Local Audit and Accountability Bill [HL]

Debate between Lord True and Earl of Lytton

Wednesday 19th June 2013 Grand Committee

[The Earl of Lytton]

My Lords, I have an amendment coming up, Amendment 14BBA, but had I known how the discussion on this amendment moved by the noble Lord, Lord McKenzie, would proceed, I would have asked for it to be grouped with these amendments, so it is possibly better that I make my comments now and consolidate the entire process somewhat. Otherwise, I fear that Amendment 14BB will have stolen a large part of my thunder, apart from anything else.

I queried the majority of independent members issue on Second Reading. I am mindful of what the Minister said on Monday: that the panel would not need to be large but that independence was important. I can certainly relate to the question of whether you have a committee and a panel as a term of art, with the duplication that that involves, to which I referred earlier. I think that the principle of an independent chairman is a given, but it appears to me from my much lesser knowledge of these procedures than that of other noble Lords that some councils might have few politically independent members. I do not know how many would have none at all, but there must be some. Even political independence, it seems to me, is no guarantee of freedom from bias, if that is the point that the Bill is intended to address. The subtitle of my amendment would be, “Precisely what do we mean by independent in this context?”. That ought to be explained.

Picking up on the point made by the noble Baroness, Lady Eaton, it seems to me that objectivity and competence, rather than independence, would be a better test for this purpose. I am bound to admit that I am at a loss to know which would be the more readily capable of definition and, if necessary, enforcement, so to some extent I can see it from the Government’s side. I think we are all agreed that we are trying to get a true and fair picture of an authority’s financial affairs. Up to a point, that works back to the basis of oversight from within the council.

Apart from asking the Minister whether she can enlighten the Committee on the question of independence, I remind your Lordships, who all know it far better than I do, of the veritable layer cake of qualifications and eligibility criteria that already applies to audit and to auditors, to which the Bill in this respect risks adding further complexity. I relate to the points made by the noble Baroness, Lady Eaton, about the independence and objectivity of auditors as professional people embedded in their culture, training and ability to retain their professional status. As a member of another profession altogether, I very much relate to that. Ultimately, it is the auditor who is doing the scrutiny, not the committee or panel. They are there simply to select—if selection be needed; we will get to that later. If the auditor is given the proper tools and the freedom to act and attacks it with the independence of mind necessary, that is the fundamental safeguard sought by the Bill.

[Lord True]

My Lords, I declare an interest myself, as leader of a local authority, and apologise for not being able to take part in these proceedings before. I shall make a very small point, which need not be clarified now but perhaps could be before Report.

I have a great deal of sympathy with the tenor of comments being made universally around the Committee about the risks of overlapping. I strongly follow the noble Earl’s comments about the importance of the integrity and role of audit as it is practised by local authority officers at the moment. I was going to raise my query later, but I shall follow the noble Earl, because it affects independence, which is the subject of this amendment. Paragraph 2(2)(b) of Schedule 4 would not disqualify somebody from being a member if,

“the panel member has not been an officer or employee of an entity connected with the authority within that period”—

that is, for five years.

The only thing that needs to be made clear and perhaps can be made clear on Report is whether that means the authority or the individual. Let us posit a case of somebody who has been an officer of a body and has gained a great deal of lifetime experience, and has retired early, perhaps eight years ago—we do not want any age complication, so let us just say that he no longer works for that authority. After his departure, some years later, that body becomes a connected authority, whereas he has had no connection with it for some time. His experience might be useful, and one does not want to exclude potential individuals by idle wording. I take it that the Bill means that somebody who has been working for, or connected with, the authority in the past five years should be excluded. However, the way in which it is written could mean that if you have worked at any time for a body that becomes connected in the previous five years, you would be excluded. I think that the second category might be considered, as somebody could be useful in pursuing this role.

