Localism Bill

Debate between Robert Neill and Baroness Keeley

Wednesday 18th May 2011 Commons Chamber

[Robert Neill]

My hon. Friend is entirely right, and I am grateful to him for raising the suggestion in Committee, because it fits neatly with an established pattern of working in the GLA. As he rightly observes, the proposal will require any Mayor to achieve a measure of cross-party consensus. The system is established in relation to the Mayor’s budget and the various strategies that he is entitled to bring forward, and it is logical to include such an important issue in the same regime. Not only is there an electoral system in the GLA which requires cross-party consensus for a two-thirds majority, but the assembly is seized of certain powers not unlike our powers in this place to call for people and papers, so it can summon people and, therefore, carry out robust scrutiny.

Importantly, the assembly is also elected on a basis that includes constituency representatives and those elected through a list system, so any London borough that might be affected or concerned by a proposed mayoral development corporation has its constituency assembly representative at City hall who is able to stand up, ask questions and challenge on their behalf. I hope that that meets the Opposition’s point, and that their amendment will not be necessary.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

I doubt it, because having representatives from borough councils on the assembly is not a strong enough measure; they may not comprise the majority. There is still the view in London borough councils, which we will hear more of when we come to our amendments, that they should have a veto. The designation of a mayoral development corporation in an area is a very powerful measure. I heard the Minister say that he did not believe the current Mayor had any extra MDCs in mind, but he could do, and the power is cast quite widely.

[Robert Neill]

I am disappointed in the hon. Lady’s response, because I thought that we had got a good deal of the way down the track to meet what were sensible concerns. There is a difference between recognising that the establishment of a mayoral development corporation is part of the outworking of London-wide policy, in which the Mayor will have to have regard to the strategic economic and developmental interests of the whole city, which may be different from the individual interests of a single local authority, and recognising that the assembly is the body that this House has already charged with holding the Mayor to account for the way in which he exercises those powers.

There is a difficulty with giving a veto to an individual London borough, because the borough’s interests are very properly not required to be strategic in the same way as those of the Mayor and of the assembly. Often they are, in fairness, and I do not mean to diminish the importance of the London boroughs. As the hon. Lady knows, I spent 16 years as a London borough councillor before spending eight years on the London assembly. That may indicate precocious sadness on my part, but that is a different matter. Both bodies fulfil very important functions, but they are different functions, and, if we are rightly going to put a check and balance on the Mayor’s exercise of his strategic role, we must do so through the assembly—the elected strategic check and balance. The boroughs have an important role in this because the Mayor is required to consult them, among other bodies, and they therefore have a powerful tool in being able to raise their concerns and to lobby their borough elected representative on the assembly to ensure that their case and their voice is heard.

--- Later in debate ---

[Robert Neill]

I will give the right hon. Gentleman this: he is right on textual analysis but remains wrong on policy, because his solution is a centralist one that would give the Secretary of State a veto. The whole point of what we are doing, in improving the Bill from its original state, is that we do not allow the Secretary of State to veto a decision taken by elected representatives in London; rather, we allow the assembly, which is the established body for keeping the Mayor of London in check, to exercise the veto. In policy terms, that is preferable.

I am disappointed that the Opposition object to this. As I recall only too well, in 1999 they made great play of having devolved power to London by establishing the Greater London authority. I now accept that that was the right thing to do. We are following the logic of that by enabling Londoners to take the decision as to what is the best shape and size of an important regeneration tool for London. They do that with the Mayor making the proposal and the assembly having the ability, if necessary, to veto it, and the boroughs being able to be consulted and to exercise influence through their elected members of the assembly. I am sorry that the Opposition seem to want to start a bit of a war where none need exist, because there is consensus among all parties in the assembly that it is desirable to go down this route.

[Barbara Keeley]

I think I am right in reporting the Minister as saying that a principle of the Localism Bill is to trust local representatives. I hope that Ministers will bear that in mind as they take the Bill through its final stages in the House, because I want to question them about why that does not carry through to the imposition of shadow mayors, although I know that that is outside the scope of this debate. If we are to be true to the principle of trusting elected representatives, which the Minister has just stated, we must not impose on them.

