursday, speaking to the Labour Economy Minister, Ken Skates, to discuss the Mid-Wales Growth Deal and possible links with the LEP in the Marches.

[Lord Jones]

Does the Minister agree that Mr Skates has made considerable advances in aiming for a better relationship between Whitehall and Cardiff?

[Lord Bourne of Aberystwyth]

I certainly do. I do not want to damage his future political career at this very sensitive juncture in Wales, but that would certainly be my reflection on things. My apologies to Ken if that does not help.

I thank the noble Baroness, Lady Pinnock, for what she expressed as her fundamental support for what we are doing here. I accentuate that the borrowing caps have been agreed with the constituent authorities, as well as the combined authorities. I note that she raised some issues, quite rightly, about the additional borrowing and asked for reassurance about the checks that exist. First, the cap has been agreed; as she will know, the Treasury is not generally profligate in these matters. Additionally, local authorities are already subject to a prudential borrowing code and regime, which will remain the case. The monitoring officer will be watching that like a hawk to make sure that it complies with the overriding requirement that the authority is able to pay back the debt that is concluded.

The noble Baroness is right that this varies from area to area; indeed, the noble Lord, Lord Kennedy, also made that point. These are bespoke deals. For example, there is a world of difference between Cambridgeshire, Peterborough and Liverpool City Region, so it is not surprising that there are differences between the areas in what is being devolved. The nature of devolution includes these electoral checks, done locally, and one has to trust that people will look after their area. It is the Government’s belief—widely shared in the House, I think—that these things should be dealt with at a level close to people’s jobs, homes and experience. That is precisely what is happening here. I note that the noble Baroness went on to talk about her positive welcome; I very much thank her for that.

The noble Lord, Lord Kennedy, also generally welcomed the borrowing powers. He noted, and I agree, that sometimes these consultations result in very few people responding. The same is true, sadly, of the number of people voting in local elections, which the noble Lord and I have discussed in other environments. I know that the average turnout is always higher in the noble Lord’s elections in Lewisham, for reasons we can only speculate on, but his point was fair. We often include a health warning and say that we are disappointed by the number of people who responded. Nevertheless, it is important that we go through that consultation exercise. I suggest that if we were doing something that was entirely off beam, the number of people responding would be greater. That is the experience. Nevertheless, it is a point well made.

I thank noble Lords for their general welcome for what are important powers for these combined authorities. I am not making a party-political point here, but I note the combined authorities’ success across the board. They are working well and are generally welcomed by the people in their areas.

The noble Baroness, Lady Pinnock, asked me to address future developments. We will be watching Sheffield. She is right that there are challenges there and, as noble Lords have seen, there is a challenge about the position of Yorkshire generally. We are looking at proposals that have been made relating to that. They have landed with us and we are looking at them. Obviously that is something we would want to discuss with the incoming mayor of the Sheffield City Region. It is not quite universal in Yorkshire. As the noble Baroness will know, Sheffield and Rotherham are not as warm about this as other authorities, let us say. That is what is happening there. We are aware that Leeds, for example, is the largest city without a mayoralty combined authority badge. It is important that that is put right.

We are looking more broadly at devolution now that we have, or will have shortly, eight combined authorities with the biggest cities, although not exclusively large cities, because Cambridge and Peterborough are somewhat different and we have a particular arrangement with Cornwall, where there is no mayoralty but there is a devolution deal. We are looking at that. In the fullness of time I expect to bring that back to the House for discussion. With that, I beg to move.