HS2 Update
Lord Smith of Leigh Excerpts(7 years, 6 months ago)
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Lord Ahmad of Wimbledon
As I said in the Statement, we have made certain changes on the actual route, which are based on the feedback we have been getting through different consultations and on the reports that we have had on the previous route in 2013. It is right that we take some time, because there are some major changes to certain elements of the Y route as it is. The consultation on that will not take an indefinite period of time: we are talking about up to March of next year. The noble Lord raises the important issue of the link into the city centre. I am sure he will acknowledge and respect the fact that the Government have listened and have sought to accommodate exactly the amendment that he sought previously.
Lord Smith of Leigh (Lab)
My Lords, I welcome the Statement made this afternoon and the Minister’s commitment to phase 2B of HS2. The economic benefits are in fact more than he said. He concentrated on the main regional centres but the recent publication from HS2 showed that the benefits will be wider than that and journey times will be improved. In fact the economic benefits will improve health in the north because people in work tend to be healthier. I want to press him on future investments and ask him to ensure that as the HS2 line will hit the west coast main line at Wigan, we will get improvements and an upgrade to that line. We do not want a 21st-century journey up to Wigan followed by a 19th-century journey to Glasgow.
Infrastructure Bill [HL]
Lord Smith of Leigh Excerpts(9 years, 10 months ago)
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Lord Smith of Leigh (Lab)
My Lords, in some ways the north-west is ahead of the game in handing over land to the HCA. When the NWDA was abolished by the Government, we had quite a large landholding for that agency, and the question was: what to do with the land? Rather than try to disperse it through a large number of local authorities, it was transferred to the HCA. That worked successfully, first, because these were pretty large-scale plots of land. They were originally designed for economic development and that was the purpose to which they were put. Secondly, the HCA operates on a local basis, so we were dealing with a local branch of the HCA; we were not dealing with any central bases in London. Thirdly, the HCA worked very effectively with local authorities. Therefore, any planning problems could be rapidly dealt with, and the HCA reported back to the North West Regional Leaders Board, which is a local authority leaders board, on what was left of the portfolio.
Therefore, I think that the principle of what the Government are doing is ideal. I do not think that the LGA—I must declare an interest as a vice-president of it—wants to undermine that, but it may be a case of horses for courses. There may be parcels of land which, by their nature, are small in scale and value and which would probably be better for the local authority to work with at its local level rather than the HCA, which operates on a regional basis.
I hope that, in replying, the Minister can reflect on what my noble friend said in introducing the amendment and can see whether there is a way forward on this matter.
Lord Tope
My Lords, the noble Lord, Lord McKenzie, said that this had been introduced as a probing amendment. I recognise that and will certainly be very interested to hear the response. I was particularly interested to hear the comments from the noble Lord, Lord Smith. I am quite prepared to accept that in this respect, at least, the north-west, or more particularly Greater Manchester, leads the way with the combined authority, which some of us think may well be part of the way forward for the rest of the country. The experience in Greater Manchester, to which the noble Lord, Lord Smith, has just referred, is certainly very interesting.
I was not terribly clear whether he was supporting the amendment of the noble Lord, Lord McKenzie, or supporting the probe, or saying that it is something worth exploring. It is certainly worth exploring. I hope that the Minister will agree to take it back and look not at why we do not need it or why it is not necessary, but whether and to what extent it would add to the available permissions for doing this. I think it is true that most local authorities, of whatever political persuasion and in whatever part of the country, are now keen to get on and make their contribution to meeting the severe housing need throughout the country. If an amendment or addition of this sort does anything to add to that, it must be desirable, even if it is not strictly necessary. I hope that on that basis, the Minister—although I suspect that she is not about to accept this amendment—will at least agree to take it back and give some positive consideration to how such an amendment or alteration might add one more weapon to the armoury.
High Speed Rail (Preparation) Bill
Lord Smith of Leigh Excerpts(10 years, 6 months ago)
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Lord Smith of Leigh (Lab)
My Lords, I should declare some interests, in view of the remarks of the noble Lord, Lord Cormack. I am a member of the National Trust, but it does not speak in my name. I am also the leader of Wigan Council, as most Members know, and chairman of the Greater Manchester Combined Authority. I confirm to the Minister that all the local authorities in Greater Manchester, whatever their political control, are supportive of High Speed 2 coming to Manchester. Indeed, it has the support of the business community in Greater Manchester. We have great support and are getting very positive comments from the consultation for Greater Manchester as a whole and, I am sure, for each and every one of the local authorities.
We support the strategic case that the Minister and other noble Lords have made. It is about capacity. Let us get this clear: it is about capacity on the railways in order for people to continue to travel. The growth that noble Lords have talked about, in both numbers of passengers and freight, means that we cannot cope with the existing infrastructure and we have to invest in new.
One of the alternatives, which noble Lords have talked about, is to try to improve capacity. That has been well established, but I can remember the misery of being a passenger on the west coast main line during its refurbishment. It was not much fun; I even missed an appointment with the Garter King of Arms to come into this place because the train was late, as was every train on the west coast main line at that time. Therefore, that is not really an option.
I am a former director of Manchester airport so one might think that the idea of increasing air transport would appeal to me. But we cannot possibly have the capacity at our airports to handle intercity transport within Britain; we want that capacity to be used for international connections and not for too many internal connections. We could not do it; it is not a possibility. Of course, in order to get to airports, infrastructure needs to be designed. Although I am sure that the noble Lord, Lord Heseltine, is normally correct, we actually built a new railway into Manchester airport to enable better connectivity.
Another option is to do something with the motorways. They are already congested and if we do not do anything to the rail system or to the motorways, we will just end up in gridlock. The impact of an increased capacity on the motorways, as the noble Lord, Lord Berkeley, said, is going to be far greater than anything that High Speed 2 would create. Therefore, High Speed 2 is really our only alternative.
We support the economic case even more strongly because of the benefits that we believe High Speed 2 will bring to cities such as Manchester. I am willing to take the gamble that it will not suck business out of Manchester; rather, it will create more activity in our city region. We think that the benefits of HS2 alone will be about £1.3 billion but, of course, the additional facility in Greater Manchester of the airport station will probably add to that by a further half a billion pounds. Therefore, HS2 could result in an increase in activity in Greater Manchester of almost £2 billion.
Piccadilly station is bang in the heart of Manchester and will help to regenerate more of the city centre. There will be additional benefits resulting from that and the regeneration will be important for Manchester. As the project is being constructed, as noble Lords have said, jobs will be created. We are already working locally to see what skills will need to be developed so that we can maximise the benefits of construction in Greater Manchester.
In Manchester we benefit from this national connectivity. As noble Lords have said, it is not just connections from Manchester to London—although that is clearly important—but Manchester to Birmingham, Leeds and other cities that will be greatly improved. We also recognise that we need to improve local connectivity and through the Greater Manchester Community Transport Forum, we are already investing considerable amounts of money into improving the tram system and the bus network so that people will be able to get access from across the conurbation into the new station at Piccadilly. The airport will provide us with international connectivity that will mean more jobs.
