Local Government Bill

– in the House of Commons at 4:38 pm on 7th January 2003.

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Order for Second Reading read.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government) 4:49 pm, 7th January 2003

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

Local government performs a vital function in the life of our country. Local authorities between them account for about 25 per cent. of all public expenditure in England and Wales. Local authorities deliver a wide range of services that are vital to the well-being of local communities and individuals and are uniquely well placed to reflect and represent the concerns and aspirations of the people living and working in their areas.

Just over a year ago, in our White Paper, XStrong Local Leadership; Quality Public Services", we set out our ambitious agenda for the future of local government. Two key themes lie at the heart of that agenda. The first is the need to devolve power and responsibility to local authorities. The second is the importance of driving up standards of delivery in every local authority area. The two are inextricably linked.

The last decades of the 20th century were, sadly, characterised by excessive centralisation. Local authority powers were progressively curtailed and eroded while central Government sought to exercise ever-greater supervision and direction over the minutiae of local government activity. The Conservatives now seek to present themselves as being in favour of devolution, at least in respect of local authorities. It is always good to see sinners who have recognised the need to repent, but there are many people in local government with long memories who find the current posture of the official Opposition difficult, if not impossible, to reconcile with their entirely different behaviour when they were in power. It will take more than a few airy speeches to wash away the long record of heavy-handed centralisation and contempt for local democracy that marked the Conservative years in government.

This Government want to see local authorities succeed. We want to help councillors and council officers to deliver the strong local leadership that people expect from their council, and the quality services that everyone has the right to expect. Our White Paper set out a range of measures to help to achieve those goals, including a new performance management framework, on which the Audit Commission delivered its first comprehensive performance assessments just before Christmas, and a range of deregulatory measures designed to give local authorities more freedom to succeed and more incentives to drive up service standards. The Bill is one further important step along that road. It gives effect to all the commitments requiring legislation set out in the 2001 White Paper, and introduces measures to remove unnecessary and outdated bureaucracy and red tape, and to help those working at local level to respond to changing needs and demands.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

The right hon. Gentleman will recall that the Select Committee report commented on the amount of regulations that would be used to bring these measures into being, and recommended that most of those regulations should be made available in draft form to the Standing Committee. Will he tell us when these important regulations will be made available?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman makes a very fair point. As I said to the Select Committee, we intend to make available to the Standing Committee, by the time it comes to consider each of the relevant passages of the Bill, the main regulations in draft that will apply to those passages, or—I make one caveat—in certain respects, particularly relating to the business improvement district programme, the guidance that we propose to issue that will inform the regulations. The reason for that is that the business improvement measures represent an innovative approach, and we intend the regulations to enable changes to be made in due course, but we do not want to be too prescriptive. That is why we are using the regulatory framework rather than putting detailed prescriptions in legislation, but we will issue guidance to illustrate how we expect the business improvement district programme to be taken forward.

The Bill covers both England and Wales. It responds to a number of requests made by the Welsh Assembly for specific Welsh provision. The Welsh Assembly supports the Bill, and has welcomed its introduction. The Bill has been the subject of extensive consultation, and, indeed, was preceded by a draft Bill published last summer and scrutinised by the Urban Affairs Sub-Committee of the then Select Committee on Transport, Local Government and the Regions. Of course, areas of concern arose from the consultation, and we have gone some way towards meeting those concerns. Most notably, we removed one of the most controversial measures, which originally proposed to merge revenue support grant and national non-domestic rates.

I turn now to the substance of the Bill. Part 1 makes a fundamental change—

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I am grateful for some of the changes that were made as a result of the Select Committee's recommendations. Before my right hon. Friend outlines all the measures in the Bill, will he tell us more about one or two of the things that have been left out? Will he tell us also when he envisages those measures being inserted in the Bill during consideration in Committee? I have in mind especially the controversial issues that arise from section 28. Secondly, there is the registration of landlords. Local authorities would very much like that power when dealing with empty homes.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

As my hon. Friend knows, we have given effect to all the legislative commitments in the White Paper, and that was our objective. Perfectly rightly and properly, there is concern about section 28 and other measures. The Government will support a suitable amendment to repeal section 28 of the Local Government Act 1988, if one is tabled. We regard section 28 as an unnecessary piece of legislation.

