Thurrock Council: Best Value Inspection Report

Lee Rowley Excerpts

Thursday 15th June 2023 Written Statements

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I am today publishing the best value inspection report into Thurrock Council, authored by their inspector, Essex County Council. The final version of this report was submitted to the Secretary of State on 19 May 2023, following a representations process whereby any particular individuals criticised were given an opportunity to read and respond to those relevant parts of the report before it was published.

This publication follows my update to the House on 16 March in which I confirmed that the Secretary of State for Levelling Up, Housing and Communities and I had formally expanded the Government intervention in Thurrock Council, appointing Dr Dave Smith as an independent managing director commissioner, and providing commissioners with further powers over Thurrock’s governance and staffing functions.

The best value inspection report details widespread failure in Thurrock Council’s financial, governance, and leadership functions. The challenges facing Thurrock “stem from a series of self-sustaining, systemic weaknesses which have allowed for repeated failure over many years." Although individual officers and members made significant mistakes, particularly in relation to financial investments, they were operating within broken systems at the council which are in urgent need of reform and improvement.

The report clearly sets out the events which led to the collapse of the council's commercial investment strategy last year, after that strategy was allowed to operate in an environment with wholly inadequate scrutiny and governance arrangements.

That failure has had profound consequences for the council’s financial sustainability, and the inspection report confirms that Thurrock is unable to balance its budget without exceptional financial support from Government, which has now been granted in principle for the financial year 2022-23. Going forward, the report makes it clear that in addition to realising extensive efficiency savings, the council will have to review the scope of its local services.

The report reveals that the pattern of failure which has characterised the council’s approach to commercial investment can also be seen in its delivery of major infrastructure and regeneration projects. These failings have resulted in the loss of substantial sums of public money. The council’s lack of openness and transparency prevented these failings from being properly scrutinised, and these losses were often concealed, or not properly reported.

The report concludes that these failings are attributable to the breakdown of political and managerial leadership; inadequate governance arrangements; and profound weaknesses in the council’s control environment.

The Government’s Response

The best value inspection report makes a number of recommendations, some of which pertain to actions that the council should take, for example to expand the scope of its improvement and recovery plan, and some of which relate to expanding the powers of commissioners.

I am pleased to confirm that the majority of the report’s recommendations have already been addressed by the expansion to the intervention I announced on 16 March, which provided commissioners with the powers to drive forward change in Thurrock council’s finance, governance, and staffing functions, which the report highlights as areas of particular concern.

The recommendation in the report on member development, and the importance of engaging residents in local democracy, accords with the concerns about leadership and member training raised in the first commissioner’s report and best value inspection update letter. The importance of strengthening member capacity at the council cannot be overstated, because all members will have a vital role to play in the council’s recovery. I expect Thurrock council to carefully consider this recommendation, and to work closely with commissioners to ensure that it is taken forward, for example, by being incorporated into the council’s improvement and recovery plan. I would expect that equally close attention is paid to the section of the report which focuses on the council’s delivery of major projects, where there are clearly lessons to be learnt.

The report also recommends that Thurrock council change its scheme of elections, from electing its members in thirds, to “all-out” elections, where all members are elected at the same time. The report recommends that if the council does not make this change by 31 July, that the Secretary of State should consider making an order under section 86 of the Local Government Act 2000 to secure this.

Given the pressing need to bring stability to the council, the Secretary of State has concluded that he wishes to seek representations on using his powers under section 86 of the 2000 Act, to bring about a move to whole council elections from May 2025. The May 2024 elections of one third of members will go ahead as planned, to ensure residents have the opportunity to have their say. It is important that Thurrock council can express its view on this proposal before a final decision is made. I have written to the leader and commissioners of Thurrock council today to notify them of the Secretary of State’s proposals, and representations should be received, from the authority or any other interested party, by 29 June.

This report lays bare a rare but significant case of a council failing to comply with its best value duty across several fronts. As I noted in my statement to the House on 16 March, I am hopeful that the recent expansion to the intervention will help the council to address the concerns set out in the best value inspection report, and to continue its vital work to improve the way in which the council is run.

The people of Thurrock deserve a well-run council that can fund the delivery of good-quality services in a sustainable and responsible way. Progress has been made in recent months but this will require significant improvements in the COUNCIL’S leadership, finance, and governance functions at both the political and managerial level. Commissioners will play a significant role in securing these improvements and informing Ministers’ ongoing response to the situation in Thurrock. The Secretary of State and I look forward to receiving the commissioners’ second report at the end of this month.

This will be a challenging time for Thurrock’s officers and members as they reflect on the findings and recommendations of the best value inspection report. The Government will continue to work closely with Thurrock council and its commissioners, and we remain fully committed to supporting them in their improvement journey.

A copy of the best value inspection report will be placed in the Libraries of both Houses.

[HCWS852]

Draft Building Safety Act 2022 (Consequential Amendments etc.) Regulations 2023

Lee Rowley Excerpts

Tuesday 13th June 2023 General Committees

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I beg to move,

That the Committee has considered the draft Building Safety Act 2022 (Consequential Amendments etc.) Regulations 2023. 

It is a pleasure to serve under your chairmanship, Sir Robert. The regulations will make technical but important changes to the language used in existing legislation, bringing it into line with the new terminology and processes introduced by the Building Safety Act 2022.

I will start by providing some context. After the Grenfell Tower tragedy, the Government recognised the need for an overhaul of our building safety regime. The Hackitt review identified the need for significant change, including recommendations focused on the building control process. Part of the Government’s response to those building control recommendations included the introduction of provisions in section 33 of the 2022 Act that repeal section 16 of the Building Act 1984. The Government consulted on those provisions and they were subject to pre-legislative scrutiny ahead of the laying of the 2022 Act.

Section 16 of the 1984 Act made provision for the deposit of plans with local authorities before starting building work, as well as the passing or rejection of the plans. The information provided to building control was not always consistent, nor was it always sufficiently detailed for the work being carried out.

Section 33 of the 2022 Act—that section is yet to be enacted—repeals section 16 of the 1984 Act and provides instead for a new system of applications for building control approval. For higher-risk buildings, that effectively means a more stringent system that makes the Building Safety Regulator the sole building control body. Applicants cannot proceed with work without having explicit approval from the regulator. For non-higher-risk buildings, there is no significant change from the existing procedure. Local authorities and approved inspectors will remain responsible for supervising that work, and work can begin before approval is granted.

[Hilary Benn (Leeds Central) (Lab)]

As the Minister and we all know, one thing that we have learned during the cladding crisis is that there are loads of jerry-built buildings that were not built according to the building regulations at the time. Will he explain how the new system and the role of the Building Safety Regulator will ensure that, in future, the basic rules are indeed followed, not just when the plans are submitted and approved, but so that the buildings are built according to those rules?

[Lee Rowley]

I am grateful to the right hon. Gentleman for his pertinent question. He is absolutely right that we have to bring in new regulation and ensure that that is effective, compared with what happened previously. The purpose of centralising everything in the Building Safety Regulator for buildings that are over 18 metres is to make sure that there is a consistent approach. That approach will take the form of a multiple-stage process, known as gateways, whereby the developer is required to have an interaction with the regulator to make sure that the system works as it goes along. For example, for gateway 0, initial plans have to be submitted for consideration and comment by the regulator, and the exchange goes backwards and forwards. It is a much more iterative and discursive-based approach. There is also a stop in the process, whereby if the Building Safety Regulator is not content with what is happening, approval will not be provided to allow the developer to continue.

[Hilary Benn]

I am grateful to the Minister for that explanation. I have a follow-up question: what will that mean for inspection? This is about what the builders are doing on any given day, including putting in or not putting in the fire break—in many cases, they did not do that, even though it was in the plans. What role will the building safety inspector have in ensuring that, as the buildings are built, they are inspected to see that what is on the plans is actually built?

[Lee Rowley]

I am grateful to the right hon. Gentleman for raising that question. That will be in subsequent gateways and a subsequent part of what the Building Safety Regulator does. We are introducing a succession of regulations and statutory instruments, and on top of that, the Health and Safety Executive, which is where the Building Safety Regulator sits, will provide further information and guidance, and so on. That is a very important question, and the answer will become clearer in the coming months. If the right hon. Gentleman has any remaining concerns or suggestions from his experience, I will be happy to consider them and pass them back to the HSE.