If we are serious about rebalancing the economy in this country, then High Speed 2 is really important. Otherwise, the south-east will tend to dominate, as it has done in the past. I particularly welcome the creation of the growth taskforce, which will concentrate minds on how we can best engineer that growth, and I am sure that the Minister is aware that we have two members of that taskforce from Greater Manchester who are, I am sure, making a contribution.
Noble Lords have hinted that in the early part of the 19th century, this country had a phenomenal period of building railways. In a period of 20 years we built about 6,000 miles of railways in this country, providing the basis of the network that we have today. We did it because we had the confidence and engineering skills, and we did it without the cost-benefit analysis; no Victorian asked “What will be the benefit?”. They just had the confidence that this thing would work—it did, and it produced the benefits for the Victorian economy that we can see.
On the whole, during that period, Parliament was supportive of railway developments. The only hiccup was when the first Manchester to Liverpool railway was mooted and turned down, and they had to reroute it so that it did not go across too much of the Marquis of Stafford’s land. George Stephenson’s ingenuity meant that he managed to get it to go across an impossible area of Chat Moss and to float the railway as he did, meaning that that railway could be built. Other than that, Parliament supported the building of railways during the Victorian period and I hope that we can do the same in this particular Bill.
I want to briefly mention, as noble Lords have done, this odd contradiction between what Britain thinks about high-speed rail and what other countries, particularly in Europe, think about it. Spain has already got 3,000 kilometres of high-speed line, carrying 29 million passengers. The Germans are planning a network of about 2,500 kilometres and they have about 78 million passengers. We are planning to get about 317 kilometres and we currently have 9 million passengers—somewhat behind Belgium. Then, as noble Lords have mentioned, there is France. France was the leader in high-speed rail, planning for nearly 5,000 kilometres. It has with well over 100 million passengers currently on the TGV system.
On holiday in France last summer, I was delayed by some construction work near Tours for a new TGV line. When I came home, I checked what was going on, and it was a new extension of the TGV from Tours to Bordeaux, eventually on to Toulouse and the Spanish frontier. They announced this on roughly the same day that my noble friend Lord Adonis was planning to talk about HS2. It will open in 2017. We are now at the stage of a paving Bill and the lines in the north will not be completed until 2033. The French seem to be able to do these things somewhat faster than we can.
My only criticism of the Bill and the Government’s plans—not just this Government but both Governments —is not that we are building it but that we are building it too slowly. Actually, we ought to be building the two phases together. I accept that the congestion on the southern bit of the west coast main line is causing the greatest pinch points and needs to be tackled, but the economic benefits are greatly needed in the north and should be considered. If the Minister wants to examine the relative spending on rail by region, she will find that in the south-east they are spending roughly £2,700 per head of population; in the north-west it is £178, so there is quite some way to go.
There are two visions of Britain in the future. One is a vision where we try to make do and mend with the current system; we accept that Britain will be a second-class country with a second-class economy and a clapped-out transport system. The other is a vision for the future, a vision for our children, a vision of a Britain that can compete in the modern world, and for that we need high-speed rail.
Growth and Infrastructure Bill
Lord Smith of Leigh Excerpts(11 years, 3 months ago)
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Lord Shipley
My Lords, in speaking to this amendment I first declare that I am a vice-president of the Local Government Association and, as your Lordships know, a government adviser on cities policy. This amendment would extend the city deals structure, potentially to all councils, and it would be a practical manifestation of what we passed in the Localism Act. I welcome that. The aim of this amendment is to boost economic growth, based on the core package for wave 2 cities. As the noble Lord, Lord McKenzie, explained there will be a confirmation, I think within a few weeks, of those wave 2 cities. However, the core package will be derived from the experience of those in wave one. I expect that that announcement will be made during March; I certainly hope it will be before Easter.
The amendment would mainstream the core package of the city deals. When the Deputy Prime Minister launched the wave two process at the end of October, he said that,
“while it’s too early to talk exactly about what a third Wave might look like, I very much see this”—
wave two—
“as a step in a journey”.
I have concluded that the door is ajar and that this amendment may well represent a means of providing it with a gentle push, for all the reasons that my noble friend Lord Jenkin outlined. There is a very clear base of evidence that if you localise, decentralise and devolve, you will actually drive faster economic growth if you provide local councils and their local enterprise partnerships with the statutory means of delivering that economic growth.
I have one caveat. Councils will need to show governance structures demonstrating their stability, their ability to manage risk and their ability to pool thinking and resources with their local enterprise partnerships and neighbouring councils so that driving growth in an area is seen as a collaborative process rather than a competitive one. I am particularly impressed by the governance structure that is in place in Greater Manchester, where the combined authority—enabled under legislation from 2009—provides a model that could be built on in other parts of the country.
Finally, on timing, if wave 2 city deal announcements are made later in 2013, this amendment will be implemented some time around the summer or autumn of 2014. As my noble friend Lord Jenkin said, this gives the Government an opportunity to consult and think further—but then to come forward with a means whereby the powers that are being given to a number of cities will actually be available to all of local government.
Lord Smith of Leigh
My Lords, I must follow the noble Lord’s compliments to Greater Manchester by speaking at this point. I need to declare my interests, which I repeat from Second Reading, particularly to mention that I am the chair of the Greater Manchester Combined Authority. I therefore support this amendment, which gets to the heart of the Bill’s Title—it is what the Bill should be about.
I took part in the negotiations with the Government over the city deal. It was a very interesting process. Obviously, we developed ideas on our own and in conjunction. The noble Lord, Lord Jenkin, is absolutely right that it needs to involve not just local authorities but the local business community. It takes a very special skill for many businesspeople to rise above their day-to-day work to have that comprehension of local economic policy, but in Greater Manchester we are fortunate to have many people who can do that. We rely on them and other partners such as universities, which are very important, too. On the key partners, we need to remind the Government that this is not a financial issue for local authorities. We are actually asking for devolution—not necessarily for more money but to have the money spent at a local level, where many of us believe it will be spent more effectively. In some cases, no money is involved at all; it simply gives us permission to do what we currently have to do.
The city deals work. They can harness the strengths of local partners and build on local knowledge, and they can be addressed to the local circumstances. I am sure that the city deal for Greater Manchester is different from the city deal for Newcastle, because the issues are clearly different. We will have some similar issues. No doubt skills are a very important part but, for us, transport was a key issue. As the noble Lord, Lord Jenkin, rightly said, this amendment mirrors the report of the noble Lord, Lord Heseltine. It is really beginning to address this point about freedom. At a meeting of the Greater Manchester Combined Authority on Friday, we were pleased that we were beginning directly to fund local businesses to take on new workers and expand, so the measure is working practically on the ground. It is not a theoretical thing, and I will be very glad to see the rolled-out programme.
Like the noble Lord, Lord Shipley, I am a bit concerned about the wording of the amendment because I would not like every local authority to have to have its own deal with the Government. That is not what the spirit of this measure is about. What we did very carefully in Greater Manchester was to think about the functional economics. What is an economic area that makes sense? As important and lovely as the great city of Manchester is, its geography is a very odd shape. It is very long and thin. It is not a functioning economic area. The centre of Manchester and the centre of Salford are very close together, so we need to go over local authority boundaries. I hope that in passing some version of this amendment, we can encourage local authorities to be co-operative, as the noble Lord, Lord Shipley, said, to work together to think about what is in the interests of their communities and to make sure that we start to deliver what all noble Lords want, which is more growth, more employment and more opportunities in the country.