Local Government Finance Bill

Debate between Lord True and Earl of Lytton

Tuesday 10th July 2012 Grand Committee

[The Earl of Lytton]

My Lords, I aggregated these amendments together to try to deal with them as quickly as I could. They cover a number of different areas but I felt that it was right not to seek to group them individually or in smaller groups for the very purpose of discharging that obligation. While understanding what the noble Earl said and standing here chastised as appropriate, I am nearly at the end of what I wanted to say.

This particular amendment seeks to restore objectivity and professionalism—not that these individuals are lacking in professionalism but to make sure that the valuation body commands respect and continues to do so in future. That is quite an important point of principle. I have dealt with the question of falls in value following the antecedent valuation date, which just leaves me to deal with Amendments 70 and 95.

Amendment 70 relates to the way in which the Valuation Office Agency appears to be managing the appeals system. There seems to be an inclination to declare incoming proposals for alteration invalid, but not necessarily straight away. It is important that the validity of an appeal is decided at an early stage, in the same way as if a planning application were submitted that had to be decided upon at that juncture. It should not thereafter be possible for the validity to be impugned. Amendment 95 is linked to Amendment 70 and could be an alternative to it. I am going to sit down. I beg to move.

[Lord True]

My Lords, the noble Earl has raised a number of issues and I know that my noble friend will respond. That will be important because as business rates take the burden over the coming years these issues will become matters of considerable controversy and potentially democratic controversy. Knowing the noble Earl’s expertise and the courtesy of my noble friend, I am sure that these matters will be discussed further over this summer. I hope that in her response she will not necessarily rule out the idea of at least exploring these proposals. It may be that the Government have the necessary powers that the noble Earl is referring to in Amendment 96 to make adjustments in the system. But if that is not the case, it is a matter that we ought to consider further because this area will bear further examination. Indeed, I referred to an incident in my borough, which demonstrated the problems that can arise.

I am not going to tempt the noble Earl to his feet immediately, but perhaps when he replies to the Minister’s response he will say how he envisages in Amendment 70ZC this concept of a decline in market value being a reason, rather than a proximate event, to occasion appeals and change. I am not absolutely certain as to how he envisages that would be triggered. Would it be triggered by each individual land holder? You could have whole series of appeals in the light of a general trend in market decline. The noble Earl nods, so I think that that is the case. If that doctrine is to be imported into law, for some of the reasons that the noble Earl set out, some mechanism might be needed for collective action in those circumstances, otherwise it could be another reason for a proliferation of appeals that might come out of the works.

I listened with great interest to what the noble Earl said and I hope that we can be assured we will have the flexibility to address some of these issues as they arise over the next few years.

Local Government Finance Bill

Debate between Lord True and Earl of Lytton

Thursday 5th July 2012 Grand Committee

[Lord True]

I shall be able to join other noble Lords.

As I said when I spoke briefly yesterday on another matter, I do not think that everything has to be prescriptively set out in legislation. I will be listening very carefully to what my noble friend the Minister says about consultation because the points that have been made by other noble Lords are very well made. It is obviously vital, particularly in the first stages of a new process, that a real and meaningful consultation takes place. We will be very interested to hear what my noble friend says about whether or not it is necessary to put this in the Bill.

I would like to refer to two amendments specifically. I will not follow the comments made by my noble friend Lord Shipley, but the points he made about “general nature” in Amendment 34, tabled by the noble Lord, Lord Smith of Leigh, were well made and I agree with him. Amendment 25, also tabled by the noble Lord, Lord Smith of Leigh, which inserts,

“no later than the end of November each year”,

is also interesting. I have no doubt that officials in the department will say it is very unwise to put something such as this in the Bill because you never know what is going to happen, et cetera. But everybody in local government is aware that these things seem to be creeping later and later. It was always November, and you knew what was going to happen; then it was December. Now we are facing a whole range of legislation, specifically this one, with very short timescales, which we discussed at Second Reading.

