Cities and Local Government Devolution Bill [HL]

Lord McKenzie of Luton Excerpts

Monday 29th June 2015 Lords Chamber

[Lord Shipley (LD)]

My Lords, Amendment 42A concerns media and public access to meetings, addressing issues around the right of the press and the public to have access to the meetings of combined authorities. Existing statutory requirements enable the press, the media generally and the general public to attend, view or listen to council meetings, council committee meetings and council sub-committee meetings. These regulations are well understood in terms of their requirements and their spirit. Alongside the right to attend meetings, there are rights to receive advance notice of meetings, to see agendas in advance and to inspect relevant documents.

This amendment seeks to ensure that those rights of access cannot be diminished in the case of combined authorities. It requires reasonable access to be ensured and, in subsection (2), acknowledges the need to ensure that commercial confidentiality is protected and for officials to feel able to give essential advice to those who are charged with making decisions. Both criteria are, of course, within the existing regulations for local government.

Why, therefore, does the Bill fail to make any mention of an obligation on the mayoral authorities which it creates to meet in public? Members of the public and the media currently have a general right to attend council meetings, including those of the local authority executive or the cabinet and their committees. They also have the right to film, audio record, tweet or blog from those meetings. These rights are primarily set out in the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 and the Openness of Local Government Bodies Regulations 2014. Given the freedom that the Secretary of State will have to set up the new authorities by ministerial order, there is great potential for them to be watered down unless the rights of the public and the press are protected by being placed firmly in the Bill.

Given the importance of overview and scrutiny committees, will the Minister tell us the intention behind Schedule 3, which contains an enabling power allowing the Secretary of State to block disclosure of information to an overview and scrutiny committee and to determine what material it, in turn, can put into the public domain? This amendment seeks to address these concerns. I look forward to the Minister’s confirmation that there will be no diminution of the right of the press, the media generally and the public to attend meetings of combined authorities as they currently do within local government.

[Lord McKenzie of Luton (Lab)]

My Lords, we are fully committed to openness and transparency in the proceedings of local government and have already moved amendments to that effect. However, as the noble Lord, Lord Shipley, said, we need to be sure that nothing in or arising from the Bill could dilute or disapply existing public rights of access to meetings, records and related documents. The noble Lord has also posed a pertinent question on Schedule 3.

There may be a lack of clarity over the precise circumstances envisaged in subsection (1)(b) of Amendment 42A concerning,

“leaders of a combined authority”.

Presumably, the provision applies when they are meeting as members of that combined authority rather than otherwise. Perhaps that needs clarification. We have generally argued for dealing with matters on the face of the Bill, so we look forward to assurances from the Minister that the issues raised here are already covered. To the extent that they are not, we will work with the noble Lord, Lord Shipley, to fill any gaps on Report.

[Lord Storey (LD)]

My Lords, this amendment is in my name as well. Yes, it is important to have powerful leadership in metropolitan areas, and yes, it is important that we have transparency. In my own local authority in Liverpool, the elected mayor, in his infinite wisdom, has decided to do away with scrutiny, so there are no scrutiny committees at all. That should not happen in this case, so it is very important to clearly make the point that not only should there be transparency in all actions under the new arrangements but, where papers are relevant, the papers should be freely available to the general public—to the electors—and, where possible, those electors should be allowed to attend those meetings if they wish. If we do that it will give people real confidence about the new arrangements. They will feel that the arrangements are transparent and democratic and, above all, that nothing is being hidden from them behind closed doors.

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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.

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[Lord McKenzie of Luton]

I know that we deal with situations where the best can happen in the best of all possible worlds, which is where we are on the Bill. However, could the noble Baroness confirm that in a whole range of functions being devolved to a combined local authority and the budgets to go with it, the prospects of those budgets being aggregated—with freedom for the combined authority to spend as it wishes, given those particular functions, and not have to follow the Bill above those amounts—would be perfectly possible, feasible and welcomed?

[Baroness Williams of Trafford]

My Lords, the noble Lord gives a theoretical example, which I am not in any position to stand at the Dispatch Box and confirm. I know I have reiterated this during the course of the Bill, but it really would be for a group of local authorities to prove that whatever proposal was put forward would result in growth and be fiscally neutral.