Devolution: English Cities

Lord Turnbull Excerpts

Wednesday 17th July 2019 Grand Committee

[Lord Turnbull (CB)]

My Lords, while reading the excellent report by the noble Lord, Lord Heseltine, I was at times overcome by nostalgia, having followed the history of local government finance, functions and boundaries since I joined the Treasury in 1970. I remember in the early 1980s the Treasury was proud to have got local authority self-finance expenditure—LASFE to the cognoscenti—up to more than 60%, but only a decade later it was down below 25%. Local authorities have been stripped of functions and taken out of social housing and their boundaries are constantly reshuffled. How did this happen?

There was a narrative in Whitehall and Westminster that local authorities were incompetent and wasteful, out of touch with the interests of local residents, meddling in national politics, anti-business and anti-development. Was that a fair description? It was certainly not in all cases, but there were prominent examples that fitted the bill, such as my home borough of Lambeth, Brent, the GLC and Liverpool. One response was the introduction of a poll tax on the premise that business, which contributed much of local taxes, had no vote and many voters paid little in rates. The unwinding of the poll tax led to business rates being sequestered and captured as a national tax, and rates replaced by council tax, which was less buoyant and less progressive.

The Whitehall/Westminster narrative continued for several decades and to some degree lives on. Recently, education has been taken away from local authorities and cuts in spending imposed on them have been more severe than on government departments. The first thing that strikes one about the narrative is its sheer hypocrisy, the pot calling the kettle black, as though central government never had any major failures of policy or delivery. When I joined the Departure of the Environment as Permanent Secretary in 1994, with the noble Lord, Lord Deben, then Secretary of State, it was apparent even then that the narrative was outdated. I met many local government chief executives and found them impressive, possessing skills often lacking in Whitehall, which explains why, when senior civil service positions were opened up to open competition, many of them were successful. I also found that they were keen—desperate, even—to develop their communities.

In 1997, the noble Lord, Lord Deben, was succeeded by the noble Lord, Lord Prescott. I am sorry that he is not well enough to be with us. He changed the name of the department to the Department of the Environment, Transport and the Regions, recognising explicitly the regional dimension of its work. His commitment to the regions was strong and unwavering, but in retrospect I think he took a wrong turn in trying to develop a greater regional dimension by championing the creation of regional assemblies. These never took off. Most of the subsequent development of local authorities has been focused on stronger executive action with the creation of elected mayors overseen by small assemblies—more power to act, rather than power to debate.

The report from the noble Lord, Lord Heseltine, makes a powerful case for city regions with elected mayors on the London model. One can spend a lot of time obsessing about the optimal size of the local authority, but we are close to a reasonable outcome. Where it is possible to make unitaries work they should be the first choice, bringing housing and planning alongside other major services. But that still leaves some functions that are too broad even for the larger unitaries, such as London boroughs and the met authorities around our big cities, such as transport, infrastructure, business development, regeneration, skills and further education, and the development of affordable housing. By the latter, I mean principally land assembly and planning, rather than the landlord function, which needs to be at a more local level, perhaps left to housing associations. It is for these wide-ranging services that the city regions are best equipped. I also endorse the recommendation that mayors absorb the unloved police commissioners, as in London.

When I arrived in the Departure of the Environment in 1994 there were still two important components of the Heseltine legacy: urban development corporations and the regional offices. The noble Lord, Lord Heseltine, notes that there was opposition to urban development corporations as they were taking away responsibilities from local authorities, but where they were reviving derelict industrial and port land in areas with few residents I thought that was appropriate. Indeed, the centres of our major cities are much more prosperous and completely transformed from where they were 30 years ago. The problems now lie elsewhere, in the suburbs and smaller cities. Going forward with UDCs on the original model is probably not the right vehicle. The particular structures should be for mayors to decide.

The other piece of machinery was the regional office network, which strangely the noble Lord gets to only at page 52 of his report. This was a consortium of Whitehall departments—the DoE, the DTI, employment and so on—which came together to act at a regional level. They were an essential counterbalance to the vertical structures of Whitehall. It was a big mistake to abolish them and I hope they can be quickly reconstructed.

There is one issue where I queried the noble Lord’s proposals. He proposes a separate department of the regions with its own Secretary of State and Permanent Secretary. In the 1990s the DoE and the DETR, while retaining their responsibilities for housing, planning and regeneration, were, in effect, the conveners of the network. Creating a department that has a co-ordination function but no services of its own—no skin in the game—is likely not to be effective. A department of everything that would be the DETR, which was already a monster department, plus skills and employment might be too much of an ask.

The belittling of local government has done immense damage to England, politically, socially and economically, exacerbating divisions rather than closing them up. We should welcome the mea culpa of the noble Lord, Lord Heseltine, and his conversion to strong and effective local government, but to achieve that Whitehall/Westminster has to cast off its inbred sense of superiority.

I have one final thought: 30 years after its introduction, council tax is due for revaluation. It takes no account of changes in relative property values across the country and, without that, we will find no proper solution to local government finance.