Various people have intervened in this debate. It would help if we moved on to considering the amendments fairly soon, because we will be able to take the arguments in the round if we do that.

[Mr Speaker]

Order. That is in the hands of the Chair. At this stage, the hon. Gentleman will continue his remarks.

--- Later in debate ---

[Barbara Keeley]

I want to speak briefly in support of the amendments so ably presented by my hon. Friend the Member for Lewisham East (Heidi Alexander). There was much consensus on this part of the Bill, unlike on others. There was much consultation with the Mayor, the Greater London assembly and London councils. To me, this part of the Bill shows the value of early and thorough consultation. Perhaps there is a lesson for us there.

As my hon. Friend has argued, the powers of a mayoral development corporation would be great. The power of the Mayor to establish new mayoral development corporations anywhere across the Greater London area is cast widely, as we discussed extensively in Committee. Amendment 352 quite rightly seeks to ensure that where a Mayor seeks to establish a further mayoral development corporation, the majority of the borough councils affected by such a designation would have to agree to it. The Opposition do not believe that this would create any form of impasse. However, it is important that a borough council with only a small representation in the assembly—one that could therefore in no way seek to achieve a two-thirds majority through its assembly representation—should be able to come to agreement with either one or all the other boroughs if another development corporation was designated. We agree with my hon. Friend’s amendment 352 and will support it in a Division.

[Robert Neill]

This has been an interesting and worthwhile debate, although I accept that there has been an element of déjà vu for some of us. I say that as someone who served on the old Greater London council and who found its abolition quite painless, partly because at the same time I was serving on the fire authority, the waste regulation authority, the waste disposal authority and the borough council. My hon. Friend the Member for Peterborough (Mr Jackson) is quite right that we created a somewhat convoluted architecture thereafter, which is why it is right to restore as much decision making as we can to London. That is why I am grateful for his support for the general thrust of where we are going.

I understand the point that the hon. Member for Lewisham East (Heidi Alexander) made about the importance of employment and housing. She is absolutely right about that. I also accept the need to take all the agencies in London along with any such proposal, but I cannot accept her proposition that we cannot trust London’s politicians to come to a mature decision on the best way forward.

A powerful point about the history of London was made by my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) and my hon. Friend the Member for Croydon Central (Gavin Barwell), and it was also reinforced by my hon. Friend the Member for Peterborough. They all have long experience in London government. Their point was that there are some details that can be looked at, but it is important to recognise that the relationship between the Mayor and the assembly has matured, even in the short time that the assembly has been in existence. Indeed, the relationship between the Mayor and the boroughs has matured regardless of party, under Mayors of both principal parties, as it happens. We should not underestimate the brokerage and leverage role that exists in the system, in addition to a purely legalistic role.

If I may be permitted to mention one bit of history, something that we learned from the previous GLC is that it was not simply the disagreements of Ken Livingstone with the Government of the day that undermined the GLC. Rather, the GLC was undermined by the tension between the two tiers and the risk, on occasion, of impasse —impasse that arose regardless of the party controlling the GLC and the London boroughs at the time. That is my concern. Giving boroughs an absolute veto in the way suggested by amendment 352 risks recreating the tensions of the old GLC days, rather than sticking with the more collaborative working that we currently have.

The proposal put forward by my hon. Friend the Member for Croydon Central, to which my right hon. Friend the Member for Bermondsey and Old Southwark also referred, is a sensible one. We can consider the details and discuss them sensibly to find a way to take it forward. We have learned from the rather remote model of operation of the earlier development corporations, and we want to embed that learning in how we go forward in future.

Even at this late stage, I hope that the Opposition will think about the necessity of pressing their amendment 352 to a vote. However, if they really insist, I would ask the House to reject it.

Question put and agreed to.

New clause 21 accordingly read a Second time, and added to the Bill.

New Schedule 2

‘Transfers and transfer schemes: tax provisions

Part 1

Transfer under paragraph 60 of Schedule16

1 (1) For the purposes of any enactment about income tax or corporation tax, the Office and the HCA are to be treated as the same person.

(2) In particular, the transfer effected by paragraph 60 of Schedule 16 is to be disregarded for those purposes.