[Alun Cairns (Vale of Glamorgan) (Con)]

The right hon. Member for Leeds Central makes some important points, but as the Minister introduces further guidance associated with the regulation, will he agree to work with the industry to ensure that the additional red tape that is necessary to meet the safety needs does not inhibit business development and the construction industry adversely, adding costs well in excess of what was envisaged? Will he work with industry to come up with novel solutions in respect of how to meet the need, but not at an adverse cost?

[Lee Rowley]

My right hon. Friend makes an incredibly important point. We have to ensure that the regulations are effective in solving the problem, which manifested itself in such a tragic way a number of years ago, and that they do so in a way that ensures that we still build and that developers can still bring forward the houses that we badly need for the next generation. We have started that process. A couple of a months ago, I spoke at a conference convened by the Health and Safety Executive—where there were nearly 1,000 people from the industry, regulators and local councils—to make sure that that conversation is under way. We need to continue that and ensure that there is clarity on that issue.

The purpose of the regulations is to align the Highways Act 1980, the Clean Air Act 1993 and 13 local Acts with the terminology and processes that will be established when section 33 of the Building Safety Act is enacted. Provisions in the Highways Act that relate to the payment of charges for street works when building control plans are deposited are amended to refer to the new system for building control approval.

Section 16 of the Clean Air Act is also amended. That section requires local authorities to check the height of proposed chimneys to ensure that they are tall enough to prevent smoke and particulates from becoming prejudicial to health. The changes replace references to the deposit of plans with, again, references to the new process for building control approval. Similarly, 13 local Acts are amended to do the same. Of those local Acts, 11 contain provisions relating to appeals to the magistrates court. To align the Acts with the new procedure for appeals, the provisions are amended to direct those appeals to the first-tier tribunal.

This instrument also contains a transitional provision to ensure that consequential amendments do not apply to plans for building work that were deposited before the date on which the regulations come into force.

I say to the right hon. Gentleman for Leeds East—

[Hilary Benn]

Central.

[Lee Rowley]

Central—I almost got my points of the compass correct. To address the question from the right hon. Member for Leeds Central, I reassure all right hon. and hon. Members that they will be provided with the opportunity to scrutinise the new system’s specific requirements—we have talked about this briefly today—for applications for building control approval. Those were subject to a consultation in 2022 and will be set out in a number of statutory instruments in the coming months. The Government intend to bring the consequential amendment regulations and the regulations that create the new system into force in the autumn.

Without these consequential changes, the provisions of the Highways Act, the Clean Air Act and the 13 local Acts will not operate as they do now, as they will no longer have meaning once section 33 of the Building Safety Act is brought into force. For that reason, I commend the changes to the Committee.

--- Later in debate ---

[Lee Rowley]

I am very grateful to the hon. Gentleman for confirming his support for the regulations. I look forward, hopefully, to the Committee’s commendation of them.

Question put and agreed to.

Teesworks: Accountability and Scrutiny

Lee Rowley Excerpts

Wednesday 7th June 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

It is, rightly, a long-standing convention that Opposition parties in this place have the opportunity to raise their concerns through debates such as this, to deal with the big issues of the day and to use the precious time of the House to articulate their vision for the future of this country. On these occasions, the Opposition can choose the subjects, the words they use, the allegations they make and the inferences they allow to be drawn.

So here we are today, having a debate about a blighted and costly site, with a massive price tag when industrial activity ceased, that is being transformed for the benefit of those who live and work nearby, in a region that is on the up. The debate is not about the achievements to date, or the failure of successive Labour Governments and Members of Parliament to improve the lives of people on Teesside. Instead, it is a debate about technicalities. It is not about whether a review will happen, look at these matters in depth or be led by independent experts, because all that will happen. Neither is it about whether the facts will be established, as was raised by the hon. Member for Wigan (Lisa Nandy), because they will be.

Instead, the Opposition have chosen to have a three-hour debate about the process by which a decision was made to have a review that is led by one group of people, instead of by another group of people. It is a debate about how we have chosen to set up a review, in the usual way that we choose to set up reviews rather than in the extraordinary way that the Opposition propose. The Labour party makes strange choices.

I want to say this, because it is important: the Government believe in the people and the places that make Teesside special. We have backed them with funding and powers to level up, which was sorely lacking under the 13 years of the previous Labour Government. That was why Ben Houchen was elected as Mayor in the first place. His record of attracting investment and delivering for the Tees Valley speaks for itself. In that spirit, he approached the Government some time ago about an independent review of the South Tees Development Corporation and the Teesworks joint venture after the hon. Member for Middlesbrough (Andy McDonald) had made serious allegations in the House, which he will not repeat outside the House. I want to make it clear now that, as previously stated, Ministers and officials have so far seen no evidence of corruption, wrongdoing or illegality.

[Clive Efford (Eltham) (Lab)]

rose—

[Lee Rowley]

I give way to the hon. Gentleman, who can, perhaps, tell us precisely what corruption, wrongdoing and illegality he is alleging.

[Clive Efford]

I just want to point out to the Minister that what he is threatening my hon. Friend the Member for Middlesbrough with is a strategic lawsuit against public participation. We have had debates in this Chamber about SLAPPs; in fact, the Under-Secretary of State for Business and Trade, the hon. Member for Thirsk and Malton (Kevin Hollinrake), who is sitting next to the Minister, has supported action against them and their use to cover up the Londongrad fraud whereby illegal money has been washed through London banks and financial centres. The Minister should think very carefully before he comes here and threatens people with legal action outside the House to silence democratic debate.

[Lee Rowley]

There is absolutely no silencing going on. We are debating, we will continue to debate, and we have set up a review to ensure that we understand the allegations that have been made. It is perfectly legitimate for me to point out that the hon. Member for Middlesbrough refuses to repeat those allegations elsewhere, and for people to draw whatever conclusion they wish to draw from that. However, it is also clear that the allegations being made threaten to damage confidence in Teesworks and its success—hence the Secretary of State’s decision on 24 May to commission an independent review of the joint venture.

On the “Today” programme this morning, the hon. Member for Wigan was challenged with the observation that

“there is a danger that political parties throw about allegations of corruption”.

To that point no answer came this morning, and an answer certainly did not come in the opening speech. Now that the Labour party has chosen to allocate a significant amount of parliamentary time to this discussion today, it is incumbent on Opposition Members to spell out their specific concerns. They may have tried not to do that, but they need to state the allegations about which they are concerned.

We listened to a long speech from the hon. Member for Wigan, who set out a factual case about the events that happened in the order in which they happened, but made no comment about what element of concern she felt about each of them. There have been no specific allegations; nothing has been forthcoming except rumour, gossip and innuendo. Perhaps the hon. Lady does not wish to provide allegations, but Opposition Members have certainly alleged that this is the case.

[Lisa Nandy]

rose—

[Lee Rowley]

The hon. Lady has already had a significant amount of time in which to speak, and I am not willing to give her more time to produce similar innuendo. On 20 April the hon. Member for Middlesbrough was very clear about industrial-scale corruption, but provided no further information. If Opposition Members cannot provide specific information, specific allegations and specific concerns in this debate, that will show how little interest they have in the truth rather than innuendo.

[Lisa Nandy]

rose—

[Madam Deputy Speaker]

Order.

[Lee Rowley]

I will give way to the hon. Lady.

[Lisa Nandy]

Thank you very much, Madam Deputy Speaker, for intervening to make sure that some basic manners and courtesies are respected.

May I ask the Minister to stop this ridiculous politicking? I have just set out for him a series of concerning points that have been raised by a respected national newspaper, with evidence behind them, many of which are not disputed by those involved in the proceedings. I have explained to him why an independent investigation is needed, and I answered those questions on the radio this morning, as he well knows. He may not agree that the National Audit Office is the best body to investigate, but if he disagrees with that, why will he not tell us the reason? That is all we are asking for.

[Lee Rowley]

I believe the hon. Lady said on LBC this morning that no allegations of corruption were being made. In the spirit of being willing to accept interventions, I am happy to take a further intervention from her. What specific allegations is she actually concerned about?

[Lisa Nandy]

We are concerned about the fact that no value for money is being achieved in this project, because of allegations raised in the report in the Financial Times, which set out that hundreds of millions of pounds have been put behind a project that Ministers appear to have handed over and then walked away, in a company 90% of which has been transferred into private ownership, where two investors have taken—apparently; allegedly—£45 million out but put not a penny in. We want to ensure that that constitutes value for money for the public and that this asset, which belongs to the people of Teesside, will be used for the benefit of people on Teesside for generations to come. If the Minister can reassure us in detail on those points, it would be absolutely wonderful. If he cannot, why will he not commit to an independent investigation?