Lord Greaves
My Lords, I am pleased to follow the noble Lord, Lord Smith of Leigh, because outside Greater London, Greater Manchester is probably the best example of a classic city region in this country. City regions suddenly became all the rage a few years ago under the Labour Government, and they are perhaps making a bit of a comeback now.
The problem is that when people get new ideas, they tend to regard them as a template that applies everywhere. There is no doubt that city regions can be very powerful places in democracy and growth, but the geography of this country is not the same everywhere. Even within England, there are places which it is difficult sensibly to allocate to a city region. The temptation is for people to look at the model and try to impose it everywhere, instead of asking about the geography of this country, which is very different in different places, and about the appropriate model given the geography of a region or sub-region.
A classic example is the towns of west Cumbria—Barrow, Whitehaven and Workington—and their local authorities, Allerdale, Copeland and Barrow. It is very difficult to say which city region they can be part of. Newcastle upon Tyne might have imperialist designs on them and pretend they are part of it, but they are clearly not, and they are equally clearly not part of the Greater Manchester city region, Merseyside or whatever. They are different. The largest places in those areas, including Carlisle, are smaller than the largest places in west Yorkshire or Greater Manchester, obviously, so the system that is used ought to take account of the geography of those areas. That is not to say that they should not have the kind of powers which are set out in this amendment, the powers that existing city deals have, which will, I hope, go on to get more; it is to say that central government has to get out of the mindset of trying to fit everybody into the same size bottle and accept powers have to be devolved to some smaller places because that is the nature of the economic geography and the economic regions in those areas.
It will not surprise noble Lords to learn that I think that east Lancashire is another area, not quite as extreme an example as west Cumbria, that is very difficult to fit sensibly into any particular city region. If we were forced into a big city region, it would be Greater Manchester, but we would always be peripheral and far too far out. Despite the wishes of some people in Preston, it is very difficult to claim that Lancashire is in any way geographically a city region with Blackpool out on the coast, Blackburn and Burnley, former county boroughs, further inland, Lancaster further to the north and then all the other places.
If this is going to be successful, it has to be accepted that it is not just the major metropolitan centres, such as Manchester, Leeds and Newcastle, and smaller but equally important ones such as Norwich, that are going to be the engines of growth in this country. They are probably the main engines of growth because of geographical factors, but the rest of the country needs a fair deal as well, and we do not want to be looking forward to a country where some areas are growing: the south-east and Greater London, obviously, but also those cities that have been remarkably successful in recent years, of which Leeds and Manchester are perhaps the leading examples. Those of us who live out in the sticks need a decent standard of life, a decent level of growth and a decent level of local services, just the same as everywhere else.
My final point is that it is more difficult institutionally where there is two-tier local government. In some areas, the districts are not important. District councils vary hugely across the country. There are some areas where shire districts are not really important within the economic development sphere, never have been and are never going to be. Some of them are quite weak rural authorities in that sense. There are other areas where they are the motors of economic development and the places were inspiration, motivation, ideas and people from the public sector and the private sector come from. I suggest that west Cumbria and east Lancashire are classic examples of this there the county councils traditionally have not had a very strong economic development role.
Local Government Finance Bill
Lord Smith of Leigh Excerpts(11 years, 10 months ago)
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Lord Smith of Leigh
I remind the noble Lord, Lord Palmer, that the Olympic Games’ security problems were caused because of the outsourcing of security. As the noble Lord, Lord Jenkin, reminded us, much of the council tax administration is also outsourced, so that may not augur well for us to get a successful conclusion.
I was interested in the point made by the noble Lord, Lord Tope, about his authority already being out to consultation. I question whether the timing is right. Amendment 73 proposes a change to the consultation, and other amendments might come through, so that the consultation that his authority has undertaken might not be the right one when an amendment is passed. That is the danger of rushing it too early.
I would welcome from the Minister in responding to the debate, in addition to answering the questions asked by my noble friend Lord McKenzie, a timetable for the publication of the Government’s default scheme. That would be helpful.
Lord Tope
I agree with the noble Lord, and frankly I was surprised when I saw it in the committee papers back at the beginning of June. However, the way in which my authority worked—and I played no direct part in this—was on the basis that the scheme had to be finalised by the end of January. Therefore, working back from that date, given the committee system that we have now adopted thanks to the Localism Act, it was necessary for the draft consultation to be agreed in committee in June. I am not arguing that it is desirable, and I accept that in the course of the consultation there may well be changes. I am quite sure that at the end of the consultation there will be changes as a result of the consultation, never mind any other changes, but unless local authorities start to get on with it now, they will get into difficulties with the timing. I say to the noble Lord that he may need to look at the timing in Wigan as well.
Lord Smith of Leigh
My Lords, I have received an e-mail that tells me that a factory employing 100 people on my patch is going to be closed, so that will give me more problems with the council tax benefit. Local authorities have got into trouble over reductions in expenditure in local authorities through legal challenges. Usually, consultations have not taken account of the equal rights of all groups of people, and that is really important. We need to make sure that we do not fall into this trap and create a minefield. Could the Minister give us a timescale for when the department intends to produce the default scheme? I think that might be helpful.
Baroness Sherlock
I would like to pick up where the noble Lord, Lord Shipley, left off because he made the point that I was going to make. I want to add just one thing. Irrespective of the debates about where the decisions should be located in general, the point about vulnerability is one that the Government brought into play. He said that the Government made a decision and said, in their own documentation:
“The Government has been clear that, in developing local council tax reduction schemes, vulnerable groups should be protected”.
The Government have put this issue out there, so it is not unreasonable for a local authority to say, “What do you mean by ‘vulnerable’?”. I spoke to one local authority last week that was extremely concerned that, almost irrespective of what definition it chooses, it will end up being subject to legal review because it will exclude some people, and it cannot imagine any way in which it could do that that would not have that consequence. In responding, the Minister may point out that a local authority could choose to adopt the default scheme and therefore the legal responsibility would lie with the Government, but that would work only if the authority has the resources available to be able to make good the difference. It does not apply to any other scheme or variation of it that it could take on.
I am very much with the noble Lord, Lord Beecham, who pointed out that there is a very real risk, in addition to the legal point, that the Government are raising expectations by reassuring everybody that vulnerable groups will be protected without explaining what that means. That makes it even harder for local councils to justify whatever decision they take that is short of the total quantum of vulnerability that could be defined out there.
I will make one final point, triggered by something that the noble Baroness, Lady Browning, said. One of the difficult areas in policy and one of the reasons why some decisions should be made centrally is that some kinds of vulnerability are not seen on a sufficiently large scale in an individual area for local councils to be expected reasonably to understand them and make prescriptions about them. It is analogous, perhaps, to health policy where, in commissioning, there will still be certain kinds of rare conditions that are dealt with centrally. Sometimes there are good policy reasons, even if one is being localist, to have guidance coming from the centre so that people can reasonably be expected to understand vulnerabilities that they may not encounter every day. Can the Minister perhaps address that as well?
