Local Democracy in the United Kingdom

Lord Razzall Excerpts

Thursday 28th January 2016 Lords Chamber

[Lord Razzall (LD)]

My Lords, those who have known me only in your Lordships’ House may be surprised that I am participating in this debate because, since I came into it in 1997, I have really involved myself in only the arcane world of BIS and the Treasury. My background, however, was in local government. I was a local councillor in Richmond, the borough of the noble Lord, Lord True, from 1974 to 1998. Indeed, from 1983 to 1998, when the Liberal Democrats ran Richmond Council, I was the deputy leader. I now sit on the advisory board of an organisation called GovernUp, which was established by Nick Herbert and John Healey in another place on a cross-party basis to look at the way government is run. One of the drivers for the creation of GovernUp was that, for the first time in many decades, we have three political parties that have recently participated in government, so a cross-party organisation can call on that degree of joint expertise.

Clearly, the issues raised by my noble friend Lord Shipley in this welcome debate are fundamental to how our government is run. The experienced councillors in your Lordships’ House will remember the changes in local government funding since I first became a member of Richmond Council in 1974. Then, 75% of the council’s revenue was raised locally by a combination of rates and business rates. The overwhelming balance was funded by a mechanism which recycled the City of Westminster’s extensive business rates revenue. By the time I left, a long time later in 1998—by my arithmetic, that is 24 years later—only 25% was raised locally by the borough and the balance came from central government. That has been a fundamental shift in the way local government is funded. I know the noble Lord, Lord Beecham, would suggest that this was all done by the Tory Government, but my experience was that, irrespective of whether it was Labour or the Conservatives who controlled central government, it was the centre that imposed the restrictions that we have on local government.

We clearly have the absolute iron grip of the Treasury. We all know—the noble Lord, Lord Beecham, was quite right in saying this—that the cuts imposed on local government by the Treasury are always, in percentage terms, greater than the cuts imposed on central government because central government can then blame local government for the destruction of services. The local government situation is made even worse by ministerial control. In 1974, when I first became a councillor, local government, having raised its money, could spend it in any way it wanted. That is no longer the case: huge areas of expenditure are ring-fenced and, even worse, Ministers interfere at the detailed level in all sorts of decisions, of which interference in the planning system is but one.

What should we do? My noble friend Lord Shipley, quite correctly, raised significant reservations and concerns about recent legislation. As a Liberal Democrat, your Lordships would expect me to say that the solution is regional government with devolved taxation powers. Even an optimist will recognise that that is not going to happen in the short term. As my noble friend Lord Shipley indicated, now is surely the time for a complete cross-party review—he described it as a constitutional convention—to determine where government powers are best exercised. I am very mindful of the words of the noble Lord, Lord Birt, who is not in his place, when he said we should not assume that the answer is always to devolve more powers in a knee-jerk response. We need to look at every power to decide where it is best exercised. All my experience, both in local government and centrally, tells me that Room 101 Whitehall does not always know best.