[Lee Rowley]

That is, finally, extraordinarily helpful. For the first time in multiple questions to the hon. Lady, she has actually given an answer. She is concerned about value for money. Excellent! We are all concerned about value for money across local government. That is why we have a best value regime, which means that the Secretary of State announces inquiries and reviews, and appoints people to undertake them. The hon. Lady and her Front Bench team know that, because we have talked about it on numerous occasions in this place. They are completely aware of the best value regime that this Government use, because in 1999 it was the Labour party that endorsed that regime as part of its legislation.

[Mr Simon Clarke]

Will the Minister give way?

[Lee Rowley]

I will give way to my right hon. Friend, who actually knows what he is talking about on this issue.

[Mr Clarke]

My hon. Friend is right to highlight the fact that it is Labour’s own regime that we are applying, but can we also get on record the fact that Department for Levelling Up, Housing and Communities officials do not believe that the threshold for a best value investigation has been met in this case? That is to say, the civil service does not believe that such an investigation is merited. We are doing it to dispel the allegations and smears from the Opposition.

[Lee Rowley]

I am grateful to my right hon. Friend for clarifying that important point, particularly in respect of the Department.

It is important, given the inferences by the Opposition, to highlight what has actually been put in place. The specific terms of reference and the announcement that was made long before today are clear about the intention of the Government to clarify this matter. The review will be led by Angie Ridgwell, who is currently chief executive of Lancashire County Council and has over 30 years of experience across local government, central Government and the private sector. She will be supported by Quentin Baker, a qualified solicitor and director of law and governance at Hertfordshire County Council, and by Richard Paver, who brings significant financial experience and knowledge of combined authorities from his previous role as the first treasurer of the Greater Manchester Combined Authority. They bring significant experience of senior public leadership, specific financial and legal expertise, and confidence of detailed scrutiny. All Members of the House should support their important work so that they can proceed quickly and free from partisan comments.

There is still time for Labour Members to articulate why they are suddenly so keen on NAO-led inquiries in local government when they have not been keen on them before. When there are challenges or potential questions, there is a long-standing precedent of someone other than the NAO reviewing and assessing those concerns. Why should Labour Members know this? Because, as I said, they endorsed this process in the Local Government Act 1999. They confirmed that the Secretary of State could determine the approach where there were questions about local government bodies, and as far as I am aware, they have not critiqued the use of those powers when they have been used multiple times before, including in the last few weeks. Perhaps Labour Members could tell me which parts of the Local Government Act 1999—their Act, their decisions, their choices—they have randomly, abruptly and arbitrarily decided, simply for the purposes of an Opposition day debate, that they no longer wish the Government to apply.

If Labour Members are deciding that they no longer want to use the established regime, perhaps they could tell me which of the established reviews, inquiries, panels or commissioners they wish to switch into their newly preferred process. I do not remember this being requested when the Secretary of State intervened following an external review of Labour-led Sandwell Council in 2021, following allegations of serious misconduct by members and officers that painted a deeply troubling picture of mismanagement. Should we move that to an NAO review?

I do not remember Labour suggesting this approach when the then Secretary of State determined to appoint experts to carry out an inspection at Labour-led Liverpool City Council in 2020 as a result of arrests made on suspicion of fraud, bribery, corruption and misconduct in public office. [Interruption.] There is a lot of chuntering on the Opposition Benches, but are they seeking to bring the NAO into that? The hon. Member for Wigan talks about hand-picking, but the Labour party appointed its own inquiry into the wrongdoing. That inquiry was led by a former Labour MP, supported by a peer newly ennobled by the right hon. and learned Member for Holborn and St Pancras (Keir Starmer). And I cannot remember the Labour party requesting an NAO review of Labour-led Croydon Council after a number of serious concerns about the council’s governance and risk management were outlined in a public interest report by external auditors in 2020.

The cold, hard facts are these: the Mayor of Tees Valley has had much success over the past half a decade in bringing jobs, growth and economic development to an area that is now on the up and thriving again, thanks to its Conservative leadership and its engaged and constructive Conservative Members of Parliament. On this specific issue, the Government agreed to a request from the Mayor for a review, which is being set up in a similar way to other reviews. Those who will be involved have been appointed as others have been appointed in the past. The terms of reference have been published using a similar process and, if there is an issue, we will deal with it in the normal way. The experts who are giving of their time and expertise should now be given the time to get on with the job, in the normal way, and to present their conclusions when they are ready.

[Sir Robert Goodwill]

The hon. Member for Wigan (Lisa Nandy) repeatedly called the site an asset, but it was a heavily contaminated industrial site. Indeed the former Labour Member of Parliament for Redcar, Vera Baird, suggested it could cost up to £1 billion to clean up the site. It is now an asset, but only because of Ben Houchen’s actions.

[Lee Rowley]

My right hon. Friend is absolutely right, and that is one of the few facts that the hon. Member for Wigan left out of her contribution, in which there was no clarity about what she is actually alleging.

These are serious matters. Serious allegations have been made, and it is incumbent on us all to clarify the position as soon as possible, for the good of Tees Valley. The review we have set up will do that, and we look forward to it reporting in the usual way at the earliest opportunity. Members should welcome and support the review, and I hope against hope that, in the next two hours, they may still do that.

Oral Answers to Questions

Lee Rowley Excerpts

Monday 5th June 2023 Commons Chamber

[Janet Daby (Lewisham East) (Lab)]

17. What recent progress he has made on cladding and non-cladding remediation for residential buildings.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

The Government intend to enact reforms to improve the buildings insurance market by banning commissions, increasing the transparency of information and preventing unjustified legal costs when premiums are challenged. We are also pressing the insurance industry to launch its scheme. In 95% of all identified unsafe high-rise aluminium composite material buildings, and in 400 buildings supported by the building safety fund, remediation works have been either completed or started.

[Sir Stephen Timms]

I have raised before in the House the predicament of residents of Barrier Point, in my constituency, whose insurance premiums have risen sixfold. The Secretary of State told me in January that such insurers were

“squarely in our gun sights”.—[Official Report, 30 January 2023; Vol. 727, c. 55.]

Can the Minister offer any prospect of imminent relief to my constituents, some of whom face a demand of an additional £6,000 this year?

[Lee Rowley]

I completely appreciate the point the right hon. Gentleman makes. That is why I have met with the Association of British Insurers multiple times in the last few weeks alone. I am hopeful that the scheme it hopes to bring forward with the insurance industry will come forward in the next few weeks. Later today, I am meeting the British Insurance Brokers’ Association again to talk about how it will reduce commissions, in advance of the work that the Secretary of State has already announced to ban such commissions.

[Janet Daby]

In my constituency, there are two main housing developments where remediation work has been promised to fix unsafe cladding on buildings. I hope that the Minister is fully aware that living in unsafe buildings has meant individuals and families have had to put their lives on hold. Leaseholders cannot sell, move or staircase their homes, and some have had to put starting a family on hold. Will the Minister acknowledge that that is unacceptable? Will he agree to implement a timeframe so that work is prioritised by housing providers and building firms?

[Lee Rowley]

I am grateful to the hon. Lady for highlighting the challenges her constituents are facing. I appreciate the point that she is making about challenges. That is why we are trying to push forward with remediation as quickly as we are able to do so. Since the announcement by the big six lenders in December, taking effect in January, it should now be possible for more owners and leaseholders in properties like these to be able to buy, sell or remortgage. Early data received by the Department indicates that while the market will take some time to become more functional, it is moving in the right direction.

[Sir Robert Neill (Bromley and Chislehurst) (Con)]

Will the Minister recognise that this is not just a question of ridiculously escalating premiums? There is also the problem experienced by my constituents in Northpoint in Bromley, which I have mentioned in the House before. The previous insurer, Aviva, which had insured the building up until the Grenfell fire, is refusing to quote at all. That withdrawal from the market is putting many people under real pressure. The cladding has already been removed from the building, the risk has gone and there is a zero claims record, but a major firm like Aviva will not even quote. There is a market failure here. Just as we did with the EWS1 fire safety certificates, when there was a withdrawal of professional negligence insurance, please can we intervene and make sure that people at least come into the market properly?