Photo of Kali Mountford Kali Mountford Labour, Colne Valley

I welcome the steer that my right hon. Friend has given the House. Is he saying that the Government would be minded to accept an amendment during consideration of the Bill?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Yes, I can give my hon. Friend exactly that assurance. We will support a suitable amendment to repeal section 28. As I have said, it is an unnecessary piece of legislation.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

Why will the Government not table their own amendment? Why will they say that an amendment is not appropriate in their eyes? If they are to make that judgment, the Government should table one.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

As I have explained to my hon. Friend Mr. Bennett, the Chairman of the Select Committee, we have been working extremely hard to give effect to all the legislative commitments in our White Paper. The Bill fundamentally deals with local government finance. The hon. Gentleman will fully understand—I know that he will have studied the Bill—that many measures are involved, and we have concentrated on putting them in place. We have always made it clear that if suitable amendments are introduced in respect of other measures, we shall be prepared to be sympathetic. That applies especially to section 28. I have given a clear indication to the Chairman of the Select Committee and to my hon. Friend Kali Mountford that the Government will consider an appropriately framed amendment sympathetically.

Photo of John Battle John Battle Labour, Leeds West

While my right hon. Friend is displaying an open and magnanimous spirit, is he aware that the Bill offers an opportunity to tackle the issue of private landlords? Would he be similarly open-minded and magnanimous in accepting an amendment that dealt with that issue? I suspect that there will be no other opportunity, unless he can assure me otherwise, to tackle the matter.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Housing provisions are the subject of separate legislation that is being prepared by the Department. I know that my right hon. Friend the Deputy Prime Minister will want to say more about that in the near future. We have an important agenda in proceeding with the finance measures set out in the Bill. We do not want to overload the Bill with a large number of measures, especially when there are other options for achieving my hon. Friend's legislative objective.

Photo of John Bercow John Bercow Conservative, Buckingham

May I tell the Minister that if Kali Mountford tables an amendment to secure the repeal of section 28, I shall certainly support it? Some time ago, I came to believe that section 28 is gratuitously offensive. It causes justified resentment and should, in the interests of fairness and decency, be urgently repealed.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am happy to say to the hon. Gentleman that I wholly concur with his view. We see no useful purpose for section 28. Contrary to the views that are often expressed, it does not have an effect in relation to what is taught in schools. There are separate provisions to cover that. As he rightly stated, it gives considerable offence to many people whose lifestyle is stigmatised by the provision. We regard it as unnecessary and undesirable. We shall support an appropriate amendment to achieve its repeal.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

In that case, why did the right hon. Gentleman not include the provision in the Bill?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am sorry that the hon. Gentleman clearly was not listening when I answered precisely that question from Mr. Davey.

Photo of David Curry David Curry Conservative, Skipton and Ripon

If the Government do not, on balance, like a provision, but do not have a very strong view on it, it is legitimate for them to say that they will open themselves to persuasion by a Back Bencher. However, if the Government fundamentally believe that a measure is wrong, as the Minister has just stated repeatedly in this case, it is sheer gutlessness not to try to repeal it by tabling an amendment with their names attached.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I have a lot of respect for the right hon. Gentleman, who has done the job that I am doing now. He will know that putting legislation together is complex. When one has many competing claims for provisions to be included and there is a White Paper with a series of important commitments that need to be implemented, it is right and proper that the Government should concentrate on those. He will know also that it is perfectly reasonable to seize opportunities for change that may be presented by amendments tabled by Back Benchers in Committee. I seem to recall, when I was in Opposition, moving amendments in Committee that were, in some cases, at least temporarily successful in changing legislation for which he was responsible. That is a proper part of the process.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I intend to make progress, as we have dealt with this matter at considerable length.

Part 1 makes a fundamental change to the way in which local authorities borrow to support capital investment. It ends the current consent regime that requires authorities to obtain Government approval for all borrowing. In future, local authorities will be free to borrow without Government consent if they can afford to service the debt without extra Government support. We will, of course, continue to support the major part of authorities' capital programmes, but authorities will be free to use their self-financed borrowing for any kind of capital spending—that is on buying, building and improving property and infrastructure.

There are many ways in which councils will be able to use those new freedoms. They could include, for example, major social services schemes such as improvements to residential care homes and grants to voluntary organisations for family centres. They could involve environmental schemes to encourage household recycling. There could be an emphasis on crime prevention measures such as improving street lighting and car park security. Those are random examples. Authorities will have complete discretion as to how they apply that new freedom.