(3) Accordingly, that transfer is not to be regarded for the purposes of Part 8 of the Corporation Tax Act 2009 (gains and losses from intangible fixed assets) as involving any realisation of an asset by the Office or acquisition of an asset by the HCA.

(4) In this paragraph—

“enactment” includes an enactment contained in an instrument made under an Act,

“the HCA” means the Homes and Communities Agency, and

“the Office” means the Office for Tenants and Social Landlords.

Part 2

Certain transfers under scheme under section161 or162

Interpretation of Part 2 of Schedule

2 In this Part of this Schedule—

“CTA 2009” means the Corporation Tax Act 2009,

“public body” means—

(a) a person which is a public body for the purposes of section 66 of the Finance Act 2003 (stamp duty land tax: transfers involving public bodies), or

(b) a person prescribed for the purposes of this Part of this Schedule by order made by the Treasury,

“relevant transfer” means—

(a) a transfer, in accordance with a transfer scheme under section161, to a taxable public body of property, rights or liabilities of the Homes and Communities Agency, or

(b) a transfer, in accordance with a transfer scheme under section162, to a taxable public body,

“taxable public body” means a public body which is within the charge to corporation tax,

“transferee”, in relation to a transfer in accordance with a transfer scheme under section161 or162, means the person to whom the transfer is made, and

“transferor”—

(a) means the Homes and Communities Agency in relation to a transfer, in accordance with a transfer scheme under section161, of property, rights or liabilities of that Agency, and

(b) means the London Development Agency in relation to a transfer in accordance with a transfer scheme under section162.

Computation of profits and losses in respect of transfer of a trade

3 (1) This paragraph applies where a taxable public body (“the predecessor”) is carrying on a trade or part of a trade and, as a result of a transfer scheme under section 161 or 162—

(a) the predecessor ceases to carry on that trade or part of a trade, and

(b) another taxable public body (“the successor”) begins to carry on that trade or part.

(2) For the purposes of calculating, in relation to the time when the scheme comes into force and subsequent times, the relevant trading profits or losses of the predecessor and the successor—

(a) the trade or part is to be treated as having been a separate trade at the time of its commencement and as having been carried on by the successor at all times since its commencement as a separate trade, and

(b) the trade carried on by the successor after the time when the scheme comes into force is to be treated as the same trade as that which the successor is treated, by virtue of paragraph (a), as having carried on as a separate trade before that time.

(3) If a trade or part of a trade is to be treated under this paragraph as a separate trade, such apportionments of receipts, expenses, assets and liabilities are to be made for the purposes of computing relevant trading profits or losses as may be just and reasonable.

(4) This paragraph is subject to the other provisions of this Part of this Schedule.

(5) In this paragraph “relevant trading profits or losses” means profits or losses under Part 3 of CTA 2009 in respect of the trade or part of a trade in question.

Transfers of trading stock

4 (1) This paragraph applies if—

(a) under a relevant transfer, trading stock of the transferor is transferred to the transferee,

(b) immediately after the transfer takes effect, the stock is to be treated as trading stock of the transferee, and

(c) paragraph 3 does not apply in relation to the transfer.

(2) Sub-paragraphs (3) and (4) have effect in calculating for any corporation tax purpose both—

(a) the profits of the trade in relation to which the stock is trading stock immediately before the transfer takes effect (“the transferor’s trade”), and

(b) the profits of the trade in relation to which it is to be treated as trading stock (“the transferee’s trade”).

(3) The stock is to be treated as having been—

(a) disposed of by the transferor in the course of the transferor’s trade,

(b) acquired by the transferee in the course of the transferee’s trade, and

(c) subject to that, disposed of and acquired when the transfer takes effect.

(4) The stock is to be valued as if the disposal and acquisition had been for a consideration which in relation to the transferor would have resulted in neither a profit nor a loss being brought into account in respect of the disposal in the accounting period of the transferor which ends with, or is current at, the time when the transfer takes effect.

(5) In this paragraph “trading stock” has the meaning given by section 163 of CTA 2009.