[Lee Rowley]

My hon. Friend makes an important point. That is exactly why we are trying to encourage and work with the ABI and the large insurers, to bring forward this new scheme that should help with the kind of issues that he has highlighted. I hope we will have more news on that in the coming weeks. If not, I would be very keen to talk to my hon. Friend and his local residents about how we can move forward.

[Chris Elmore (Ogmore) (Lab)]

3. What assessment he has made of the effectiveness of the process of delivering funds for successful levelling-up fund bids.

--- Later in debate ---

[Ian Byrne (Liverpool, West Derby) (Lab)]

4. What steps he is taking to help local authorities with budgetary pressures caused by inflation.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I am not sure that I can respond with quite so much brevity, Mr Speaker!

In the most recent financial settlement, the Government provided billions more in taxpayer subsidy to support councils, including funds to mitigate inflation. Councils are always under a duty and a responsibility to improve and transform services and make them more efficient, but the Government continue to support them when we are able to do so.

[Ian Byrne]

A recent report from our Select Committee highlights the fact that local authorities’ revenue funding from central Government has been reduced dramatically since austerity began in 2010, and notes that levelling-up funds generally do not replace grant funding because they are capital, not revenue. Can the Minister be honest and admit that the latest local government finance settlement will entrench and widen already huge regional inequalities, leaving the levelling-up agenda in tatters?

[Lee Rowley]

Absolutely not. [Laughter.]

[Theresa Villiers (Chipping Barnet) (Con)]

I am sure that many Members of the House will share my experience that, on the doorstep, an issue that comes up almost more than anything else is potholes. Barnet Council is clearly failing in its duty to fill them in. Does the Minister have any advice for our failing local council on how it can improve its record on filling in potholes?

[Lee Rowley]

My right hon. Friend is absolutely right to say that one of the core responsibilities of local councils is to do the basics, and one of the basics is potholes. That is why the Chancellor recently announced additional money for local councils to ensure that they are filled, and it is for local councils to translate that into reality on the streets.

[Mr Speaker]

I call the shadow Minister.

[Sarah Owen (Luton North) (Lab)]

Under a Government who created a cost of living crisis that has sent inflation levels soaring, there are now 4.2 million children living in poverty, and 70% of them are in working households. One third of children in the west midlands and 200,000 children in the north-east live below the poverty line. Shockingly, a quarter of all children growing up under the Scottish National party in Scotland now live in poverty. What support can local authorities expect in order to deal with this increase in child poverty, and is the Department’s decision to award levelling-up funding to only one in four deprived areas a factor in the heartbreaking levels of child poverty we see in Tory Britain today?

[Lee Rowley]

The Government offer a huge amount of support to the most vulnerable in our society. We have seen that all the way through covid and through the inflation and energy issues, and we will continue to do it through the welfare system as a whole. The best way out of poverty, where it is possible, is to work, and that is why this Government are ensuring that work pays, work matters and work achieves.

[David Duguid (Banff and Buchan) (Con)]

5. What steps he is taking to level up all parts of the UK.

--- Later in debate ---

[Clive Efford (Eltham) (Lab)]

Residents in Master Gunner Place in my constituency are still paying for a waking watch, despite a new fire alarm being introduced. These properties were built with major defects by Countryside Properties, and they are now owned by Samnas. I want to know what the Minister is going to do to take these people to task, because they are costing my constituents a lot of money, which should have been resolved before.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

The hon. Gentleman will have seen that we have recently reopened the waking watch fund, but on the specific issue he has raised, I would be happy to meet him, because I also want to understand why this has not been removed as a result of the money spent.

Woking Borough Council Intervention and Tees Valley Independent Review

Lee Rowley Excerpts

Thursday 25th May 2023 Written Statements

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I would like to update the House on action the Government are taking in relation to two local authorities. In the case of Woking Council, Government are taking decisive action given clear evidence that the best interest of taxpayers is not being served. In the case of Tees Valley Combined Authority, in response to a request from the Mayor, the Secretary of State has decided on an exceptional basis to commission an external assurance review.

Woking Borough Council

Woking Borough Council is a small district that has engaged in commercial investment activities since 2016. As a result of this, as of December 2022 the council had debts of £1.9 billion, with plans to increase it to almost £2.4 billion by 2024-25, and now faces significant impairments against key assets. This makes Woking the most indebted council in England compared to its financial size, with a net budget of £24 million and core spending power of £14 million. In its most recent budget report Woking Borough Council recognises that this debt, and the council’s reliance on commercial income to fund services, places it in an extremely challenging financial position. The Department considers that this is, based on current evidence, the most challenging financial position of any local authority in England.

The Government is introducing new powers through the Levelling-up and Regeneration Bill that will allow direct intervention where authorities are exposed to excessive risk from borrowing and investment practices. Ahead of that, since May last year, we have been engaging with Woking, given that it is likely to fall within scope of those powers. As a result of our engagement, the Department has been increasingly concerned about the level of risk the council is carrying and how that is being managed.

External assurance review

As a result of the Department’s concern about the specific situation in Woking, in January 2023 the Department commissioned an external assurance review covering the council’s governance, finance and commercial issues. This review was carried out by Jim Taylor, Carol Culley OBE and Mervyn Greer, with fieldwork taking place over January and February. The review team was asked to provide an external assessment of Woking’s governance arrangements, financial situation, commercial investments and their capacity and capability to manage these in the immediate and longer-term.

The council made the Department aware of further developments in its commercial and finance arrangements in April 2023, following which the Department requested that the review team undertake further fieldwork in April and May. The resulting report reflects all review work undertaken from January to May 2023 and will be published on gov.uk, and copies have been deposited in the Libraries of both Houses. This report has been redacted in places in light of the commercially sensitive nature of some of its contents. The full report, including the commercially sensitive information, has been considered by the Secretary of State in taking his decisions in relation to Woking.

Failure to comply with best value duty

Evidence within the review shows that Woking Borough Council is failing to comply with its best value duty to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness, as required by the Local Government Act 1999. The financial challenge is acute, and the review has concluded that the Council cannot become financially self-sustaining without considerable Government support.

To quote the review:

“The scale of this issue is unprecedented.”

“From the historic base, the sheer scale and complexity of the investment and commercial activity of the council, means that the Council will never have the capacity to effectively manage all the commercial and economic considerations...”

“Commercially, the council is overstretched and remains reliant on further support in the form of additional skills and capacity to continue to find a resolvable solution to its commercial position.”

“There is no realistic route to the Council returning to financial sustainability alone... The Council will need to undertake significant service transformation and consider their future operating model.”

"The new leadership of the Council is taking the right steps. However, it does not have the capacity or capability to address a challenge of this scale without additional support...on the current trajectory the Council will not rectify these issues itself and will continue to fail its best value duty. The Council will require significant support, including statutory oversight.”

“There are critical decisions that need to be taken in the next 2-3 months, for which immediate expert support is required.” “...the financial issues are more severe and immediate than initially thought [when undertaking work in January and February]”

“...This leads to the conclusion that, despite many initiatives and advice being actioned there is no overarching strategy for the whole situation under the council’s control.”

In addition to the work of the reviewers, the Department has had direct engagement with Woking Borough Council in relation to its financial situation. It is the Department’s view that the council has failed to provide assurance that it is taking the necessary actions to comply with its best value duty and address the serious issues noted in the review. Nor has it given the Department assurance that it has capacity to take the necessary action, or develop an adequate strategy to resolve the situation, when considering the scale and pace of the response required.

The council is aware of the gravity of the situation and has made clear in published papers for its meeting on 23 February 2023 that it is at risk of issuing a section 114 notice, with public statements attributing this to issues relating to shortfalls in commercial income and cost pressures.

Statutory intervention in Woking

The Secretary of State is satisfied that Woking Borough Council is failing to comply with its best value duty. The Secretary of State considers it necessary to put in place an intervention package immediately, to secure the council’s future and sustainable compliance with its best value duty. The intervention will consist of the appointment of commissioners to oversee specific functions of the council, alongside directions to the council. The Secretary of State is confident that this package will address the failings identified, and is necessary for the council to secure compliance with its best value duty.

