Cities and Local Government Devolution Bill Second Reading

This briefing is intended to update Northern Housing Consortium (NHC) members on the progress of the Cities and Local Government Devolution Bill [HL], following the completion of the House of Lords Second Reading on 8th June 2015.

Introducing the Bill on Monday 8th June, Baroness Williams of Trafford, noted that “[the] Bill … puts in place not only the legal framework for devolving powers, but the framework to ensure that the strong and accountable governance necessary for devolution is in place.”

The issue of governance – the election of so-called “metro mayors” – is a key part of this Bill and will likely prove the most controversial aspect. The Bill sets out the scope of the role of an elected mayor including the provision that mayors will absorb the role of Police and Crime Commissioner.

Other issues related to governance include the ability of the elected mayor to appoint a deputy mayor; how a mayor will be elected and the role and make-up of an overview and scrutiny committee (elected from within the combined authority membership) to oversee the work of mayors.

The Bill is being led for the Government by the Department for Communities and Local Government and the Bill sponsor is Baroness Williams of Trafford, Parliamentary Under Secretary of State for Communities and Local Government.

Second reading is the second stage in the passage of a Bill. It occurs after:

• First Reading – where the Bill is introduced either in the House of Commons or the House of Lords, but no debate takes place
• Second Reading – when the general principles of the Bill are discussed
• Committee Stage – where detailed, line-by-line examination of the Bill takes place, usually conducted by a small group of MPs that are representative of the political make-up of the House
• Report Stage – where a debate is conducted on the floor of the House with any MP allowed to contribute to proceedings. Report Stage allows the changes introduced at Committee Stage (amendments) to be reported to the whole House and gives all MPs the chance to introduce their own amendments to the Bill. Report stage is followed me Third Reading, a final vote on the Bill before it proceeds to either the House of Lords (if the Bill is introduced in the House of Commons) or the House of Commons (if the Bill in introduced in the House of Lords).

The Second Reading of the Cities and Local Government Devolution Bill 2015 was interesting in that it saw notable contributions from a range of Lords whose political careers have been closely staked to issues of decentralisation, devolution and local government including Lord Heseltine, Lord Prescott and Lord Shipley.

As stated, Second Reading is an opportunity to discuss the general principles of the Bill – in this case, devolution – rather than specifically discuss items within the Bill (though measures within a Bill may be alluded to). Because of the nature of this Bill and the wide, cross-party support that devolution has gathered many of the contributions were largely in favour of the premise of the Bill –more powers, more localism – with the only real concerns being centred around the Bill’s prescriptive nature, especially where the need for a mayor was concerned. There was also some feeling among some members that the Government needed a legal framework but the structural framework for each devolution deal should be allowed to be more asymmetric. These are points that will likely be discussed, at length, in the Committee Stage.

Introducing the Bill on Monday 8 June, Baroness Williams of Trafford, noted that “[the] Bill … puts in place not only the legal framework for devolving powers, but the framework to ensure that the strong and accountable governance necessary for devolution is in place.” Baroness Williams also sought to play down suggestions that mayors would be enforced on combined authorities noting that provisions within the Bill “are to be used in the context of deals between government and places.” She stressed that “nothing is being imposed”. She continued that “where there is a request for an ambitious devolution of a suite of powers to a combined authority, there must be a metro mayor, but no city will be forced to have a mayor and the powers that come with it. No county will be forced to make any changes of governance and to have the powers that can come with such governance changes.”

Responding to Baroness Williams’s opening, Lord McKenzie of Luton spoke of “the economic imperative—the need to enhance and sustain growth and reconfigure and join up services in the face of more cuts—and the democratic benefit which can flow from people having more power in their localities and communities” and said that such a wish will “require us to now address the benefits of devolution on a more profound and sustained basis”.

He also mentioned that “there is no general provision in the Bill whereby sources of revenue accrue directly to local authorities as part of a devolution process”. He alluded to Lord Heseltine’s assertion in his No Stone Unturned report which cautioned against “penny packets” approach to devolution, that is “parcels of cash attached to specific projects, each with their own particular objectives, timetable and requirements”. Lord McKenzie asked the Minister is she would heed his advice.