Local authorities must accept that those freedoms go hand in hand with a responsibility to act in a way that ensures high standards of financial management. That is why we have retained reserve powers and are setting out specific obligations to monitor financial performance and maintain prudent reserves.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

Forty-five local authorities already demonstrate excellent prudential management because they are debt-free, yet clause 11(2)(b) seeks to prevent them from being able to manage those assets and to decide their priorities for them. The Minister wants to sequestrate them and spend them on local authorities who have not managed their budget well. Surely that is not about devolving responsibility to local government.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

No, I am afraid that the hon. Lady has got completely the wrong end of the stick. Some authorities happen to be debt-free because of good fortune, not good financial management. Some happen to have inherited assets. For example, a number of new towns have housing stock that they did not have to incur debt to acquire. Others may have been remiss in meeting responsibilities in their area, so they simply have not incurred debt. The suggestion that there is an absolute parallel between efficient management and debt-free status is not accurate. Also, the provision for capital receipts applies to all other local authorities where a proportion of receipts currently has to be set aside. We are ending that provision, and instead there will be a pooling mechanism. If it is right that all other authorities in the country should be part of a pooling mechanism, I can see no logical reason why debt-free authorities should not be part of it too. She does some special pleading, but she will have to do better.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

As a Member for a new town, I think that my right hon. Friend should be aware that concern about clause 11(2)(b) does not come only from Members on one side of the House. The Bill incorporates a system by which a new town is considered to have been given a wonderful windfall, which means that its borough council must pay #10 million a year back to the Treasury from its own resources by 2010. The idea that that is fair falls badly on the ears of my constituents, who live in a town that is 50 years old and whose entire fabric is falling into disarray, as the Select Committee has recognised. My right hon. Friend should be aware that these matters cause anger among Members of all parties.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I must tell my hon. Friend that to some extent he has misunderstood the arrangements, which will ensure that there is continued increased investment in housing—I know that that is dear to his heart. We have already increased housing capital investment by a factor of two and a half since we came to office. My right hon. Friend the Deputy Prime Minister will make a further announcement when the communities plan is announced later this year.

On capital receipts, where an authority needs to spend for the reasons that my hon. Friend outlined, those needs will be taken fully into account when we determine the sums to be made available. There is no reason at all why he should be afraid about a loss of spending capacity in an area that genuinely needs to spend on housing and intends to use its capital receipts for that purpose.

There is a different issue concerning authorities that have received substantial capital receipts but not applied them to housing investment. For example, Ashford has received more than double the amount in capital receipts in the past three years that it has spent on housing investment. When there is a genuine need for housing investment, it is curious that authorities with considerable assets but no apparent enthusiasm to spend them to meet housing need can keep their council tax down by using those sums for other purposes. It is therefore right to have a mechanism to make the best use of those receipts to meet the needs that arise.

Photo of Patrick Hall Patrick Hall Labour, Bedford

My right hon. Friend mentioned incentives. Does he accept that a debt-free housing authority such as Bedford borough council views the prospect of the withdrawal of the local authority social housing grant as a disincentive to invest in the social housing sector? It earmarked all its capital receipts for housing on the basis that an equivalent sum would be repaid for use in the general capital account. Will he address that possible loss of incentive?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

As I told my hon. Friend Mr. McWalter, we have already made it clear that authorities with a genuine need to spend on housing investment can look forward to the new framework with confidence. We intend to take those needs into account when we determine the arrangements that will be announced by my right hon. Friend the Deputy Prime Minister when the communities plan is introduced. However, there is no reason for local authorities to feel nervous about any reduction in housing investment. We are seeking to increase investment and make sure that assets are used for that purpose. As my hon. Friend Mr. Hall heard me say, we are obviously concerned about authorities that have received substantial receipts but have not used them for necessary investment.

Photo of Barbara Follett Barbara Follett Labour, Stevenage

I thank my right hon. Friend for assurances that new towns such as Stevenage will not lose much-needed housing money. However, does he realise the effect that delaying the announcement of the amount that they will receive in capital receipts is having both on their ability to plan ahead and his stated aim of devolving power to local authorities? It is taking power away from local authorities, and there is a lot of resentment in Stevenage about that.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I fully understand the concerns voiced by Stevenage—indeed, I met a delegation from there. However, I put it to my hon. Friend in the nicest possible way that perhaps she could tell her colleagues in Stevenage that, according to our records, it has received #14.4 million more in capital receipts over the past three years than it has applied to housing investment. Her colleagues may wish to consider that before making more representations.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