It is the Secretary of State’s view that the situation in Woking is sufficiently urgent to justify forgoing the usual period of representation. He considers that there is a pressing case for urgent Government action to protect the interests of the residents and taxpayers of Woking, and the public purse. The scale of Woking’s financial challenges is unprecedented, and we have serious concerns about its commercial arrangements; the Secretary of State is concerned that further evidence of failure could come to light imminently and require further immediate action. The appointment of commissioners and the directions set out below will therefore take effect from today.

Appointment of commissioners

The Secretary of State is appointing the following individuals as commissioners to exercise certain functions as required:

Jim Taylor (Lead Commissioner). Jim is an ex-chief executive officer of three metropolitan borough local authorities and was appointed in March 2022 by the Secretary of State as a commissioner at Sandwell Metropolitan Borough Council. He also conducted a governance review of Slough Borough Council for the Secretary of State in 2021.

Carol Culley OBE. Carol is the current deputy chief executive and section 151 officer at Manchester City Council. She is CIPFA Junior Vice President, a member of the CIPFA Council and Chair of the CIPFA Public Financial Board; and

Mervyn Greer. Mervyn is a Crown Representative at the Cabinet Office where, amongst other responsibilities for strategic suppliers to HMG, he is the appointed Crown Representative for Local Government Commercial and the LGA. His background is in property and built asset management in the private sector, where he was responsible for major outsourcing and property related commercial contracts. He retired from the private sector in 2016. He was a member of the team which conducted the statutory best value inspection of Liverpool City Council in 2021.

The Secretary of State has taken the unusual step of appointing the three individuals who carried out the external assurance review as commissioners. This reflects the acute situation in Woking, and the urgent need for commissioners to begin work immediately to ensure that the council takes steps to secure compliance with their best value duty. The Secretary of State considers that these individuals are best placed to take up these roles in the immediate term, due not only to the knowledge acquired during their time reviewing the council, but to their individual knowledge and experience in local authority leadership, governance, and commercial development. Our understanding of the situation in Woking is likely to change throughout the period of intervention. Their appointments are therefore for 12 months and will be reviewed within six months or at such a time as the Secretary of State determines necessary.

The scale of the financial challenge in Woking means that the council must take immediate steps to address its commercial and financial challenges, and to make transformative change across its entire operations. The commissioners will therefore exercise the following functions:

those associated with the source of Woking’s failures, financial governance and decision making, commercial decision making and management of commercial projects, regeneration and property;

those where the council will need to make changes as a result of these failures, functions associated with the council’s operating model and service redesign to achieve value for money and financial sustainability; and

those that will ensure the council has the right skills and structures to make ongoing improvements across the entire organisation, governance and scrutiny of strategic decisions; and the appointment, dismissal and performance management for senior and statutory officer positions.

Directions to Woking Borough Council

Alongside this, Woking Borough Council will be directed to prepare and agree an improvement and recovery plan to the satisfaction of commissioners. This must include, as a minimum, plans to:

achieve financial sustainability and reduce debt;

ensure value for money when exiting commercial arrangements;

ensure compliance with financial management rules and guidance;

reconfigure services; and

ensure the Council has the necessary skills, capabilities and capacity to carry out this work

and achieve compliance with their best value duty.

As with other interventions led by the Department, the council is directed to meet the costs of the commissioners. The fees paid to individuals are published in appointment letters which are available separately on gov.uk. I am assured this provides value for money given the expertise that is being brought, and the scale of the challenge in councils requiring statutory intervention.

The Government are committed to making sure the residents of Woking have what they need from their local council, including confidence in its service delivery, financial management and governance.

I will publish the directions and explanatory memorandum associated with this announcement on gov.uk, and place copies in the libraries of both Houses.

Independent review: Teesworks

Yesterday, the Secretary of State confirmed that he has made the exceptional decision to support the commissioning of an independent review to consider the specific allegations made, and Tees Valley Combined Authority’s oversight of the South Tees Development Corporation (STDC) and Teesworks joint venture.

The Tees Valley Mayor approached Government some time ago regarding the possibility of an independent review of STDC and Teesworks. He raised concerns regarding the allegations made in Parliament by the hon. Member for Middlesbrough (Andy McDonald) of “dubious dealings” and “industrial-scale corruption”. The Mayor was, understandably, particularly concerned about the damaging effects that these allegations could have on investment and job creation across Teesside.

My colleague, the Minister for Levelling Up, explained in her letter of 17 May to the hon. Member for Middlesbrough that the Department has so far seen no evidence of corruption, wrongdoing, or illegality. This is still the case.

The Secretary of State’s decision has been taken in response to Mayor Houchen’s previous request for an independent review to address these allegations and reflects his recognition that the continued allegations of “corruption” poses a real risk to the shared ambitions to deliver jobs and economic growth in Teesside.

In line with established practice, a review panel will be appointed by the Secretary of State to undertake the independent, external assurance review. The members of the panel will be announced shortly as will detailed terms of reference. Since serious allegations of corruption, wrongdoing and illegality have been made, I will ask the panel to address these accusations directly, and to report on the governance arrangements at STDC including how decisions are made, as well as looking at the value achieved for the investment of public money on the site.

The Secretary of State yesterday wrote to the Tees Valley Mayor explaining his decision, a copy of his letter has been placed in the Library of the House of Commons. He also wrote to the Chairs of the Levelling Up, Housing and Communities and Business and Trade Committees, and to the shadow Secretary of State for Levelling Up, Housing and Communities.

Any interested party, including Members of Parliament, will be invited to make representations to the panel as part of their evidence gathering. The report and any recommendations will of course be published in line with usual practice.

[HCWS813]

Leasehold Reform

Lee Rowley Excerpts

Tuesday 23rd May 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

A fair housing market that works for everyone is at the heart of this Government’s central mission to level up opportunity, prosperity and pride throughout the United Kingdom.

At the end of her speech, the hon. Member for Wigan (Lisa Nandy) said that “politics is about choices.” She is absolutely right. That is why this Government are committed to ensuring safe, decent and secure homes are available to everybody, regardless of tenure, whether through a better deal for tenants in the social and private rented sectors, or through our unashamed support for home ownership, because of the security and freedom it affords to people to make their homes truly their own and to shape their futures.

This Government believe in the moral aim of people owning their own homes and in allowing them to build up capital for themselves, their families and their future. That security and freedom should allow people to make decisions about their own home, including over changes, repairs and improvements that are made or costs that are paid. In reality, the time-limited nature of residential leasehold and the sharing of control with the landlord means a significant imbalance in power. Someone who may not live in the same building or share the same priorities or motivations, as the hon. Member for Wigan outlined, may make decisions affecting someone’s home and everyday life.

[Catherine West]

What does the Minister say to leaseholders living in a cost of living crisis, with an increase in service charge that is through the roof, yet, for example, they live in a six-storey building with only one lift that is approaching its eighth week out of service? All hon. Members will have heard similar stories. There is no redress, and the Government are not taking responsibility or pushing the owners to do anything. Does the Minister agree that the situation is now out of control?

[Lee Rowley]

I do not know the detail about the particular situation that the hon. Lady outlined, but I would encourage the leaseholders to use all available avenues. There is redress, although I accept it works in some instances and not in others, but I would say to those residents: change is coming.

We have said that too often leaseholders are being charged exploitative and multiplying ground rents, in exchange for no, few or inadequate services; high charges are being levied in order to respond to simple requests; unaffordable costs to buy out the freeholder or extend the leasehold are being applied; upgrades, such as electrical charging points, to blocks are frustrated by rigid leases; or, as the hon. Member for Hornsey and Wood Green (Catherine West) indicated, urgent repairs to buildings are being neglected. That does not meet the definition of home ownership by anyone, in this Chamber or beyond.

[Several hon. Members rose—]

[Lee Rowley]

I will give way in a moment, but will make a bit of progress first. There is broad agreement across the House, and beyond, that the situation needs to change to make home ownership fairer, easier and cheaper. That is why the Government have already taken significant steps to better protect leaseholders from unreasonable costs, and why we are committed to going further and bringing forward further leasehold reforms to strengthen transparency and accountability.

[Mr Betts]

I am pleased that the Government have good intentions, but the Select Committee’s 2019 report had 52 recommendations. The Government accepted many of them completely and said they wanted to move towards accepting others and work out how that could be done. Since 2019, which was before the last general election, what have the Government actually done? Would the Minister confirm that all they have done in practice is to bring in measures to ensure that peppercorn ground rents are charged on new leasehold houses? That is the only thing they have done, out of all the recommendations they agreed to accept four years ago.