Speaking in his new role as Liberal Democrat Local Government spokesperson, Lord Shipley welcomed the Bill “not because everything in it is right but because it represents a further and very important stage in achieving greater decentralisation and fiscal devolution within England”. Speaking about the referendum on a North East Assembly in 2004

Lord Shipley said that this was not a perfect Bill and raised concerns about the democratic legitimacy of the new Bill: particularly the new structure of local governance and public support for that structure. He stressed that “we need to think very carefully about running policing, social care and health, strategic planning, housing, skills, transport, economic development and regeneration all through one person” and further said that “in London there is an assembly with powers of scrutiny over the mayor. Something similar is needed as part of the Bill.”

The Earl of Listowel, a crossbench Peer, referenced housing throughout his contribution particularly in relation to providing social housing for the poorest families and for key workers. He urged the House “to look at this Bill as an opportunity to think about how we can increase the supply of affordable homes, key worker housing and social housing in this country.”

Lord Heseltine began his remarks noting that “if there is an area of this country’s administration where devolution is necessary, it is in the poorest communities, which are all fragmented into different streams of funding from central government. There is no correlation or process at local level that draws the funding together and asks fundamental questions”. On metro mayors, Heseltine said that there is “… built into the statute, endless provision for new mayors to be created within the existing framework of local government without a referendum, so why should we be preoccupied with this delaying tactic?”

In his remarks, Lord Prescott suggested that ‘everything in the powerhouse of the north was embodied in 2006’s Northern Way’ and went on to criticise the Government for suggesting that their devolution agenda was historic noting that “when they say, “Ah, the powerhouse of the north!” it is not original or historic—we did that 10 years ago.”. Generally speaking, he was supportive of the Bill but held some reservations about elected mayors.

In her remarks, Baroness Wheatcroft raised in interesting point regarding a potential elected mayor’s role in mediating planning disputes. She noted that “any thriving local community needs housing, as we have heard already, but the nimby tendency in this country is not to be underestimated.” She continued that when put several local authorities were put together; there is a great danger that “there will be very different views on where the housing development and indeed any other development should go. I am not entirely clear what the mayor’s role will be in ironing out that sort of conflict.”

In his brief remarks, Lord Whitty stated that “housing is also no longer a clear and effective local government responsibility. To reverse that, we need to take the initial steps that the Bill suggests”. He referred to a time when local government had the ability to “raise their own money. They could determine their own domestic and business rates at that point and could go to the private market and borrow money on various terms”. He called for the relaxation of Treasury borrowing rules so that councils could return to a system like this.

On a further point related to planning and land availability, Baroness Hollis suggested that ‘all the publicly held land within a city should be pulled into a single property board to make best use of development sites’. She continued “on finance, we need five-year funds to plan transport, housing, skills and training. We need more from the business rate to fund investment”

On the topic of devolution to non-metropolitan areas, Baroness Eaton said “I am glad that the Chancellor listened to the representations of the LGA and the non-metropolitan commission and has opened the door to England’s counties as well. These areas account for half our country’s population and economic growth. Their economic contribution, and their potential growth, is as significant for the nation as that of the big cities. Even so, the language of devolution remains centred around cities.”

Summarising the debate for the opposition, Lord Beecham repeated his call for the reintroduction of government regional offices saying that they would “help to meet the point made in this debate about having a central point of contact between the local authorities in a given area and government itself”. He added “there is no reason why the mechanism of combined authorities, backed up by well-resourced scrutiny and the active participation of public sector partners and their private and community sector counterparts in appropriate policy areas, should not operate effectively and accountably. They should have their own audit committee, or public accounts committee, independently chaired.”

Lord Beecham urged the Government “not to make a fetish of the mayoral system as a condition of empowering and working in partnership with combined authorities, or with other authorities and groups of authorities, because we are not, as the Minister made clear earlier, just talking about combined authorities” alluding to Baroness Eaton’s point that not all devolution is centred on cities and is just as important for non-metropolitan areas.

He concluded his remarks by calling for a return to “needs-based local government finance system” saying that it “is critical if the Government’s proclaimed aspirations are to be realised. I repeat that devolving tax- raising powers of itself is insufficient, given the variability, and vulnerability, of the local tax base. By all means devolve those powers, but recognise that there is still a need, in addition to the fiscal devolution … to have ample financial resources available.” This fits neatly with calls contained within the Northern Housing Manifesto that said to focus on outcomes-based investment rather than scattered project-based investment.

At the time of writing, the Bill was due to begin Committee Stage in the week beginning 22nd June 2015.

The NHC will continue to monitor the passage of the Bill and brief MPs and our membership as appropriate, including through our monthly ezine as well as in our weekly Parliamentary Briefing. We welcome your feedback on this briefing and are happy to deal with any questions or comments you have on measures contained within the Bill or its progress.