While the Minister is commenting on the redistribution of pooled housing capital receipts, will he also comment on clause 90, which redistributes the surplus from some local authorities' housing revenue accounts to local authorities that have managed their housing revenue accounts badly and are in deficit? How is that amount of redistribution justified in the Bill?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman should remember that the current framework for housing revenue accounts was introduced by his party when it was in government and contained precisely that provision. The only difference was that the housing revenue account framework that his party put into effect included housing benefit in the housing revenue account. That has caused considerable anxiety and resentment among local authorities and we are removing the provision. We are introducing proper resource accounting, an approach that I believe David Davis, who leads for the Opposition and previously chaired the Public Accounts Committee, strongly recommends. That is the purpose. We are separating benefit from the housing revenue account. I hope that the hon. Gentleman welcomes that.

The new duties imposed in part 2 are no more than any well-managed local authority would do anyway, but by making those duties statutory, we are making it clear that we will accept nothing less than sound budget setting and monitoring and prudent financial management. Although most local authorities manage their affairs scrupulously and well, and many achieve very high standards, as the Audit Commission's work testifies, it remains the case that a small number of badly managed and poorly performing local authorities tarnish the good reputation of local government. It is in everyone's interests that those authorities turn around their performance and strive to match the standard of the best. That is what the comprehensive performance assessment and follow-up process are designed to help achieve, and that is why we make no apology for including the part 2 provisions in the Bill.

Various mechanisms to make grants are provided for in part 3, including a wide-ranging power to give greater flexibility in making grants to local authorities for any purpose. The new power will allow Government to pay grants without imposing undue conditions—another way in which we are working to reduce red tape and bureaucracy.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman cannot have it both ways. If he favours local government being able to operate without unreasonable central control, he must support measures that allow greater flexibility in grant-making powers. If he wants detailed central control, he will argue for the retention of detailed parliamentary scrutiny of each individual grant, many of which are of very small sums indeed.

This measure will be subject to parliamentary scrutiny, because our departmental accounts will continue to be the subject of full parliamentary scrutiny, and it will ensure—[Interruption.] I am surprised that the hon. Gentleman makes light of that. Parliamentary scrutiny of departmental accounts is an important part of the responsibilities of this place. That is the proper way of doing it, rather than minute point-by-point scrutiny of every single grant, however small, to individual local authorities, which is required under the current legislation. I should have thought that the hon. Gentleman would welcome our approach, which tries to streamline the procedure and cut out unnecessary bureaucracy.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

Mr. Davey may not have made himself entirely clear to the Minister, or perhaps the Minister did not entirely understand his point, which related not to the scrutiny of each individual grant, but to the scrutiny of the objective criteria under which the grants will be paid. Far too many grants have been paid, for example, in education without any clear objective criteria. It is notable how many of those grants have gone to Birmingham, whereas none has gone to the Isle of Wight.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

If the hon. Gentleman gave some attention to the details of grants to local authorities, he would be aware of the extraordinary number of very small grants that go, for example, on the beacon council scheme, to which we shall refer later. The average grant is some #40,000. There are well over 100 authorities seeking beacon status next year. Not all will succeed, of course, but to require individual grant approvals in such minute detail is clearly not a sensible way to operate. Obviously, there are broad criteria. When the criteria for beacon council grants are determined, they will specify exactly the sort of broad features in which he is interested. It is right that such issues should be scrutinised, but that does not include the minute detail of individual grant payments.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

The Minister will be aware of the Select Committee's concern about the subjectivity in the way in which the general grant was given. Does he agree that local authorities and anyone who is faintly suspicious will see that the new measure is an extension of subjectivity or, in other words, allocation by ministerial will?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

If the hon. Gentleman, who was a Local Government Minister in a former Administration, had read the Local Government Association brief, he would know that it warmly welcomes the provision and believes that it is an appropriate deregulatory measure that allows greater flexibility. Indeed, it states:

XThe LGA welcomes the proposal to simplify and extend the statutory basis of grant payments to local authorities. This is particularly welcome in cases where the new power will provide for greater flexibility for councils in the use of the grants."

I attach rather more attention to the LGA's view than to his.

Part 4 provides for business improvement districts, which will allow local authorities and businesses to work together to put in place appropriate projects to improve their area. Such projects could deal with a wide variety of issues, including improvements to the quality, safety and accessibility of local shopping centres, enhancements to commercial and business centres and other similar desirable aims. There are already good examples of councils and businesses working together voluntarily to deliver benefits for their areas. That will provide a strong basis for the new bid schemes to develop once the legislation is introduced.