Lord Smith of Leigh
My Lords, I have found this debate and the ones previously on Amendments 76 and 76A fascinating. I need to remind noble Lords that I am still leader of Wigan Council. Therefore, for me, this is not a theoretical debate. I will have to determine a scheme within my authority, with colleagues, that will decide who is eligible, who is not eligible, which group will be regarded as vulnerable and which group will not be regarded as vulnerable. It will not be easy. I was going to say that it is not a zero-sum game, but I remind noble Lords that it is not even a minus 10% game; it is a minus 20% game if we exclude pensioners. So we are lucky in that sense.
I find myself agreeing with much of what the noble Lord, Lord Deben, said about localism. I recognise what he said and I agree with it. Where I would differ from him and what we need to recognise is that local authorities come at this with very different needs in terms of the number of people who are receiving council tax benefits, as has been said earlier, and the potential changes, as I mentioned earlier. I already know from being in this meeting that I have 100 more people who will be regarded as needing council tax benefits as a result of their factory closing this afternoon. So these things are changing all the time, and we need to recognise that.
I have had some interesting solutions to my dilemma from various quarters today, such as applying reserves. The noble Lord, Lord Beecham, is absolutely right. My treasurer is already coming to me to say, “You are going to lose probably £500,000 on your council tax collection because these people are not going to be able to afford to pay the cost, so you have to think about that”. We have talked about the problems of increasing demands on council tax benefits as it becomes a local thing, and I think that the noble Lord is right that we will do it much better than it is done at the moment, so that probably will encourage more people who do not claim at the moment to start to claim.
Earlier in this Bill we talked about the problems of business rates and the fact that they will have some risk element, so we will have to put that in. We talked about the flexibility of council tax, which is a very interesting phrase. Perhaps the Minister could let me know whether he means by “flexibility of council tax” that he is going to allow me to put the council tax up and is not going to require me to hold a referendum. I cannot believe that anyone sensible is going to say that they are going to have a referendum to put council tax benefits up: “Please vote for it and you will pay more council tax”. We would never win that, so it is not going to work.
We have heard that we should make further cuts. In my authority I am planning £66 million of cuts over four years. The Government thankfully gave me some warning and we have them in place. If I now have to make more cuts to accommodate all this—probably between £2.5 million and £3 million-worth—where are they going to come from? What have I got to do that I am not already looking at? I need to remind noble Lords that it is the vulnerable groups who rely most on councils’ services. If I cut services to vulnerable groups, they suffer. I can put up daily charges or raise the qualification for receiving social care. All these things affect vulnerable groups and there is no easy solution.
The difficulty for me is this. Presumably all the people we give council tax benefit to are regarded as vulnerable people, otherwise we should not be giving them that benefit. If we start to define vulnerability—here I echo what the noble Lord, Lord Shipley, said, as well as the comments of other noble Lords about the needs of different groups in communities—the danger is that we will define who are the deserving and the non-deserving poor. In the future, there will be people who get council tax benefit support and those who either get less or nothing.
A lot of vulnerable groups have strong lobbying sectors, but the ones who do not get that kind of support are the working poor. I remind the Committee that we are talking about a marginalised and alienated group in our society made up of people who do not vote very much at the moment. But they could be tempted to vote by extremists who say, “We will listen to you”. It is happening in certain communities. People are listening to those who are giving them false promises. We know that Respect, which was mentioned by the noble Baroness, the BNP or whatever group it is will offer things that they cannot deliver. The result of this Bill and the way we will have to design the council tax support scheme will drive more and more people to the political extremes. Are we doing a good job here?
Lord Best
My Lords, I am provoked to give a short preview of the amendments tabled in my name that are to follow—but not tonight. However, I thought I might briefly whet appetites because they relate so closely to what we are talking about. I see that noble Lords are all agog.
These amendments are about more localism. They are about removing some of the inhibitions on councils deciding precisely how they want to raise the funds that will pay the £400 million the Treasury is waiting for. They are about whether pensioners are included or not included as a vulnerable group being decided locally. This is the point made by the noble Lord, Lord Deben. In my full and unamended speech I will say that there are many grounds on which pensioners might already be treated slightly more favourably than some of the other vulnerable groups. I will contend that in respect of the groups that are considered to be vulnerable, local authorities should have greater discretion, and suggest that local authorities should also have greater flexibility in how they raise council tax, not only in respect of the current discounts for empty and second homes, but in respect of single person discounts. I will explain that if local authorities were allowed to vary the single person discount, currently fixed at 25% and set centrally by diktat from Whitehall, some might choose to reduce that discount across the board to 20%, meaning that all those who currently receive it would have to pay another 46 pence a week. It is not a vast sum, but it would raise more than the £400 million across the piece and make it unnecessary for us to define vulnerable groups and get ourselves into all kinds of tangles in reducing support for the very poorest in our communities. In advance of moving those amendments and in the context of this debate, I thought that noble Lords might like to hear the preview.
Local Government Finance Bill
Lord Smith of Leigh Excerpts(11 years, 10 months ago)
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Baroness Sherlock
My Lords, the Institute for Fiscal Studies, in its excellent report, Reforming Council Tax Benefit, states rather drily:
“It is difficult to think of reasons why the government’s original plan to integrate CTB into Universal Credit was inferior to what is now being proposed”.
Later on, the report says:
“There is no simple way that making only minimal changes to CTB will allow the new council tax rebate systems to interact with Universal Credit in a coherent way”.
I and a number of other noble Lords here spent months sitting through the stages of the Welfare Reform Bill, now the Welfare Reform Act 2012. This country is spending billions of pounds to create it, and the Government are now creating a scheme that will not interact in any coherent way with that thing that the whole country has now been told to expect.
A number of questions need addressing, many of which were raised by my noble friend Lady Hollis in her very powerful speech; I will ask just a couple. First, how is universal credit as income to be treated in the new system? Do the Government propose to give any advice to local councils? There is nothing very straightforward about this, and it is one of the many questions that every council will have to address. If universal credit is not treated as income, that would be much simpler, but it means that people facing the withdrawal of universal credit in addition to the withdrawal of council tax support, as well as paying national insurance and tax, would stand to lose at least 90p of every extra £1 earned, as my noble friend Lady Hollis pointed out. The alternative is that councils face putting incredible pressure on those who least can afford to bear the burden.
My noble friend Lady Hollis pointed out very well, I think, why council tax benefit and its successors are not basically local benefits. The only thing different about them is the extent of the liability. The reason why council tax benefit is national is because all of the assessments made are related to the extent to which the individual needs help in paying that liability, and that, of course, is shown out. For example, in working out how much somebody should get in help or council tax benefit, the starting point is the applicable amount, as I am sure the Minister is only too well aware. I recommend to him the Welfare Benefits and Tax Credits Handbook, which shows that the applicable amount is the same for income support, income-based jobseeker’s allowance and income-related employment and support allowance; indeed, it is used as the basis for housing benefit and council tax benefit. The point is that council tax benefit is a national benefit because it is designed on exactly the same basis as all the other elements of a social security system related to the need to assess what help somebody needs to meet their outgoings.