Continuity in relation to loan relationships

5 (1) For the purposes of the application of Part 5 of CTA 2009 (loan relationships) in relation to a relevant transfer of rights and liabilities under a loan relationship to which immediately before the transfer takes effect the transferor is a party for the purposes of a trade it carries on, the transferee and the transferor are to be treated as if at the time of the transfer they were members of the same group.

(2) For the purposes of the application of Part 5 of CTA 2009 in relation to a transfer that—

(a) is to a public body,

(b) is in accordance with a transfer scheme under section 161 or 162, and

(c) is of rights and liabilities under a loan relationship to which immediately before the transfer takes effect the HCA or LDA is a party otherwise than for the purposes of a trade it carries on,

the HCA or LDA, and the person to whom the transfer is made, are to be treated as if at the time of the transfer they were members of the same group.

(3) In this paragraph any reference to being members of the same group is to be read in accordance with section 170 of the Taxation of Chargeable Gains Act 1992.

(4) In this paragraph—

“the HCA” means the Homes and Communities Agency, and

“the LDA” means the London Development Agency.

Chargeable gains: disposal on transfer to be treated as no gain/no loss disposal

6 (1) For the purposes of the Taxation of Chargeable Gains Act 1992, a disposal constituted by a transfer within sub-paragraph (2) is to be treated in relation to the transferor and transferee as made for a consideration such that no gain or loss accrues to the transferor.

(2) A transfer is within this sub-paragraph if—

(a) it is a transfer in accordance with a transfer scheme under section 161 of property, rights or liabilities of the Homes and Communities Agency and the transferee is a public body, or

(b) it is in accordance with a transfer scheme under section 162 and the transferee is a public body.

(3) In section 288(3A) of the Taxation of Chargeable Gains Act 1992 (meaning of the “no gain/no loss provisions”) at the end insert—

“(m) paragraph 6(1) of Schedule [Transfers and transfer schemes: tax provisions] to the Localism Act 2011.”

Stamp duty

7 Stamp duty is not chargeable on a transfer scheme under section162 if the transferee is a public body.

Modifications of transfer schemes

8 (1) This paragraph applies if—

(a) a company delivers a company tax return,

(b) subsequently an agreement is made modifying a transfer scheme under section 161 or 162, and

(c) as a result of that, the return is incorrect.

(2) The return may be amended under paragraph 15 of Schedule 18 to the Finance Act 1998 so as to remedy the error, ignoring any time limit which would otherwise prevent that happening.

(3) An amendment may not be made in reliance on sub-paragraph (2) more than 12 months after the end of the accounting period of the company during which the agreement is made.

(4) Sub-paragraphs (5) and (6) apply if the company does not amend the return so as to remedy the error before the end of that 12 month period.

(5) A discovery assessment or a discovery determination may be made in relation to the error, ignoring any time limit which would otherwise prevent that happening.

(6) Such an assessment or determination may not be made in reliance on sub-paragraph (5) more than 24 months after the end of the accounting period mentioned in sub-paragraph (3).

(7) Expressions used in this paragraph and in Schedule 18 to the Finance Act 1998 have in this paragraph the meaning they have in that Schedule.’.

Part 3

Transfers under scheme under section171(1) or (4) or187(1)

9 (1) In this paragraph “transfer scheme” means a transfer scheme under section 171(1) or (4) or 187(1).

(2) The Treasury may by regulations make provision for varying the way in which a relevant tax has effect from time to time in relation to—

(a) any property, rights or liabilities transferred in accordance with a transfer scheme, or

(b) anything done for the purposes of, or in relation to, or in consequence of, the transfer of any property, rights or liabilities in accordance with a transfer scheme.

(3) The provision that may be made under sub-paragraph (2)(a) includes, in particular, provision for—

(a) a tax provision not to apply, or to apply with modifications, in relation to any property, rights or liabilities transferred;

(b) any property, rights or liabilities transferred to be treated in a specified way for the purposes of a tax provision;

(c) the Secretary of State or Mayor of London to be required or permitted, with the consent of the Treasury, to determine, or to specify the method for determining, anything which needs to be determined for the purposes of any tax provision so far as relating to any property, rights or liabilities transferred.

