My Lords, we are in the slightly unusual position of having no fewer than seven former council leaders gathered together here, including the
noble Baroness the Minister. I do not know what the collective noun for such a group would be. Perhaps I may suggest a redundancy of council leaders, because—let us face it—most of us, or most of our successors, are finding their position extremely limited these days.
We are engaged in something of an experiment. It is an interesting experiment, as most of us have acknowledged, with considerable potential but with certain concerns which have already been voiced both in this debate and on previous occasions. The issues are very broad, but they cannot be addressed simply by the imposition of a mayoral system. Many of us feel that there should have been a local decision to adopt that system. The noble Lord, Lord Shipley, and I were on opposite sides of a referendum in Newcastle for having an elected mayor for the city. His successor was the Liberal Group Leader on Newcastle City Council who I formed an unlikely coalition with and which turned out to be successful in securing a no vote. But we now have a situation where Newcastle, if the North East Combined Authority goes ahead, will have an elected mayor imposed and in the Tees Valley area we already have an elected mayor in Middlesbrough. However, we have an authority which, having had an elected mayor, then decided to get rid of him and the position in Hartlepool, and yet they are going to be faced with that requirement. It is interesting that the Secondary Legislation Scrutiny Committee asked the Government what consultation had been carried out about these proposals and the Government replied that Ministers had indicated that the:
“Passage of legislation, is founded on the longstanding tradition of representative democracy in this country. The matters covered in these Orders have been consented to by the democratically elected representatives of the people of Liverpool City Region, and of the Tees Valley”.
Accordingly they said:
“Those giving consent will have done so in the knowledge that they are democratically accountable through the ballot box to the people of Liverpool City Region and of Tees Valley, and we can be confident that they will have engaged with their constituents in such ways as they consider appropriate”.
That is a very high-sounding affirmation of the belief in local democracy. Oddly enough, the principle does not seem to extend to the decisions which councils can take about the services they deliver. They are being constantly eroded. We are now seeing further moves to distance local authorities from the provision of education and we have seen similar moves elsewhere. More particularly, of course, we have the financial position of local authorities, which are rigorously and vigorously constrained in the exercise of their functions. For example, the vaunted democracy about which the Government boast did not extend to allowing councils to increase council tax by more than 2% without a referendum. That was not a decision they were deemed competent to make. We have of course seen similar erosions of responsibility in other areas.
On the financial side in particular there is significant loss of resources to authorities involved in the devolution process. The National Audit Office report sets this out very clearly. We hear much about the additional funding, which in the case of a number of areas will amount to £30 million a year over 30 years, or £900 million, which sounds like a great deal of money. That sum will
be paid into the Liverpool City region. A smaller amount, because it is a smaller area, of £15 million a year and therefore £450 million will go into the Tees Valley area. It sounds impressive, but then we must look at what is currently being spent. Total capital spending—this is what the money will be for—in the Liverpool City region now is £312 million a year. In addition, £44 million under the annual local growth fund is payable to the LEP, which is obviously also concerned with that infrastructure. Therefore the total amount in the Liverpool area is something over £350 million, so £30 million distributed between all those authorities amounts to something like 8% of what is currently being spent on capital programmes. The position is similar in Tees Valley where the total capital spend of local authorities and the LEP is just under £190 million. It will get £15 million, which obviously is something like 7.5% of what is currently being spent. The financial investment that is being made and boasted about in connection with this project is minimal.
On business rates, I think the Government are still consulting on what needs to happen with them. It is all very well to say that local authorities will be able to keep business rates, but in both Merseyside and Tees Valley areas—I suspect particularly in those areas—the business rate income will be pretty minimal relative to the population and in comparison with other authorities. Presumably there has to be some kind of mechanism for redistribution. I do not know whether the Minister will be able to indicate how far the talks have progressed, and she may not wish to tell us or not be able to tell us what the outcome will be. However, where are we as regards the timetable for coming out with a clear position on how the business rates will be redistributed, if there is a need for, as surely there has to be, an element of redistribution? As it happens, it appears that in some areas we will go into this new system and committing to it without even knowing what the timetable is for when the business rate agenda will be addressed. Surely that is extremely unsatisfactory.
The issue raised by the noble Lord, Lord Shipley, about scrutiny is valid. There has to be local scrutiny and it ought to be built into local arrangements. We provided according to my suggestion for an audit committee under the legislation which would give some measure of independent scrutiny, and those who have been calling both today and hitherto for an effective scrutiny process are obviously right to do so.
But of course there is then the question, given that business rates will be the only locally raised revenue, of what happens to the services not merely of the combined authority but also of the constituent local authorities since revenue support grant will no longer be paid. Surely the two things have to be aligned if local services and the devolved functions are to be delivered adequately. I refer again without making any apologies for doing so to the regret that I and others have voiced about the abolition in the early days of the coalition Government of regional offices of government, never mind the regional development agencies. As the noble Baroness will recall, the abolition of regional government offices changed a system which had worked well in providing a close working relationship between Government departments and local authorities. In each region virtually all the Government departments
were represented, engaging with local authorities and operating as a conduit between Whitehall and those areas. Now that we are creating these potentially powerful mayoral authorities, it seems to be even more important that there should be a local dialogue which can facilitate a closer working relationship between central and local government.
I have a final question to raise about the position of police and crime commissioners. The understanding is that it will be possible—indeed, Manchester has already opted for this—to have the police and crime commissioner position combined with that of the elected mayor. The next Prime Minister in her current position, which will last for another 24 hours or thereabouts, was keen to promote the notion that fire authorities should go down the same route as police and crime commissioners. Does the noble Baroness have any thoughts or information about how that process might develop and whether the Government are currently working on proposals which would add fire authorities to the police service? Perhaps we will have to wait to hear what the new Prime Minister says, but is it the Government’s expectation, and possibly their political direction, that the new mayors will have as a matter of course that combined power or even just the police and crime commissioner power? That raises in my mind and I suspect in those of others both here and elsewhere some really strong concerns about the concentration of power in such sensitive areas in what will be effectively a single pair of hands, something that many would consider to be undesirable.
Clearly we want to see the new system being given a chance to work and we want local decision-making to be effective at addressing the different situations that face each group of local authorities, but that cannot happen in my submission without adequate financial resources and without the Government preparing not simply to offload these responsibilities, but actually engaging with what will in effect be two levels of local government to secure the improvements that they talk about wanting to see and which are desperately needed in so many parts of the country.