It is also based on a national assessment by central government of the amount of money that somebody needs to live on. Separating that out from the rest of the system creates fractures in what has previously been a coherent system. Ironically, it is going in precisely the opposite direction of the creation of universal credit. The point of universal credit was meant to be to bring all the component parts together in one place in order to simplify it both for the individual and for those administering it. Yet now we have a fairly important part of the system that has been broken off entirely and done in a different way.
On 8 March, welcoming the Royal Assent granted to the then Welfare Reform Bill, the right honourable Iain Duncan Smith, Secretary of State for Work and Pensions, said the following:
“The Universal Credit will mean that work will pay for the first time, helping to lift people out of worklessness and the endless cycle of benefits. Whilst those people who need our help and support will know they will get it without question. Universal Credit will, from October 2013, replace the current complex myriad of means-tested benefits with a single benefit system. It will be simpler for people to navigate and harder for people to defraud, but most importantly it will make work pay. No longer will it be possible to be better off on benefits than in work”.
If I were a council leader, I would be asking the Minister this question: how can I structure my scheme of council tax support to do both of the things that Mr Iain Duncan Smith pledges on 90% of the funding? I can see that I could simply cut support to all but the poorest, but that would have the effect simply of reducing work incentives. I could try to protect work incentives, but that would have an effect on the poorest. That is the choice I have. So the question for the Minister is: how can a council structure it so that it can help the poorest to get the help and support they need “without question” and ensure that people are always,
“better off in benefits than in work”?
Can the Minister explain? I have every confidence that councils all around the country are waiting to hear the answer because those that I have spoken to have not been able to figure it out for themselves. If the Minister cannot answer the question, is she going to break it to Iain Duncan Smith, or shall I do so?
Lord Smith of Leigh
My Lords, I support my colleagues in their contributions, which covered some of the points that I was going to raise. We thought that in Greater Manchester, where we worked together closely, we would try to work out a scheme of council tax benefits covering the 10 authorities. It has proved to be absolutely impossible. The reason is that we all start from different financial positions and we therefore approach the onset of the council tax benefit scheme from very different situations.
The point that my noble friend Lady Hollis raised about the poll tax is something that we should not forget. In the days of the poll tax, the cost of collection took a huge amount of the revenue that was collected. That was the law, we had to encourage people to pay, and if they did not pay we had to go for them in ways that were not as satisfactory as one would have liked, but that was the only way we could go forward. It created the problems that my noble friend mentioned. The unintended consequence was that a whole load of young people disappeared from Wigan and neighbouring authorities. They never registered for the poll tax; they never registered to vote because that would have exposed them as being liable to the tax; and most of them were probably not too bothered about voting. Someone said they had all moved to Spain. Well, not that many Wiganers were moving to Spain at that time. Again we are introducing a system whereby local authorities will be collecting very small bills from people who find it difficult to pay. In her response, the Minister might provide us with a calculation of the estimated extra costs of collection.
On the point about risk, my noble friend Lady Hollis made it clear that for a local authority the situation is very unpredictable as regards council tax benefit. We can devise a scheme for it, as I am doing at the moment, but I can tell noble Lords that that is not an easy task. The outcome of that scheme is unpredictable because we do not know, even when we set it to start on 1 April, how many people will be eligible to claim the benefit during the year. Clearly, treasurers will be advising local authorities that they have to cover that risk with additional balances. They cannot make an assumption. My authority covers 300,000 people and is therefore relatively large compared with other authorities. The noble Lord, Lord Greaves, comes from a smaller authority, but if, as we mentioned last week, one of the factories in his area were to close, the impact upon the scheme in Pendle would be huge. The money would have to be found for that and, at the same time, as noble Lords will remember from last week, the authority would not be receiving the business rate to cover the increase in benefit—so there would be a double impact.
At Second Reading, the Minister suggested that we can pay for this scheme by the new proposal to end discounts on empty properties and second homes. It may come as a surprise to your Lordships but there are not many second homes in Wigan. It is not a preferred choice for people who want to buy second homes. Unfortunately, that is not a source of revenue that I look forward to collecting money from. What about empty properties? We have empty properties and some have been empty for some time. I therefore asked for some information, and the number is less than the Government seem to think it is. Empty homes in Wigan are a reflection of a number of things. One is the state of the housing market, which is in great difficulties and people who need to sell their houses cannot do so. Maybe they want to move away for work, or have done so and left the house empty, and still cannot sell the property because there is no demand; I notice that the noble Earl’s organisation, the Royal Institution of Chartered Surveyors, has today announced that house prices are going down, revealing the state of the housing market. It is not there. They cannot sell the properties that they wish to sell. Many are people who have inherited properties from their parents and, again, cannot sell the property. Many of these properties are on terraces, so not desirable for modern couples. I cannot believe that there will be a huge amount of money there.
Lord Shipley
My Lords, first, I do not share the concern of the noble Baroness, Lady Hollis, about the capabilities of local government and councillors. Councillors are perfectly able to produce fair and equitable council tax support schemes. However, one problem we have is that timescales are driving the publication of draft schemes very quickly. Inevitably, draft schemes that go out to consultation will be different. After all, lots of things that local government does are different. Council tax rates are different. It would not be surprising, given differences between local authority areas that there may be differences in council tax support schemes. However, timescales are likely to prove too tight. I think that there will be a problem over equalities impact assessments and the timescales that they require. I would prefer a start date of April 2014, but we will come to that in a moment.
The real issues remain financial support, the level of financial support going into those schemes, and the new burdens doctrine. Amendment 73A matters quite profoundly because we are having a debate about the 10% cut and how it should be applied, and I absolutely subscribe to the view that it cannot simply be loaded on to the working poor. I would prefer it, if it is to be applied, to be spread across council tax payers generally.
Secondly, it has become clear to me that 10% is at the low end of what the reality will be. It will be significantly higher than that and, for the reasons that my noble friend Lord Tope outlined, demand is likely to rise and the change of title from “council tax benefit” to “council tax support” is likely to produce more people applying for it. Economic conditions remain difficult and will continue being difficult for the next two to three years; therefore, more people are likely to be applying.
Thirdly, the fixed-grant system that the Government are likely to introduce seems dubious in terms of who will actually decide on which data the government estimates are based. I fear that the estimates of demand over the first two years of the scheme will prove to be understatement. Therefore, the Government should manage the risk. In the context of 28% front-loaded cuts in the current and previous financial years, which have had a great impact on councils’ ability to meet all their obligations, there is a major principle at stake. If we have a new burdens doctrine, it ought to be applied; otherwise there is no point in the Government having a new burdens doctrine. Given the sum of money involved—£500 million, 10% of the £5 billion annual commitment to council tax benefit—this is an acid test of whether the new burdens doctrine has a future.
I sincerely hope that the Government will look again at this whole issue. I have subscribed, in my role as vice president of the Local Government Association, to the view that if you are going to localise—we are trying to devolve and localise—it is entirely appropriate for local government to take responsibility for this. They are the ones who set council tax. Therefore, they are the ones who are capable and should be responsible for setting the level of council tax support, but they have to be able to do it in the context of knowing that that cash will be available and the risk will be managed against rising demand by a Government that is supportive of them.
