Growth and Infrastructure Bill

Debate between Baroness Donaghy and Baroness Hanham

Tuesday 12th March 2013 Lords Chamber

[Baroness Hanham]

My Lords, I thank the noble Baroness, Lady Donaghy, and the noble Lord, Lord Tope, who has not spoken to this amendment but whose name has been added to it. It has the admirable aim of giving local authorities the power to decide how to adapt the nationally set permitted development and local development orders.

The noble Lord asked me for details about Article 4. I say straight away that I do not have them on me. If the noble Baroness is not going to press her amendment today, I shall be very happy to see that answers to the questions that have been asked are available before Third Reading in terms of the interpretation of Article 4 and how it can be used by the Secretary of State. I think that might be helpful under the circumstances as I rely again on the fact that local authorities can use Article 4 directions, particularly where the aim is to extend permitted development rights locally. They can be used with local development orders, and local development orders provide a quick and simple way to do this.

It is correct, as the noble Baroness said, that they have not been widely used. They were introduced of course under the last Administration but they are beginning to be used. I have a note here of where a number have been used to bring into control extensive changes of use for ground-floor units, for example, or where local development orders have been granted to extend household and permitted development rights in a village. Therefore, they have their uses and they are certainly beginning to move forward. Local authorities are beginning to recognise their benefits and that they can be put in place through a simple and streamlined procedure.

More than 30 local development orders have now been put in place in enterprise zones, and, as we speak, local development orders are contributing to growth by helping to speed up the delivery of everything from small domestic alterations to major industrial development. They can be used pretty widely across the piece.

The noble Baroness has given an outline, perhaps, of what she wanted to deal with. If she is not going to press the amendment today and is likely to return to this matter at Third Reading—which I think she would be entitled to do—I will make sure that the information about the Article 4 make-up is made available. I hope that the noble Baroness will withdraw her amendment.

[Baroness Donaghy]

I thank the Minister for her response and my noble friend Lord McKenzie for his support. I will withdraw my amendment. I just wanted to underline the fundamental difference in perception between the Department of Communities and Local Government and the LGA on the usefulness and appropriateness of LDOs and Article 4. It seems to me that the perception is so fundamentally different that there has to be something wrong somewhere. Therefore, I would appreciate a lot more information about the examples the noble Baroness has given about LDOs in that particular area and also a lot more information about why her department feels that Article 4 is flexible and the Local Government Association does not. On the basis of an assurance that we will have that information before the House, I beg leave to withdraw my amendment.

Local Government: Provisional Finance Settlement

Debate between Baroness Donaghy and Baroness Hanham

Wednesday 19th December 2012 Lords Chamber

[Baroness Hanham]

My Lords, I thank my noble friend. I am very happy to ask the councils involved in the tri-borough initiative to let us have full details of the savings they hope to make. I suppose that I ought to declare an interest as having been a member of at least part of that tri-borough arrangement many years ago. However, they are very clear that they have made tremendous efficiency savings and, more than that, that they are much more efficient. As a resident of that tri-borough, I can say that they certainly demonstrate that. I shall certainly see that my noble friend receives those details.

I believe that the benefit caseload for this year is based on the figures for 2010-11 but I shall let my noble friend know if that is not correct. I shall need to write to him regarding the final outturn for council tax.

[Baroness Donaghy]

I thank the Minister for her Statement, although I realise that she is not responsible for the rodomontade contained within it. Does she appreciate that the word “need” does not appear once in the Statement? Would she also like to comment on the word “grab”, which does appear? However, there is no reference to the fact that 800,000 working people are going to be worse off under the council tax benefit arrangements or that, at the same time, better paid people—although it is not, strictly speaking, her departmental responsibility—will experience a tax cut. Would the Minister like to comment on the fact that the Statement may contain some of the truth but not all the truth?

[Baroness Hanham]

My Lords, as I gave the Statement to the House I must accept responsibility for it. I therefore take responsibility for the word “need” not appearing and the word “grab” appearing once or twice; whether this would be my way of putting it I am not sure. The noble Baroness makes the point about the 800,000 people; again, those are the figures that appear in the Statement and I am afraid I cannot comment on them further.

Local Government Finance Bill

Debate between Baroness Donaghy and Baroness Hanham

Thursday 5th July 2012 Grand Committee

[Baroness Hanham]

My Lords, as I was about to say, the noble Lord, Lord McKenzie of Luton, was asking about the consultation on the needs and the formula. That is part of the summer consultation, so it will be dealt with before we meet again on Report. I am not going to muddy the water before that, so I will leave that there. I do not think there is any intention to change the exemption from council tax for students and business premises.

The first reset will start in 2013-14 and the Government will set out in the local government finance report all those elements sought by Amendment 38, but only in 2013-14 and in any reset year. I do not need to go through again the arguments I have already deployed in relation to Amendments 35 and 36 but, as I have already said, outside of a reset year, we do not intend to reset tariffs and top-ups to take account of need. We have been through this. This is because the scheme is designed to produce, and we intend it to deliver, a significant incentive for local authorities to promote growth. We think that incentive would be destroyed. Instead, we intend that the scheme should give authorities absolute clarity for a period of up to 10 years—clearly it will be eight at the start—about the payments that they will receive or make to central government. This will give them the strongest possible incentive to respond to business concerns, secure the necessary investment and increase their income through sustained growth.