Part 5 contains various measures that will make changes to the non-domestic rating system. For example, small business rate relief will benefit small firms occupying single premises with a rateable value of less than #8,000. That will benefit a significant number of ratepayers. There are almost 1 million properties with rateable values of less than #8,000, and businesses qualifying for the relief will benefit, as their overheads will, in effect, be cut.

Part 6 will update council tax.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

On council tax, my right hon. Friend made a statement early in December on the new formula for local authority funding. The proposals are out for consultation and I am sure that he is receiving a substantial number of representations from members of SIGOMA—the special interest group of municipal authorities—and other authorities about the impact of gearing, which will affect the council tax level. As the Bill will be considered in Committee after the date on which the consultation is due to finish, will he address the problems that some authorities are facing in relation to gearing? There is a need to ensure fairness in council taxes under the new formula, so that no local authority faces excessive council tax problems.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

We intend shortly to announce the start of the balance of funding review, which will consider in more detail the wider issues relating to the way in which local authority services are financed. That is the appropriate context in which to consider the issue that my hon. Friend raises. As he referred to the local government finance settlement, however, I should like to point out that we have received a number of representations, including a considerable number from hon. Members and indeed local authorities. Clearly, we are engaged in the process of consultation, so I do not want to say anything more at the moment. I believe that the settlement was a good one. It allowed above-inflation increases to every local authority in the country for the first time, and I believe that that helps local authorities to budget for the coming year.

Part 6 will allow for a 10-year cycle of revaluation and variation in the number of bands. It will help to achieve a fairer way of raising council tax in future years. Contrary to what has been said in some press coverage, revaluation will not lead to increases in the council tax yield. Revaluation is simply the process of looking again at the relative values and distribution between different areas. Local authorities will also have greater freedom on the council tax discounts and exemptions that they grant.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

The Government already have powers to vary the bands. Why is a new band preferable to variation of bands?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Although, as the hon. Gentleman rightly says, there is a power to vary bands, he will be aware that no power exists to increase the number of bands. It might well be felt appropriate to increase the number of bands from eight to 10 or more, but that is simply an option. At the moment, the only power available in the legislation is to vary the bands' existing widths within the existing number. We have received representations from certain parts of the north, for example, to the effect that band A covers a disproportionately large number of properties. Some 80 per cent. or more of properties in that area are entirely within band A. The occupiers of a number of very low value properties in areas with very low values feel that band A is perhaps unfair to them because it covers a very wide range, including properties that may be twice the value of their own. We have not taken decisions on these issues, but they need to be looked at, and given that we have received these sensible and logical representations, it is right that we make provision—if necessary, and if it is felt appropriate—to increase the number of bands.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

Does the Minister therefore have in mind park homes, which inevitably fall into band A, even though their owners often feel that that band is unfair so far as they are concerned?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Lady raises a perfectly fair point. I myself have received representations from the owners of park homes whose properties fall into this category, and who feel that band A is very broad. In some cases, their homes fall rather low in the overall position in band A, and a separate band might be helpful to them. This is precisely why we are giving ourselves the power, if we decide that it is appropriate to do so, to create additional bands. However, we are not committed to doing that at this stage, because a lot will depend on the revaluation process, which, as I have said, will begin in 2005.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

On a constructive note, when the banding system was set up in 1991, the variation between property values in the north and in the south, for example, was not as great as it is now. Is the Minister considering establishing a regional mean variation, so that variations in the same banding system can accommodate variations in property values throughout the country?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman will be aware that some representations have been made in favour of such an option, but as I have already made clear, we have taken no decisions and have no predisposition one way or the other on this issue. We will begin the process of revaluation with a genuinely open mind, and we will be guided by the evidence. Between now and 2005, when revaluation begins, a lot could happen in terms of relative values. For example, at the moment a great deal of concern exists in the south of England because in the past 11 years values there have increased by a greater proportion than in the north. However, current figures tell us that the fastest growing region in terms of house prices is Yorkshire and Humberside, and if that trend were to continue for a couple of years, we could well see a very different pattern from the one that currently prevails. For all those reasons, it would not be wise for us to jump to conclusions at this stage about what is the right way to handle this issue, as and when the revaluation begins. However, we have made provision, and the powers exist to deal with this issue in a sensitive way.