[Lee Rowley]

I am grateful to my neighbour, the hon. Member for Sheffield South East (Mr Betts). He pre-empts a part of my speech that I will come to in a moment.

The hon. Member for Wigan indicated that we have debated the subject many times in this Chamber. That is true and there will be lots of opportunities to do that again, because we have committed to make it easier and cheaper for leaseholders to extend their lease or to buy their freehold. We will bring forward legislation to ban new residential long leases on houses. While there are still issues, I am pleased to see that the market has already responded, with only 1.4% of houses in England now being built as leasehold, compared with nearly 15% previously.

[Emma Hardy]

The Minister will have heard my intervention earlier. I accept he is talking about leasehold reform, but will he elaborate on management companies, where people own their properties but are charged a management fee for communal areas? Such fees can be increased every year, there are no rules about the extent they can reach, and there is no oversight or regulation of them. Are there any plans for the Government to look at the regulation of such management companies, as some of them—not all—are exploiting people?

[Lee Rowley]

The hon. Lady makes a strong point and I will come to that in a moment. We have shared concerns about specifics, which we have all experienced as constituency MPs—Coppen Estates in North East Derbyshire, I am looking at you—and about the general principle and the broader point, which I will come to in a moment.

We have already taken action. The hon. Member for Sheffield South East has highlighted that we have ended ground rents for most new residential leases. The Leasehold Reform (Ground Rent) Act 2022 came into force last June and prevents landlords under new residential long leases from requiring a leaseholder to pay a financial ground rent. That will ensure that people buying most new leases will not face problems associated with ground rents. However, we remain concerned about the cost of ground rents and, in 2019, we asked the Competition and Markets Authority to investigate abuses in the leasehold sector. Since then, the CMA has secured commitments benefiting over 20,000 leaseholders, including commitments to remove a doubling of ground rent terms and to revert charges to original rates.

We know that there is more to do to tackle unfair practices, however. We know that many leaseholders find the process for extending their lease or buying their freehold prohibitively expensive or complex or lacking transparency. Equally, we understand that many right-to-manage applications fail on technicalities that may be attributed to an over-detailed procedure, and we are committed to improving this by making the process simpler, quicker, more flexible and more effective. That is why, as the hon. Member for Wigan said, we asked the Law Commission to look at the issue, and we are carefully considering the reports that it has since produced on enfranchisement, valuation and the right to manage.

[Mark Tami]

As I mentioned earlier, when many of these leasehold houses were sold, the purchasers were promised that they could purchase the freehold, only to find that that was not an option, the freehold was sold on immediately and freeholds were packaged up; they are financial products. I have spoken to people who get a letter every couple of months informing them that the freehold has been sold on to somebody else. This is their life, this is their property, but they feel that they do not own it because it is being bought and sold on a regular basis.

[Lee Rowley]

The right hon. Gentleman makes a strong point about the importance of reform. This is one of the reasons that we have committed to reform and I hope that we will be able to provide that in the months ahead in the remainder of this Parliament.

We are committed to tackling problems such as these at the root, so we will abolish issues such as marriage value and we will cap ground rents in enfranchisement calculations so that leaseholders who currently pay onerous ground rents do not also have to pay an onerous premium. To make this process simpler and more transparent, we will introduce an online calculator to help leaseholders to understand what they will pay to extend their lease or to buy it out. These changes should, and will, generate substantial savings for some leaseholders, particularly those with fewer than 80 years left on their lease, and also ensure that landlords are sufficiently compensated in line with their interest. These changes are therefore fair for all concerned.

[Sir Julian Lewis (New Forest East) (Con)]

I am grateful to my hon. Friend the Minister, for whom I have a great deal of time and respect, but it seems to me that he is talking about tinkering at the edges and improving a fundamentally unfair system. I would gently remind him of an exchange I had with the Secretary of State on 20 February this year, when I asked if there was going to be fundamental reform and he replied:

“We hope, in the forthcoming King’s Speech, to introduce legislation to fundamentally reform the system. Leaseholders, not just in this case but in so many other cases, are held to ransom by freeholders. We need to end this feudal form of tenure and ensure individuals have the right to enjoy their own property fully.”—[Official Report, 20 February 2023; Vol. 728, c. 3.]

Do I detect a basic shift away from this position? I earnestly hope not.

[Lee Rowley]

My right hon. Friend highlights the importance of reform in this area and the cross-party nature of the support for it. I would not read anything into my comments other than that we are committing to reform, we have said we will bring it forward and we will bring it forward. It will happen in the remainder of this Parliament.

Part of that reform will involve reforming unreasonable and excessive service charges. Many landlords and managing agents already demonstrate good practice and provide significant and relevant information to leaseholders, but too many are failing to meet that standard and failing to provide sufficient information or sufficient clarity. We recognise that existing statutory requirements do not go far enough to enable leaseholders to identify and challenge unfair costs. We will therefore act to improve this through better communication around these charges, and a clearer route to challenge or seek redress if things go wrong. That will ensure that leaseholders better understand what they are paying for and can more effectively challenge their landlord if fees are unreasonable, and make it harder for landlords to hide unreasonable or unfair charges.

[Anthony Mangnall (Totnes) (Con)]

I hope that my hon. Friend will forgive me for asking this question in this debate, but I wonder whether he might include in the legislation reforms relating to park homes. Many of the issues that he has mentioned are also faced by park homes across the country, including unfair prices and utility prices at very high levels, all of which are totally unacceptable. It is like the wild west for those people.

[Lee Rowley]

My hon. Friend makes an important point. I have hundreds of park homes in my constituency, and I know how important it has been for residents to see progress on those issues over the past decade. I was pleased, as I know my hon. Friend will have been, to see the changes brought forward in the Bill introduced by my hon. Friend the Member for Christchurch (Sir Christopher Chope) to reform pitch fees from RPI to CPI. That has been welcomed across the park homes sector and I know that the Government will continue to look at what reforms are possible for the sector.

Returning to the specific questions that have been put forward, we are committed to ensuring that when leaseholders challenge their landlord, they are not subject to unjustified legal costs and that they can claim their own legal costs from their landlord. Currently, if permitted by the lease, leaseholders may be liable to pay the legal costs of their landlord regardless of the outcome of the dispute, even if they win their case. The circumstances in which a leaseholder can claim their own legal costs from the landlord are limited. This can lead to leaseholders facing bills that are higher than the charges being challenged in the first place, which can deter leaseholders from taking their concerns to a tribunal. We will act on this and ensure that leaseholders are genuinely free to seek justice and to benefit when their case is proved.

Crucially, we also want to see more leaseholders benefiting from freehold ownership, as set out in the levelling up White Paper, and we recognise that reinvigorating commonhold has a significant part to play in this as a genuine alternative to leaseholds for flats. Some of the failings of the existing leasehold system have been all too evident in the past when seeking to ensure that those responsible for constructing dangerous buildings should be the first to pay for putting them right.

The Building Safety Act 2022, in addition to the existing enforcement powers available through the Regulatory Reform (Fire Safety) Order 2005 and the Housing Act 2004, empowers leaseholders and regulators to compel building owners and landlords to fix—and to pay to fix—their unsafe buildings through remediation orders and remediation contribution orders. The effect of the Building Safety Act is intended to be that building owners and landlords who build defective buildings, or who are associated with those responsible, pay for the remedying of all historical safety defects, both cladding and non-cladding. Landlords who are not associated with developers but can afford to pay are also unable to pass such costs on to qualifying leaseholders.

Similarly, on insurance costs, the Financial Conduct Authority’s latest report into broker insurance revealed that, on average, the premiums paid by leaseholders living in buildings with combustible cladding had tripled. That is unacceptable. Commissions on insurance policies also drive up prices, and in 70% of cases commissions are shared with property managing agents and freeholders by insurance brokers. This is an unfair burden that leaseholders should be relieved of, which is why we have committed to replacing commission pass-throughs from insurance brokers to managing agents, landlords or freeholders with more transparent fees and fair insurance handling costs. We have been clear that this unreasonable practice must end as a matter of urgency, and I regularly meet the relevant trade associations to make progress on this matter.

We have also made progress with a number of banks in recent months on ensuring that the market in leasehold properties affected by cladding starts to become more voluminous, by separating the building safety issues from people’s ability to live their lives.