I am sure that the noble Lord, Lord McKenzie, will recognise that, for these reasons, the Government cannot accept either of these amendments, and I hope that he is persuaded to withdraw Amendment 37 and not to move Amendment 38.

[Baroness Donaghy]

Will the Minister clarify her answer to the question asked by the noble Lord, Lord Shipley? She indicated that the system would not change. Is that the system of a couple of years ago or the system that seems to have been drifted into on student accommodation?

[Baroness Hanham]

It is as it pertains at the moment, which is that students are not charged council tax and the owner is not charged business tax. I think that is correct, and there is no intention to change that.

--- Later in debate ---

[Baroness Hanham]

I will persist with my view that there is an advantage here for local authorities in that they will have the opportunity with tax increment financing within the reset period of seven years, and then, with the longer reset period, 10 years, to help with those projects. In addition, the Government will guarantee long-term certainty over revenues and enterprise zones—as mentioned by the noble Lord, Lord Beecham —meaning that local enterprise partnerships, with which the revenue will sit, will be free to undertake long-term borrowing without any central government controls. Those are the two areas which do not come under TIF 2.

Finally, the Government stated, and made clear, in the 2011 Budget that they will support a limited number of TIF 2 schemes in the core cities, to which the noble Lord, Lord Shipley, referred. The Secretary of State may specify, in regulations made under paragraph 37 of new Schedule 7B, that business rates uplifts, from a very clearly defined area, will be disregarded from the levy and reset calculations for a specified period. The amendments specifically concern this measure.

The Government are fully committed to supporting growth. I noted carefully what the noble Lord, Lord Best, said about housing and about housing construction stimulating the economy. We will continue to have that debate, but the measures to do that are currently in place and are not related to TIF. There have also been a lot of questions about the £150 million in support from TIF for what will amount to a limited number of core cities. Some of those core cities have been announced today and are currently putting forward substantial and interesting proposal bids for this money. I have no doubt that it will work its way through the system.

Amendment 51 seeks a way to get TIF 2 reclassified as non-public sector debt, to which I say, “Oh dear”. Business rates are a tax, and taxes are uniquely established by the tax-raising power of government. Therefore, TIF 2 must be recorded as government borrowing. There is absolutely no choice to be made about how TIF 2 is accounted for—it is not the Treasury sitting on our shoulders here, it is the Office for Budget Responsibility that has made that decision. It is an independent body and has made very clear how this will score.

Furthermore, core cities that are successful in the TIF 2 competition will be undertaking additional borrowing that has not already been reflected in the Government’s local authority self-financed expenditure forecasts. The Government have been clear that we will need to limit the amount of TIF 2 that occurs so that the Government remain within the wider deficit reduction plans.

In respect of balance sheet issues concerning enterprise zones, the policy to allow rates to be retained within the zones will lead to an increase in the local authority self-financed expenditure forecasts and will be scored as public expenditure. As the business rates retention system does not start until April 2013, no costs have yet been accrued. The Government are working with local enterprise partnerships on forecasting these costs and will be discussing the detail with the Office for Budget Responsibility ahead of the Autumn Statement. That may give some substance for the noble Lord, Lord Beecham, who says I have not answered any of his questions. Given this, it is not possible to take TIF 2 schemes off the balance sheet, as the amendment seeks.

Amendments 52 and 53 would not only remove important controls from the system—I have already explained the importance of maintaining the Government’s fiscal deficit policy—but would add further layers of complexity to the operation of the scheme. That would potentially impact on all the calculations of central shares and precepting authorities, removing the certainty that precepting authorities would have about the income they were to receive in that year. Noble Lords will not be surprised when I say that I cannot accept their amendments. I will not be surprised if they say they are going to return to this at a later stage.

[Baroness Donaghy]

Can the noble Baroness clarify whether, when the Office for Budget Responsibility made clear that this could not be off-budget, it gave a full explanation as to why it said this, and whether the Government have to accept what the Office for Budget Responsibility says? I wonder if it is a swing of the pendulum against the outcome of PFI. Having a fuller picture of why that independent body said this might give us the opportunity to explore the subject further rather than just accept that it is closed.

[Baroness Hanham]

With regard to the point about whether we have to accept what it says, the answer is yes. The OBR advises the Treasury, but what it says pretty well has to be taken on board and dealt with in the way it says. I do not think I have a note at the moment of the reasons behind what it said. If they are in the public arena, I will make sure the noble Baroness knows what they are.

[Baroness Donaghy]

Does that mean that, on all subjects, every statement made by the Office for Budget Responsibility will be accepted by the Government?

[Baroness Hanham]

Sorry, I have to keep looking over my shoulder for. It would be better for me to quit looking over my shoulder and say that I will answer with detail in writing.