I know that it is not only my noble friend’s department that is involved in these discussions, but some earnest by the Government to inform local government rather earlier than has become the norm would be highly desirable. Even if my noble friend cannot accept Amendment 25, I hope she will accept that many in local government would like to know where they stand a little earlier in the financial year than has been the case all too frequently in recent years.

[The Earl of Lytton]

My Lords, I follow what the noble Lord, Lord True, has said. I have been involved on and off for many years with various organisations that are reliant on sums of money coming from local government, and if local government is pushed to the wire in terms of setting its budgets, this has a knock-on effect in every allocation it might make to any other body. I am not involved with any organisations that receive money by way of grant at the moment, but in the past I have attended meetings at which finance officers and chief executives of these small bodies have been absolutely tearing their hair out because they do not know where they stand; they do not know whether they are going to have the budgetary allocation to enable them to keep core staff, and so on.

Leaving these things to run until a very late stage is pernicious because the downstream effects are incalculable and affect employment and the viability of schemes. So I would like to reinforce what the noble Lord, Lord True, has said about that: there needs to be a better lead-in period to deal with these things and it should not be left to the last minute on the basis that it does not matter. It matters very much and I wish to impress that on the Minister.

--- Later in debate ---

[The Earl of Lytton]

My Lords, can the Minister clarify something further for me following what I said a short while ago? Let us imagine the situation of a popular coastal town, in which there are a large number of properties that may be used seasonally for holiday purposes. Many will in fact be people’s second homes and may even get a reduction when assessed for council tax because they are second homes. Because of the seasonal nature, it is difficult to track whether these are going to fall above or below what I believe is the 140-day threshold of occupation for holiday purposes. I have to say that I am not sure whether that is for general tax purposes rather than local tax, but the question then is what their whole or main use is. In theory, if one is using the property year-round for holiday lettings, that is clearly a change of use, but there is no requirement to go for planning consent and it probably does not require any building regulations control. There may be some issues to do with health and safety, but how would the billing authority know what stock lay out there and what it was used for?

I appreciate that the Minister may need to come back on this, but in such a situation, how would a billing authority know whether it was behaving “diligently” or whether it was supposed to go around tracking down who all these people are? When I did an investigation last year into holiday homes, I found that a very large number of what I understood to be holiday homes, which were clearly being advertised as such through letting agencies, were in fact subject to a council tax assessment. If we are not careful, we will be putting an absolutely impossible burden on the billing authority, if “diligently” causes it to fall foul of something that is going to be extremely difficult for it to catch up on.

[Lord True]

Along with the noble Earl, I do not expect my noble friend to answer this point now. The issue of “diligently” is, in law, an important one given that we are framing a new approach. We need to understand how that will be assessed, particularly if it also comes up with reference to the relationship between local authorities and precepting authorities. It cannot be a subjective test. The Secretary of State will not say, “I don’t think they’re doing a good job but those people are”. Secretaries of State have never acted like that in the history of local government, have they?

--- Later in debate ---

[The Earl of Lytton]

My Lords, I support the principle of what the noble Lord, Lord Tope, said in moving the amendment because we are in circumstances of unparalleled turmoil in the non-domestic sector. The present—2010—local rating lists are based on an antecedent date of 2008. It will not escape the Committee that that coincides with the peak of the market before much of the fallout of the financial situation had filtered its way though. One of the effects of that has been to produce some significant shifts in the way in which land use is now looked at. It will also be apparent to many noble Lords that there has been a growing level of conversions of properties that were once commercial into residential. This is, for many reasons, to do with the problems of building on greenfield sites, issues concerning the interim arrangements regarding the national planning policy framework and the removal—effectively the abolition—of the strategic planning system when the coalition came into being. I do not apportion any blame. We are where we are.