Whether we are talking about safety or the security and freedom that people rightly expect when they buy a home, this Government are on the side of leaseholders. We are protecting and empowering them to challenge unreasonable charges, making it easier and cheaper for them to extend their lease or buy their freehold, and boosting commonhold as a flexible alternative to take the housing market into the 21st century. Millions will benefit from these reforms, not just in the thousands of pounds saved but in knowing that the homes they have worked so hard to secure are truly their own.

[Several hon. Members rose—]

Non-Domestic Rating Bill

Lee Rowley Excerpts

Committee of the whole House
Monday 22nd May 2023 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

I rise to speak to amendments 1, 2, 3 and 20, as well as new clauses 1 and 2, tabled in my name. I note the excellent speech by the hon. Member for Waveney (Peter Aldous), who tabled amendments with very similar objectives to my own. This Bill is a disappointment to all businesses who are struggling through tough financial conditions. Not only are prices going up for every single purchase that they make, but many small businesses were forced to lock into gas and electricity contracts at astronomical rates last year and are no longer receiving any meaningful support with those energy costs. They may also be struggling with interest rate rises on their borrowings following the period of economic chaos caused by the Government last autumn.

This Government committed to reviewing the system of business rates fundamentally in their 2019 manifesto, but this Bill offers only peripheral changes to an outdated system that does not work for a modern economy. The Bill offers to change the timescale of revaluations from every five years to every three years. This is a welcome reduction, but Liberal Democrats believe that it does not go far enough. The reality for businesses is that a three-year gap between revaluations means that they will continue to pay rates that are far from reflective of the real economic conditions they are operating in. Amendments 1, 2 and 3 would require non-domestic rating lists to be compiled every year and make every year from now on a relevant period for transitional provision under the Local Government Finance Act 1988. Annual revaluations are possible. We only need to look to the Netherlands, where they have been taking place since 1995. There, rateable values are allowed to move with the local economy. This means the tax that businesses are required to pay better reflects the conditions that they face.

I also want to spend a little time on amendment 20, tabled in my name. It is estimated that as a result of the Bill as it stands, 700,000 small businesses who currently pay no business rates at all will need to submit annual reports to the Valuation Office Agency, even when there has been no change to the premises they occupy. These small businesses, like many in North Shropshire, are already plagued by seemingly endless monthly and quarterly Office for National Statistics returns, along with their ongoing tax and financial reporting requirements.

The Bill adds yet another administrative hoop for these businesses to jump through and threatens hefty penalties if forms are completed incorrectly. This piles unnecessary pressure on to small businesses and it will not raise any more tax for public services. These businesses already receive a notification to inform the VOA if there is a material change in their premises, so there is nothing to be gained from this element of the Bill. Amendment 20 attempts to deal with this problem by removing the requirement for annual reporting of no change for those businesses in receipt of small business rate relief. I urge the Minister to support amendment 20, which I intend to push to a vote, and to cut unnecessary red tape for the small businesses we desperately need to help, in order to drive economic growth and breathe new life into the high streets of our historic market towns.

I also wish to speak to new clause 1, tabled in my name. It seems very one-sided to impose punitive fines on businesses for failing to report updates to the VOA on time, without any reciprocal expectations of that agency. As I outlined on Second Reading, dealing with the VOA over changes to a premises can be a protracted affair, and all the time that that is going on, businesses face uncertainty about their rates liability and, critically, cannot plan their cash flow. New clause 1 would require the VOA to report to the Secretary of State on its performance in detail at least once a year. This report should correspond to targets to be set by the Secretary of State. The new clause also calls for the findings of these reports to be laid before Parliament. I have suggested targets, rather than legally binding levels of service, to reflect the fact that no two premises are the same and that updates can be complex and can be challenged, but those targets would at least set an expectation of performance and ensure some accountability for the VOA.

Lastly, I wish to draw attention to new clause 2. I think there is general agreement on both sides of the Committee that we want to see our high streets and market towns thrive. This is especially true in places such as the five historic towns in my North Shropshire constituency, where the local high street is not just a practical place to go to but a social lifeline for many residents. Those high street shops are in competition with online retailers whose warehouse premises have a much lower rateable value per metre squared, putting the high street at a disadvantage. This was confirmed in the Treasury Committee’s “Impact of business rates on business” report in 2019.

Disappointingly, however, the Bill does not take this discrepancy into consideration. Instead, the Government will continue to drain physical retailers through rates that do not reflect the challenges they are already facing, leaving many at a tipping point and struggling to compete on an unfair playing field. New clause 2 would require a review of the impact of non-domestic rateable values on competition in different parts of the retail sector, so that Members could understand the true scale of the issue and inform policy accordingly. This review should be commissioned within six weeks after the date this Act is passed. Overall, I urge Ministers to support these amendments and new clauses in order to improve the Bill, which is just not ambitious enough in fundamentally reforming an out-of-date tax system.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I am grateful to all colleagues across the Committee for their contributions today. I think all of us spoke on the Bill’s Second Reading, and we have rehearsed the arguments on a number of these points already. It is important to reiterate from the Government Front Bench that this Bill delivers significant reforms for the business rate system. It increases the frequency of revaluations, which I think has been generally welcomed across the Committee today. It also modernises the administration of the tax and it provides new reliefs to support things such as property improvements. Taken along with the nearly £14 billion-worth of taxpayer subsidy for businesses this year, it helps to manage the tax burden amid the ongoing pressures that the hon. Member for North Shropshire (Helen Morgan) mentioned.

I will now turn to the contributions that hon. Members and hon. Friends have made today. My hon. Friend the Member for Waveney (Peter Aldous) made an incredibly constructive set of comments, and I completely understand the sentiments behind many of the amendments he has tabled. He set a challenge at the outset of his speech, saying that he is looking to move towards annual valuations, the removal of complications and the adoption of digitalisation. We are making progress in two of those three areas, which I hope is not bad, and he has indicated that, overall, this is a step in the right direction. We are moving from five-yearly valuations—in reality, they have happened every seven or eight years in some instances in recent years, for good reason—to three-yearly valuations. We are moving towards the collection of further digital data, and we are continuing to support businesses, where we can, through the reliefs we have put in place.

--- Later in debate ---

[Helen Morgan]

rose—

[Lee Rowley]

The hon. Lady is going to tell me exactly where she would find several hundred billion pounds to fill her black hole.

[Helen Morgan]

Amendment 20 is about cutting red tape for small businesses. Does the Minister agree that he is talking about policy objectives that are not relevant to the Bill?

[Lee Rowley]

That tells us everything we need to know about the Liberal Democrats. They want to talk about only this Bill, ignoring every other policy. They look one way when talking to one part of the country, and the other way when talking to the other part of the country. That shows the Liberal Democrats’ lack of seriousness in understanding how taxation actually works, in understanding how to run a modern, dynamic market economy and in understanding how we need to pay our way to make sure our economy is successful in the long term. It is for those reasons that we oppose amendment 20.

[Peter Aldous]

The points I made were genuine. I think this Bill needs to be changed, and I hope the Government will have an open mind in considering whether to do so in the other place. We may well review this situation again.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clauses 2 to 12 ordered to stand part of the Bill.

Clause 13

Requirements for ratepayers etc to provide information

Amendment proposed: 20, on page 23, line 35, at end insert—

“4LA Paragraphs 4K and 4L do not apply if P is eligible for small business rate relief (for example, because the rateable value of the hereditament for which P is or would be a ratepayer is less than £15,000).”—(Helen Morgan.)

This amendment would exempt businesses in receipt of Small Business Rate Relief Exemption from annual reporting if there is no change to report.

Question put, That the amendment be made.

--- Later in debate ---

[Lee Rowley]

I beg to move, That the Bill be now read the Third time.

It has been a pleasure to support the progress of this Bill through the House. I do not seek to detain the House for long, but let me say briefly that the Bill offers some of the most substantial reform to the business rates system since its inception in 1990 and meets our commitment to reform and reduce the burden of the tax on business. By moving to more frequent revaluations from 2026, we are delivering on a key ask of business. We have been up-front with the House and with businesses that meeting this commitment is a major ask, which is why we have made some changes to the way ratepayers interact with the Valuation Office Agency. That principle was accepted by respondents to the review that predated this legislation.

Our approach has been to listen and to take appropriate action. I have already mentioned the evidence-based approach that we adopted in that review and the close dialogue that we foster with our partners in business and local government. We are also taking action to reform transitional relief, which was the No. 1 one ask from stakeholders on business rates ahead of the 2023 revaluation. That is a major commitment, a major step to supporting fairness and a major improvement in the credibility of our business rates system.