Lord Smith of Leigh
My Lords, in principle I support the localisation of council tax benefit, but I do not support this scheme at all. It will have impacts, and my noble friend Lady Hollis has raised them clearly. She talked about the regional in-fighting that we will have. Certainly, we believe that it will be worse in the area that I represent and many other parts of the country—worse, even than the poll tax. When the poll tax was in place, it was relatively easy for me; I was only chairman of finance. When somebody came to me and complained about the poll tax, I could always say, “The Tories have introduced the poll tax”. We swept all the Tories off the council; it was very easy. But now, when they say, “What are you doing with my council tax benefit support?”, at the end of the day I will have to devise a scheme. That will be down to me.
Lord Smith of Leigh
It has been done to me. What options would we have in designing such a scheme? I have shared with my colleagues some of the initial thoughts that we have had in Wigan; we have not got quite as far as announcing what they will be. We will unfortunately not raise the money from the empty homes thing, so we will have to make some anticipation of where the costs will come from. Will they come from council taxpayers? I do not think so. I agree entirely with the noble Lord, Lord Greaves, we are not going to ask for an increase in council tax above the minimum amount that the Government will allow us to have in order to put money into council tax benefit. A referendum on that is certainly doomed to defeat. We will never try that. Will we make cuts in services to put more money into the council tax support scheme? That is an option but as my noble friend Lady Hollis mentioned, the impact of such a policy will be on the same group of individuals who should benefit. They are the people who need and rely on many of the council’s services that are already facing £66 million of cuts over the next few years. Where am I going to find the extra £2 million or so to pay for this? Or we could have to have a scheme that pays lowers benefits than the current scheme. That is very difficult because the people upon whom this will impact are the working poor. They are the ones who will really suffer from this—if we discount some of the vulnerable groups we will talk about in future amendments. I fear for some of the political consequences. The noble Lord, Lord Greaves, and I know of the kind of campaigning done by certain political parties, including the BNP, about people who are downtrodden. They say, “No one thinks about you. Here you are, you are poor and you live in these difficult communities”. Such parties could campaign on those issues.
Earl Attlee
My Lords, I will cover that in my concluding remarks. The noble Baroness, Lady Hollis, suggested that schemes would be determined on the basis of councillors’ prejudices. I refute this, as does my noble friend Lord Shipley. Schemes will have to be constructed by the council, not on the basis of individual councillors’ prejudices. They will not be in a position to take decisions on individuals but will agree to the best system after considering any changes they think they need to make to the current scheme—or they can use the default scheme which, as noble Lords know, is more or less the current scheme.
The noble Lord, Lord Smith of Leigh, made an interesting observation. He said that he supported the localisation of council tax benefits, but not this scheme. If that is so, what scheme would the noble Lord support?
Lord Smith of Leigh
One that is fully funded, so we do not have to make local authority cuts.
Earl Attlee
My Lords, we would all love to have a fully funded council tax benefit scheme.
Local Government Finance Bill
Lord Smith of Leigh Excerpts(11 years, 10 months ago)
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Lord Smith of Leigh
My Lords, I will speak to the amendment in my name. I am glad to follow my noble friend Lord McKenzie and support the arguments that he used. Before I come to the detail, I declare my interest in this matter. I am leader of Wigan Council, chair of the Greater Manchester Combined Authority, vice-chair of SIGOMA and vice-president of the LGA. I can see that I am not alone in that.
Looking in detail at the Bill, Clause 1(7) clearly gives the Secretary of State some flexibility to defer introducing the Bill. Therefore, I tabled my amendments for two purposes. One was simply to try to understand—and I hope that the Minister can help me in her response—under what circumstances and when the Secretary of State may use the power under this clause. More importantly—again, I want to follow up the points raised by my noble friend—if local authorities want to change the funding system, they want to do it well. However, we have to accept that if we do not let them know what the new system of funding is by a certain point during this year, it will be difficult or impossible for them to implement it by 1 April next year.
I have chosen 30 November as the cut-off date as that gives local authorities four months in which to plan and make sure that computer programmes and so on are able to cope with the technical aspects of the Bill. Those are not yet in place and cannot be until all the details and statutory instruments are available. If we leave it much later than that, we will be getting towards the end of December, although as far as government is concerned the middle of December will probably be the latest date because Christmas will intervene and not much will be done then. If we respect the fact that local authorities will have work to do on this part of the Bill, and probably more informally on some of the later parts of the Bill, then we need to be honest, say that we cannot achieve what this House needs to achieve by a certain date and not go forward.
Lord Jenkin of Roding
My Lords, before my noble friend replies to the debate, I should like to add a word. The noble Lord, Lord McKenzie, quoted a passage from London Councils’ briefing, which we have all received. I and my noble friends have tabled a number of amendments—to which we will come later and to some of which the noble Lord has added his name—which recommend a marked change in the structure of this division of the business rate. London Councils—I should declare an interest as one of its presidents—has indicated to me that on balance, with regard to this part of the Bill dealing with the business rate retention scheme, it would be a little upset if the date were postponed.
A lot of work is being done on this by London Councils and there has been a good deal of discussion about the pooling arrangements that may be appropriate. Although it is not put as a very firm and immutable point of policy, its view is that 2013 for this part of the Bill is right, and I think it would regret it if the date were changed. I draw a very clear distinction between this and the later part of the Bill dealing with the council tax, where there is still an enormous amount of anxiety that councils will simply not be ready with their own local schemes. However, we shall come to that later. I think that I should let the Committee and my noble friend on the Front Bench know that on balance London Councils would regret a postponement of Part 1.
Lord Smith of Leigh
My Lords, I welcome the Minister’s reassurances that information will be in the hands of local authorities—we will test that on Report in October when we can see what happens. I do not think that I ever said that I wanted this provision to be deferred; I simply made the point that a stage will come when it is too late. The Minister herself said that, in using the word “extremes”. I would be interested to know what those extremes might be that would delay the provision from 1 April. She also thinks that there could be circumstances that lead to delay. My point was very simple: as long as the information is available so that we can put it into place, that is fine. But we will obviously be able to test that out.
Lord McKenzie of Luton
My Lords, I thank the Minister for her response to the amendment, which I will in due course withdraw. I follow on from the wise words of my noble friend Lord Smith, who has incredible practical experience of leading a major council. I was unclear from the Minister’s reply whether we had the assurance that all draft rates will be available by the time we get to Report, or all the information needed. There is not necessarily a position on that; all the information that somebody needs is one thing, but seeing it in terms of regulations that will, we hope, in due course go through the parliamentary process is something else. The Minister said that the timeframe is consistent with the current timeframe of the local government financial settlement. Well, yes—but this is not a routine local government finance settlement. It is a significant change, so aligning it timewise is not necessarily appropriate. The noble Lords, Lord Tope and Lord Jenkin, both said that there would be disappointment if there was a deferment. That may be the view of some but I know that it is not the view of everyone.
I am not sure that we fully covered the issues raised by my noble friend Lord Beecham and the noble Lord, Lord Palmer, about reserves, particularly the issue around CIPFA advice. It would be good if the Minister covered that before we put this matter to bed.