(4) The provision that may be made under sub-paragraph (2)(b) includes, in particular, provision for—

(a) a tax provision not to apply, or to apply with modifications, in relation to anything done for the purposes of, or in relation to, or in consequence of, the transfer;

(b) anything done for the purposes of, or in relation to, or in consequence of, the transfer to have or not to have a specified consequence or to be treated in a specified way;

(c) the Secretary of State or Mayor of London to be required or permitted, with the consent of the Treasury, to determine, or to specify the method for determining, anything which needs to be determined for the purposes of any tax provision so far as relating to anything done for the purposes of, in relation to, or in consequence of, the transfer.

(5) In this paragraph—

“relevant tax” means corporation tax, income tax, capital gains tax, stamp duty, stamp duty land tax or stamp duty reserve tax, and

“tax provision” means a provision of an enactment about a relevant tax.

(6) In sub-paragraph (5) “enactment” includes an enactment contained in an instrument made under an Act.’.—(Robert Neill.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 20

Authority may be required to carry on commercial activities through a taxable body

‘(1) The Greater London Authority Act 1999 is amended as follows.

(2) After section 34 insert—

“34A Restriction on exercise of certain powers except through a taxable body

(1) The Authority may carry on specified activities for a commercial purpose only if it does so—

(a) through a company that is a subsidiary of the Authority, or

(b) in pursuance of an authorisation under section 38(1), through—

(i) a body that is specified in section 38(2) and is within the charge to corporation tax, or

(ii) a company that is a subsidiary of a body specified in section 38(2).

(2) Subsection (3) applies if—

(a) the Authority carries on a specified activity for a commercial purpose otherwise than as permitted by subsection (1), and

(b) the activity is actually carried on by a body (whether the Authority or another) that, disregarding this section, is in respect of the carrying-on of the activity exempt from corporation tax and income tax.

(3) The body mentioned in subsection (2)(b) is to be treated in respect of the carrying-on of the activity as not being a local authority for the purposes of—

(a) section 984 of the Corporation Tax Act 2010 (exemption of local authorities from corporation tax),

(b) section 838 of the Income Tax Act 2007 (exemption of local authorities from income tax), and

(c) section 271 of the Taxation of Chargeable Gains Act 1992 (exemption of local authorities from capital gains tax).

(4) In this section—

“company” means—

(a) a company within the meaning given by section 1(1) of the Companies Act 2006, or

(b) a society registered or deemed to be registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969, and

“specified activity” means an activity specified in an order made by the Secretary of State with the consent of the Treasury.”

(3) In section 420(8) (orders subject to annulment) after the entry for section 25 insert—

“section 34A;”.’.—(Robert Neill.)

Brought up, read the First and Second time, and added to the Bill.

Clause 161

Transfer of property of Homes and Communities Agency etc

Amendments made: 205, page 143, line 31, at end insert—

‘(ba) a company that is a subsidiary of the Greater London Authority,’.

Amendment 206, page 143, line 38, at end insert—

‘“company” means—

(a) a company within the meaning given by section 1(1) of the Companies Act 2006, or

(b) a society registered or deemed to be registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969;’.

Amendment 207, page 143, line 42, at end insert—

‘“subsidiary” has the meaning given by section 1159 of the Companies Act 2006.’.—(Robert Neill.)

Clause 162

Abolition of London Development Agency and transfer of its property etc

Amendments made: 208, page 144, line 8, at end insert—

‘(ba) a company that is a subsidiary of the Greater London Authority,’.

Amendment 209, page 144, line 17, at end insert—

‘“company” means—

(a) a company within the meaning given by section 1(1) of the Companies Act 2006, or

(b) a society registered or deemed to be registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969;’.

Amendment 210, page 144, line 21, at end insert—

‘“subsidiary” has the meaning given by section 1159 of the Companies Act 2006.’.—(Robert Neill.)

Clause 168

Designation of Mayoral development areas

Amendments made: 212, page 148, line 1, leave out from ‘has’ to end of line.

(e) the Mayor has laid before the London Assembly, in accordance with standing orders of the Greater London Authority, a document stating that the Mayor is proposing to designate the area, and

(f) the consideration period for the document has expired without the London Assembly having rejected the proposal.’.—(Robert Neill.)