Finally, we are happy to have agreed to the Welsh Government’s request for various measures to be extended to Wales, and also to be supporting Northern Ireland with a data sharing measure.

I conclude by expressing my thanks to all Members for their contributions on Second Reading and in today’s debates. Although we have not agreed on everything, this has been a useful and constructive session. I am grateful to the Clerks of the House for supporting the smooth running of the Bill and to all of the teams across the Department and those in the Treasury, His Majesty’s Revenue and Customs and the Valuation Office Agency for their help in preparing the Bill. I look forward to watching the Bill’s progress in the other place, and I commend it to the House.

Local Government Finance

Lee Rowley Excerpts

Tuesday 16th May 2023 Written Statements

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

Following the local government finance settlement statement made on 6 February 2023,1 am today announcing a further £3 million in grant funding for 2023-24 to support 15 local authorities severely impacted by the increase in levies from internal drainage boards. This increase is being driven by the unprecedented rise in energy costs that impact particularly energy-intensive services including internal drainage boards. As this has been an exceptional year for the rise in energy costs, this will be an exceptional one-off payment to help ease this additional financial burden on councils. The Government will not provide additional grant to local authorities for these levies on an ongoing basis. Councils and internal drainage boards should continue to take action to deliver efficient services and good value for money for the public.

The 15 local authorities in scope are those whose internal drainage board levies account for over 3% of their average core spending power over five years. The allocations listed in the table below are based on 2023-24 internal drainage board levy increases.

Levelling Up, Housing and Communities

Lee Rowley Excerpts

Wednesday 26th April 2023 Ministerial Corrections

The following is an extract from the Westminster Hall debate on Parish and Town Council Precepts on 18 April 2023:

[Lee Rowley]

My hon. Friend raises points about powers and in particular the disclosure of information. He references the local government transparency code of 2015. The code is a statutory instrument that contains two elements: a mandatory section and a section of recommendations. The requirement to publish invoices over £500 and to publish procurement card transactions is mandatory. Where that is not done, or where there is a concern that it is not done, we recommend in the first instance that the authority is contacted, following their complaints procedure, and then the monitoring officer of the principal authority is contacted.

[Official Report, 18 April 2023, Vol. 731, c. 92WH.]

Letter of correction from the Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for North East Derbyshire (Lee Rowley):

An error has been identified in the response given to my hon. Friend the Member for Morecambe and Lunesdale (David Morris) in the debate on Parish and Town Council Precepts.

The correct response should have been:

[Lee Rowley]

My hon. Friend raises points about powers and in particular the disclosure of information. He references the local government transparency code of 2015. The code is a statutory instrument that contains two elements: a mandatory section and a section of recommendations. The requirement to publish invoices over £500 and to publish procurement card transactions is mandatory for parish councils with sufficient turnover. Where that is not done, or where there is a concern about compliance, we recommend in the first instance that the authority is contacted, following their complaints procedure, and then the monitoring officer of the principal authority is contacted.

City Centre Security Measures and Access for Disabled People

Lee Rowley Excerpts

Tuesday 25th April 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I start by conveying my sincere appreciation to the hon. Member for York Central (Rachael Maskell) for calling the debate and for speaking so powerfully on behalf of her constituents, especially those who have been adversely affected by the installation of bollards, the removal of blue badge parking in York city centre and the many other issues she highlighted.

I thank the hon. Members for Battersea (Marsha De Cordova), for City of Chester (Samantha Dixon) and for Strangford (Jim Shannon), and my hon. Friend the Member for Woking (Mr Lord), for their contributions to the debate. I particularly thank my hon. Friend the Member for York Outer (Julian Sturdy), who is no longer in his place, for his contribution. I know he has similarly strong views to those articulated by the hon. Member for York Central. Both the hon. Members who represent the city of York are committed champions of the residents and businesses that call York home, and I know they share our ambition for that fine city, in the heart of the northern powerhouse, to continue to grow and flourish in the long term.

York attracts over 8 million tourists from home and abroad every year. We know the visitor economy is vital for the city, but it also causes the types of questions, challenges, trade-offs and considerations that the hon. Lady so eloquently espoused in her speech. An appropriate balance clearly needs to be struck, so in my response I want to provide clarity about the Government’s role and responsibility, while outlining some of the work around accessibility for disabled residents in York, and indeed in all our towns and cities.

First, I will talk about the UK shared prosperity funding, from which some money has been contributed to the work that has been discussed. I will then talk about accessibility and finally about blue badge parking.

As the hon. Lady will know, appreciate and accept, empowering places to identify and build on their own strengths and needs is a core tenet of the levelling-up agenda, which is why the UK shared prosperity fund is giving York £5 million. The hon. Lady is absolutely right that improving infrastructure costs money and takes time. The fund will help neighbourhoods and create more high-skilled, high-wage jobs of the future.

As the hon. Lady outlined, clear concerns have been expressed about the changes that have made to some of the projects, including the perceived heavy handed use of bollards that restrict accessibility for people in wheelchairs. In rolling out the UK shared prosperity fund, we have been clear that we want to give local areas the maximum amount of local discretion. The essence of devolution is affording local areas the freedom to forge their own path, but with rights come responsibilities.

The hon. Lady has expounded the concerns that she and many others have about the course of action that has been outlined so far by City of York Council. The Government have always been unequivocal in saying that our high streets must be open and accessible to everyone. Local authorities have a duty, under section 122 of the Road Traffic Regulation Act 1984, to exercise their functions in securing the

“expeditious, convenient and safe movement of traffic.”

Although councils are ultimately free to make their own decisions about the streets under their care, they need to take into account the relevant legislation. They are also responsible for ensuring that their actions are within the law. They are accountable to local people for their decisions, and indeed for their performance. There is no specific requirement for local authorities to use bollards; it is for each council to decide the most appropriate way to resolve these challenges.

Blue badge parking is a similar case. I know that the hon. Lady has been a champion of reversing the ban on blue badge parking since it was introduced in the city’s pedestrian zones as part of the measures introduced in 2021. I appreciate that the resident-led campaign has won the support of others, including Dame Judi Dench, as the hon. Lady outlined in her conclusion.

The blue badge scheme is a lifeline for many disabled people. It helps approximately 2.5 million people in England to remain independent, while preventing social isolation. The Department for Transport has published several documents and some non-statutory guidance for councils on how the scheme should operate. One such document, as the hon. Lady outlined, is “Inclusive Mobility: A Guide to Best Practice on Access to Pedestrian and Transport Infrastructure”, which sets out the provision that should be made for parking spaces. It states:

“Creating and maintaining an accessible public realm is crucial for ensuring that disabled people are not excluded from playing a full role in society… Inclusive design requires that the needs of all disabled people are considered from the outset of any transport and pedestrian infrastructure”.

Personally, I would strongly encourage the city of York to think carefully about reconciling the understandable challenges with which it has to grapple, which we all recognise—the hon. Lady was careful to articulate and highlight them in her speech—with an approach that meets the rights of disabled people in the way she outlined. There is always a balance to be struck between protecting the public and not unduly imposing on the rights and freedoms of disabled residents, blue badge holders or the wider public who need to park in the city for essential reasons.

[Marsha De Cordova]

In my opinion, City of York Council is clearly breaching the law. It does not even seem to be complying with its responsibilities under the public sector equality duty. Is there scope for the Government to intervene to instruct or encourage the council to reverse the ban?

[Lee Rowley]

I am grateful for that question, which goes back to my point that ultimately central Government have to recognise, if we believe in devolution, that local councils must have the aegis and the space to make decisions. However, councils must make those decisions in accordance with the law, must have regard to regulation, and must think carefully about the impact and implications of their decisions in the way the hon. Member for York Central outlined. The fact that the subject had to be raised in this place tonight is indicative of the level of concern that has been expressed on both sides of the House about the challenges facing the city of York.

I have to respect the devolution settlement. I have to recognise that, ultimately, it is right that decisions are made locally. Local government does fantastic things across the country on a daily basis, and we should congratulate it and thank it for doing so. Nevertheless, I hope that the city of York is listening tonight, that it has heard the concerns and comments that have been articulated, and that it will consider very carefully how to approach the matter in future.

Question put and agreed to.