The noble Earl, Lord Lytton, again made a very powerful point. I was struck by his contribution at Second Reading. Summarising the concerns, he said that risks are about to be bestowed on billing authorities but the maintenance of the tax base is with central government. That mismatch is a real issue. Later in our deliberations we will come to some amendments that may enable us to go into that, but I am not sure that there is not a broader issue about having the ability to test the appropriateness of the rating system to bear the weight of this new way of dealing with local government finance. However, we will have to see when we get to those amendments.
Perhaps the noble Baroness would deal with the issue of reserves and clarify whether we are talking about draft regulations or about information in another form. We have had lots of statements of intent, which have been very helpful, but they do not amount to fine detail. If we have draft regulations by Report, when is it expected that they will come into effect? What is the rough timetable?
Baroness Hanham
I return to the fact that unfortunately I did not hear, and do not know, what the Secretary of State was referring to. Of course, reserves are part of local government finance and part of control systems in local government. I should like to make some further inquiries about how that interlinks, if it does, with what we are talking about—the business rate retention scheme—so that I do not mislead the Committee. I know that the provision and use of reserves—and sometimes councils have large reserves—could potentially be used to help to ease the current financial situation. I shall not say anything more about that because I do not know what was said but I shall come back to it.
I was also asked about the police authority, and again I apologise for not picking that up. As I understand it, and I shall write if I am incorrect, the police authority will make the precept because it will be in place until November. It would be pretty unreasonable to ask a new police commissioner to come in to sort that out in the short time available. Therefore, what he or she inherits from the police authority will be what goes forward for the first year. After that, the police commissioner will set his or her own precept. I am not being prodded from behind and being told that that is incorrect but I will let noble Lords know if it is not correct.
Lord Smith of Leigh
I am sorry to intervene again, but that contradicts what I was told on Friday. Because of the problems of timing, the police commissioners would want to set the budget for the year from 1 April. In fact, I have just written a letter to the Home Office to ask whether we can do something about that because it makes timing very difficult.
Baroness Hanham
If there is a disagreement on that then I must make sure that we know the answer. I have given the answer that I think is correct.
Lord Smith of Leigh
Lord Smith of Leigh
My Lords, I shall also speak to Amendment 17, which is in this group. In tabling Amendment 9, I was intrigued by the language being used in the schedule. We obviously understand what “may not exceed” means but the implication is that it may on occasions be less than that figure. I am intrigued to know on what occasions it might be less and why. What did the Government have in mind in drafting this? If they did not mean it ever to be less then presumably they would have used the words that I use—“shall equal”. This is a probing amendment and I do not want to speak further to it.
Amendment 17 is more substantial. One thing that I think local government has welcomed over recent years is that we no longer do quite the procedure that the Minister outlined, and that in announcing a settlement for a year, Governments have given indications of what the settlements are likely to be in two subsequent years. The benefit of that to local authorities in terms of future planning and what they need to do is very important. In my own authority, under the current arrangements we now have a four-year plan and have to reduce expenditure by £66 million, which is 28% of our budget. It is not easy and we are trying to make sure that it happens. However, we could not take out the expected sum on an annual basis unless we knew what was intended for subsequent years. We have to plan to remove £20 million-odd this year and £18 million next year, so it is really important.
In keeping with the tradition that has grown up in local government, I am asking in this case that when a particular year’s settlement is announced we will be given indicative figures for future years, or at least for the next two years. That would enable us to plan the system much better than if we were simply told on an annual basis. As I say, this has been a real improvement which I think has been welcomed by all sides in local government, and I hope that the Government will maintain it.
Lord Jenkin of Roding
My Lords, the noble Lord, Lord Smith of Leigh, has made a point but I am sure he would agree that it is a fairly narrow one, whereas some of the other amendments in this group raise wider issues. Perhaps I may step back for a moment to remind the Committee of what the problem is that we are talking about. There can be no doubt whatever that when the Government published their position paper, Business Rates Retention Scheme: The Central and Local Shares of Business Rates, there was very substantial disappointment on the local government side at the figure of 50% as the split between the local and central shares of the business rates. The arguments were well rehearsed at Second Reading but I will remind the Committee of the two main arguments.
First, it is recognised that the higher the local share, the stronger is the incentive to encourage development and therefore growth and jobs. Indeed, the Government’s document more or less admits that, and the tables they have produced show that that is the case. One is talking here about a broad feature of national economic policy. The second argument is more specific, and is directed at the consequence of the division. As was said by a number of noble Lords at Second Reading, the result is that priorities are still being substantially determined centrally rather than locally. It has increasingly been the declared policy of the Government to achieve more local decision-making and more local control over their affairs and finances. At Second Reading, I warned my noble friend that she might hear some of the same arguments with which she was assailed during debates on the then Localism Bill. We were able to make a certain amount of progress on that. There were a number of quite significant amendments which strengthened the localist case for more local decision-making. I hope that we might perhaps have a similar result here.
There has been a good deal of discussion within the local authority world of how one could change the position to give the authorities the prospect of an increased share in future. A number of proposals were put up, some of which have found their way into other amendments. When discussing this with the Local Government Association—I ought to have declared a long time ago that I am a vice-president of that—
Baroness Hanham
And I had better write to the noble Lord, I think. That seems pretty fair.
I was asked about the specific grants. The funding will be from the central share and the finance for specific grants, and that will include the revenue support grant. I will write on the specific grants that already exist and tell the Committee what is included.
The noble Baroness, Lady Eaton, asked about the local authorities’ pool and how the money gets distributed if they go into one with others. Frankly, that will be a matter for the pool to decide; they will regulate themselves. We would expect there to be a local government lead on that so that they can receive payments and that formal arrangements would be agreed on the operation of a pool, so it will be governed by some sort of constraints.
The noble Baroness, Lady Hollis, asked who paid and who gained, but that rather depends what you mean by who pays and who gains. We have always said that no council will be worse off as a result of its business rate base at the outset of the scheme. That was what I was trying to explain about the base, the tariffs and the top-ups. I am sorry if I did not come across well, but that is what the situation is. The information that the noble Baroness sought will be available at a point of the draft local government finance report. That will be my answer to some of the questions: that the information will be ready for a bit later on, I hope before we consider this matter further. I hope that that covers the points made.
There have been a lot of discussions, some of which we will come to on further amendments. I note what the noble Lord, Lord Tope, said about local government’s disappointment regarding the split. I appreciate that that is the situation, but we ought not to ignore the fact that by making the local business rate stay with local government, even if things are then done to it, we are setting a very sensible principle: giving the business rate to local government and maintaining it with it. That principle can then be worked on in the future, regarding how much is left. However, I think we have established an important principle here. I hope the noble Lord is happy to withdraw the amendment.
Lord Smith of Leigh
My Lords, that was a very interesting grouping of amendments, which received a wide range of contributions. I congratulate the Minister on the scope of her responses. She gave a full and helpful answer on the first amendment that I moved, Amendment 9. I will obviously read what she said in Hansard, and if necessary come back. She was definitely trying to be helpful in understanding it. However, she did not really respond to Amendment 17. She noted at the time that she was not sure whether there would be continuity, but perhaps she would like to write to me on that one.