Amendment proposed: 352, page 148, line 7, at end insert—

‘(e) a majority of those London borough councils whose borough contains any part of the designated development area agree to the designation.’.—(Heidi Alexander.)

Question put, That the amendment be made.

The House proceeded to a Division.

Local Government Funding

Debate between Robert Neill and Baroness Keeley

Tuesday 30th November 2010 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

It is a pleasure to see you in the Chair, Mr Betts, and a pleasure to respond to this important debate initiated by the hon. Member for St Helens North (Mr Watts), to whom I am sure we are all grateful. It is an important topic. It arises at this time of year every time the local government finance settlement is coming up. Inevitably, there are debates in advance of the settlement and, understandably, hon. Members seek to get the Minister to say things about the detail of the settlement. The Minister, regardless of party, says, “You’ll have to be a bit more patient because the detail as far as it affects local authorities is set out in the settlement itself, which will be laid before the House shortly”. I say that because that is the factual position. I want to respond to some of the matters raised, but I am sure that you, Mr Betts, and hon. Members who have participated in the debate, who are well experienced in local government matters, know that I am not in a position today to set out the individual impacts of the funding settlement on particular local authorities. However, I can make it clear that the provisional settlement will be done in the usual way. It will be announced shortly, and we will provide as much information as we can to enable local authorities to set their budgets.

This debate gives us a chance to look at the overall position. It is a position that arises, first, in relation to the financial situation, but it is actually broader than that. It is unfortunate that the opportunity has not been taken to put what has to be done on local government finance in the context of the Government’s broader agenda of handing more power and flexibility to local authorities. I agree with the hon. Member for St Helens North: the fact is that we need to reduce the deficit. Reductions in spending have to be made, and local government, as a significant part of the public spend, has to play its part. That much is common ground, but we are seeking to reduce spending constructively, and there I have to part company with the hon. Gentleman.

With respect to those on the Opposition Benches who have participated in the debate, there has been almost a competition—dare I say it—to come up with the most overcooked, overheated and exaggerated language possible. Frankly, it does no justice to the seriousness of the subject. Opposition Members have chosen to adopt a regrettable approach. It will make cheap headlines in a press release, but it does not advance the argument.

[Barbara Keeley]

The Minister must know—and if he does not, he should know—that councils in the north-west are now looking at having to make cuts of £35 million, £40 million and £50 million. If he thinks that that is fair and balanced, we will all be very upset next week. Last night, Stockport council, a Lib-Dem council, announced the cutting of 400 jobs, and the Local Government Association has suggested that the number of job cuts will be 140,000.

[Robert Neill]

I have seen those figures. I have also seen the SIGOMA document, which I read with interest. I have met SIGOMA representatives and I am happy to continue to do so. I want to take the hon. Lady to task a little. She referred to the reduction in funding for the working neighbourhoods fund. Yes, absolutely right—and who decided to do that? Her Government. The Labour Government made it clear that the working neighbourhoods fund was a three-year fund due to end in March 2011. The previous Government—the Labour Government—were committed before the general election to cutting it, so I am not taking any lectures from anyone on the impacts of that.

--- Later in debate ---

[Robert Neill]

That is entirely right, which is why the rage is synthetic, and why I hope that hon. Members, including Opposition Members, will welcome £650 million of additional money that the Government have put in to support the council tax freeze and which will be embedded in the base budgets of those authorities. I hope that they recognise the steps that we have taken specifically to protect services for the most vulnerable, such as £1 billion of grant funding for social care by 2014-15 within the £2.4 billion that we have rolled into formula grant. By rolling more money into formula grant, we give local authorities more flexibility to reflect their own priorities and demands.

[Barbara Keeley]

Will the Minister give way?

[Robert Neill]

I shall make a little more progress. An extra £1 billion of extra funding has gone in through the NHS budget to break down the barriers between health and social care. As I said, we are fully funding the council tax freeze and embedding it into the base. We will make £200 million of capitalisation available in 2011-12 to deal with restructuring costs. Those are positive things.

It being Two o’clock, the sitting was adjourned without Question put.