It is quite clear that a lot of businesses are paying rates on the basis of transitional relief escalation based on 2008 levels of value and are increasingly of the view that they are unsustainable. I have previously pointed out that on a like-for-like basis, non-domestic ratepayers appear to be paying more pro rata for their floor space than residential property owners pay under council tax for equivalent space. That may not be the case in central London—I have to defer to the noble Lord, Lord True, and others with greater knowledge of that—but in the rural shires, that certainly seems to be the situation. This fuels all sorts of things. If something is used for a commercial purpose, it fuels a lack of willingness to make any sort of declaration because people do not want it to go that way. One might say that there is no incentive on a billing authority to point something up as a non-domestic hereditament in circumstances where it gets 50% clawback. If it were under council tax, it would have got the lot, but I leave that for the time being because that is not the thrust of what I wish to say.

Next year we will have another antecedent valuation date for the 2015 valuation. The likelihood is that outside central London large numbers of values will fall. The transitional relief for substantial movement may well kick in, so as they have been counting up year on year towards 2015, after 2015 they may well be counting back down again. I have great concern about the reset not being until 2020 because the turmoil visited upon all sectors, residential and non-domestic, public sector and private sector alike, is making for great uncertainty and a great deal of unpredictability. It seems to me that by 2020, seven years down the road, assuming this comes into force in 2013, it will be so far out of date that something needs to be done about it before that time. I know that the Institute of Revenues Rating and Valuation, of which I am a member, is equally concerned about the long-term effects, given the problems with the arrangements for the reset and valuation being so out of kilter in their degree of modernity.

This is a science. One has to try to work out how many financial criteria dance on the head of one pin, and I might not be the best person to describe this in detail, but I foresee a problem and I would like to hear what the Minister has to say about it.

[Lord True]

My Lords, briefly, I support what has been said by my noble friends. I understand why my noble friend and her colleagues in the Treasury have put forward this proposal but, without repeating points that I made at Second Reading, the acceptance by many authorities of the transfer from one system to another is an acquired acceptance of accumulated unfairnesses—as some would call them—of all varieties. I hope that my noble friend will consider favourably some of the points that have been made by my noble friends, such as this factor and the kind of turbulence and uncertainty that the noble Earl has just been referring to—and I gave the example of the extraordinary movement in our business rate revenue of about 11% between the last two years—the fact that, in the future, we cannot foresee it and that we are going way beyond the public spending survey period.

Localism Bill

Debate between Lord True and Earl of Lytton

Thursday 30th June 2011 Lords Chamber

[Earl of Lytton]

My Lords, the noble Lord, Lord Greaves, will doubtless have expected that the words “parish council” might cause this particular old pike to rise from the depths. I see where he is coming from, although I initially felt that this could loosely be reclassified as “Son of Clause 56 stand part”. I appreciate that he has made a distinction which prevents me from pressing that in particular. I will leave most of my comments for the question on Clause 56, because there is a generic process about parishes and how they fit into the thing.

I am a little concerned about inserting the principle regarding parish into something that relates to principal authorities. I question whether it rightly sits there, bearing in mind that the Bill proposes that the Secretary of State can make a separate set of provisions for parish councils. It seems to me that there are very good reasons for that, because we have to be rather careful about what template we are using for the purposes of referendums, so I question whether the insertion of the reference to a parish here is the right one, unless the intention is to eliminate Clause 56 altogether.

[Lord True]

My Lords, on this point there is of course a fundamental difference between how parishes are viewed inside and outside urban areas. I understand all the misgivings as far as rural parishes are concerned and do not wish to follow along that line, but it would perhaps not be wise to add my noble friend's suggestion to the Bill. I point out that in the recent referendum in my own authority which I referred to, the area chosen for it was in fact the boundary of a parish because that ran across more than one ward. It is not right to write that into statute but it reinforces the point that I and other noble Lords made earlier: that some power to enable local authorities to define an area, which might or might not be a parish, would be a useful broad, localist and permissive power. I would not favour writing it into the Bill in this way but it may be one of the instruments and measures that a local authority ought to be allowed to choose other than a ward.