I thought that the debate was really interesting, because it got some way to the fundamental parts of the Bill. The contributions of the noble Lords, Lord Jenkin of Roding and Lord Greaves, seemed to be a contradiction. We all want the Bill to achieve growth in local areas for the country. However, to use a Lancashire expression, I say to the noble Lord, Lord Greaves, that 50% of nowt is nowt and 100% of nowt is nowt. Therefore, it is not really going to help in those areas where there is no growth.
Lord Smith of Leigh
Yes, you do get the negative. I am afraid that the risk is there as well, but there was a safeguarding scheme. However, if that stays at 10%, it could be very significant. There is a contradiction.
My noble friend Lady Hollis’s contribution was about accountability. That would be the phrase that I would use. She described what happened with the business rate in the old days. There was a real accountability between the levying authorities and local businesses in discussing what was involved. Now, when we have a situation in which 50% of the money is disappearing and there is clearly a lack of understanding about the current system, as my noble friend Lord Beecham said, I suspect that businesses think local authorities set the rate because they collect it. We are the responsible agents in collecting the money, so clearly if the Bill comes in the name of the local authority, businesses will assume that that is where the money is going, and not that local authorities are simply a receptacle for transferring the impact onwards.
One of the Minister’s comments is at the heart of this: she said was that if we get the base, we can try to get people equal against the base. But my contention is that if the base is not right, inequality will just be built into the system. If the issues and the problems that the noble Lord, Lord Greaves, mentioned as existing in his area are not reflected in the base, it will not be fair. I beg leave to withdraw the amendment.
Civil Aviation Bill
Lord Smith of Leigh Excerpts(11 years, 11 months ago)
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Lord Smith of Leigh
My Lords, I declare my interest as a former director of Manchester Airport, and currently a member of the shareholder committee of that airport. I have, perhaps, a different perspective to some Members who have already spoken here.
Manchester Airport serves 200 of the 400 destinations the Minister mentioned, which is, I regret to tell my noble friend, more than Heathrow. However, my different perspective does not stop me from giving general support to this legislation. I think it will enhance civil aviation overall. I am particularly glad that the Minister, in his introduction, mentioned the change in governance to the CAA, as I think that could be equally important to some of the other parts.
Until we managed to get ourselves de-designated, Manchester was also covered by the 1986 acts of designation, and I remember those times as being ones of great expense for the airport, and a lot of time-wasting, though we did manage to provide employment for a great number of very highly paid lawyers. Essentially, the results of the quinquennial reviews, when we had them, were probably less onerous on us than the market conditions forced us to implement. So of course, we were pleased to be de-designated, and I am sure the same will be true for other airports.
I wonder whether we ought to reflect the new role the CAA has, and change its name to Ofair. The CAA, in exercising its role in economic regulation, needs to bear in mind two points. First is the relationship between airports and airlines. I think that relationship may best be categorised as that of an elderly married couple, who realise they need to stay together but constantly bicker about who causes the most difficulties. I think we need to recognise that that will go on, under the new regulation scheme.
Secondly, I think we should recognise—as many other noble Lords have mentioned—the importance of aviation in terms of the wealth and employment opportunities it creates in this country. It facilitates trade, as the Minister said, and acts as an international gateway for people coming into the country, and for us getting away. Manchester contributes some £3 billion to the UK economy, and supports around 100,000 jobs. However, the sector is very sensitive to the economic climate, and in yesterday’s Times I saw two reports about this. The first was about how the domestic aviation market has reduced by 20% in five years, and the second was a report that European airlines’ losses are expected to double during the current year—not profits, but losses. The competition that the aviation industry faces is not bound by our national borders, and we need to recognise that the competition that many of our airports face is not just between Gatwick and Heathrow and Manchester, but rather within the European aviation industry.
Unfortunately, I do not think we have a level playing field in this country, because of the air passenger duty. Research that we commissioned in Manchester demonstrates both the damage to UK aviation that that does, and that it particularly damages regional airports. We have evidence that a flight that was planned from Kuala Lumpur into Manchester was diverted into Paris-Orly because they do not have to pay APD there. Also, the price sensitivity of customers at regional airports tends to be higher than in the London region, where there is a high proportion of business traffic. Hopefully, with the greater independence of the CAA, it will actually think about how aviation can develop, and look at the APD as an issue for aviation.
Security is clearly an important part, and I think we all respect that aviation is in the front line of the war against terrorism. It is important, therefore, that the Secretary of State retains the important role of responsibility for this. Airports have co-ordinated with and co-operated with the Government in implementing security matters, and in fact have gone beyond what was required by the Government. Manchester is running a pilot of whole-body screening, which may be an important way forward. To be effective, security needs full co-operation between partners and a proper exchange of information about objectives. I wonder whether some of the problems that we have experienced with border control, mainly at Heathrow but also at other airports, are evidence that we do not always get that co-operation and co-ordination. We can see the consequences. In passing over security to the CAA, we should ensure that we can demonstrate that this will not create more bureaucracy but will improve the situation. When it was responsible, the DfT listened carefully to the expert views of airport staff. Presumably the CAA will continue to do that in future.
The changes in the Bill will obviously involve increased costs for airports. Briefings I have read put the figure at up to 4p per passenger. That may sound a relatively trivial amount, but currently the charge is less than 1p, so from 1p to 4p is quite a large increase. For an airport, it will be a sizeable amount of money to pay. The Minister may want to consider whether it will be appropriate to bring in those charges all at once. I ask him to think in particular about the impact that the charges might have on some of the smallest airports in the country, which are struggling at the moment and should perhaps be considered as a special case.
The Bill also assumes that regulatory charges on airlines will be met through airports. Perhaps that seems logical to the Government and the CAA, but why should airports become responsible for those charges? I am not sure about the assumption that in the current age they will be able to pass them on to airlines. Why does the Bill not simply give powers to the CAA to charge the levies directly to airlines, rather than going through the middlemen of airports?
Will the Minister explain—if not tonight then some other time—the thinking behind Clause 7, which gives market powers in relation to airport areas. “Areas” is an interesting word. Perhaps most of us would have thought that it meant “terminals”. I am not sure that competition between terminals will produce a more effective or efficient use of resources than the current planning system. Airports have invested in their facilities and want the maximum return.
Finally, I agree with the comments of the Transport Select Committee on publications from airports. The powers are too widely drawn and risk creating bureaucracy and additional costs to the aviation industry, while the benefits are less tangible. Airports should be open and transparent, and most are. After our earlier discussions I checked on the websites of Manchester and Gatwick airports. Both already publish substantial amounts on environmental policies. We should be very careful that we do not simply expect airports to do things that the CAA thinks are helpful but which do not really mean anything.
The CAA briefing on this matter gives an interesting analogy. It quotes a number of things, such as the publication of documents about the fuel efficiency of cars, which have affected consumer behaviour. That is probably the case, because consumers pay the costs of running their cars. However, in this case, if the consumers are passengers, they do not benefit from environmental information, even though it may be important and interesting to some of them. The reason that there is much more interest now in carbon reduction measures in aviation is that reducing carbon is not only seen to be a good thing but is cost effective. Airports spend less on energy and save a lot of money.
This is an interesting and important Bill. It needs to be improved in Committee, but in general I welcome it.