Through part 7, we are aiming to complete the transition to resource accounting in the housing revenue account, thereby making it a pure landlord account. Local housing strategies will be put on a statutory basis, and authorities will have the flexibility to rationalise their housing plans. Perceived barriers to rent restructuring will be removed. Finally, part 8 contains the non-finance provisions in the Bill, which also give substantial freedoms to local authorities. For example, all best value authorities will be allowed to charge for discretionary services. Better performing councils will also be empowered to trade across a range of services that they provide.

Photo of Adrian Sanders Adrian Sanders Liberal Democrat, Torbay

I do not know whether the Minister has skipped through part 6, but on second homes and councils' ability to end discounts, how much of such discounts will local authorities be able to use without restriction?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman will be aware that, in the case of second homes, our proposal is to enable local authorities to vary the discount from the current obligatory 50 per cent. downwards to a limit of 10 per cent. There is a purpose for that. We believe that local authorities should retain the proceeds of the reduction in the discount if they choose to do so. The only way in which that can happen is if they know which properties are second homes, and they will have that information only if the owners of second homes have an incentive to record it. That is why we have set the 10 per cent. discount as the absolute minimum, and it exists for that obvious reason. The objective is that local authorities will derive the whole additional revenue that is drawn from the reduction in the discount if they choose to do so. However, it is a local discretion—one more example of the way in which the Government are devolving power and enabling local authorities to take decisions.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

I am sure that the Minister will conclude by saying that champagne corks should pop because local authorities will have much more power, but how does he explain why 70 pages of legislation contain 79 references to the Secretary of State's powers—new powers, reserve powers and powers that will not be given back to the local authorities? There is only one instance in the Bill of power being given away without obligation, and that is in connection with the prescription of rateable values.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

It is clear that the hon. Gentleman has not read the Bill, which makes it clear that local authorities will have a substantial number of additional freedoms. For example, the borrowing approval requirement will be ended, councils will be allowed to charge for discretionary services, and fair, good and excellent authorities will be allowed to trade. In addition, councils will be allowed to give discretionary council tax discounts, and to reduce or withdraw discounts on second homes and homes that have been empty a long time.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

No, I have given way already to the hon. Gentleman. He may not like what I have to say, but he is going to hear it. The Bill gives a substantial number of freedoms and benefits to local government. Local government welcomes that, as the hon. Gentleman should know. However, the Bill also contains a number of innovations, such as the business improvement district. We do not want to be too prescriptive at this stage, as that would hamper innovation and the exploration of different models. As I explained in detail to the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee—and I think that the hon. Gentleman was present at the time—we have chosen, in the relevant part of the Bill, to operate largely through regulation. The Bill contains frequent references to regulations made by the Secretary of State, because that allows us to give effect to policies that emerge as the business improvement district scheme unfolds. If we specified in the Bill how the scheme should operate, it would be more difficult to alter, as the hon. Gentleman knows. He should not jump to the conclusion that the references to the Secretary of State's powers mean that it is a centralising Bill. The official Opposition have made exactly that mistake. The Bill is not a centralising measure, but a deregulatory one. It gives substantial additional benefits and freedoms to local government, and local government welcomes it.

Photo of John Bercow John Bercow Conservative, Buckingham

Leaving aside the question of the precise balance between centralisation and decentralisation in the Bill, will the Minister say whether, on the whole, the bulk of the Bill's powers to make regulations and orders will be subject to the affirmative procedure of the House, or to its negative counterpart?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

As the hon. Gentleman will discover if he serves on the Standing Committee considering the Bill—and I should be very pleased if he does—the Bill offers a judicious mix in that regard. The affirmative powers will be used in respect of a substantial number of measures, and the negative procedures will be used in other cases.

Photo of Brian Iddon Brian Iddon Labour, Bolton South East

Will my hon. Friend the Minister confirm whether the housing direct labour organisation in my area will be able to trade with former tenants who have exercised the right to buy? Will the HDLO be able to sell those tenants double-glazing at a reasonable price, for example?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I know that my hon. Friend takes a great interest in these matters, and I have visited the double-glazing factory in his authority. It manufactures units to a very high standard, but I must say no more in case it could be implied that I am giving a commercial advantage to one operator. However, I can tell my hon. Friend that authorities that achieve a good, excellent or fair rating under the comprehensive performance assessment will be given powers to trade—with the private sector, with individuals who have purchased their homes and with other authorities. That is another of the important deregulatory measures that give local government additional powers, and which are the hallmark of the Bill.

I was referring to part 8 of the Bill, which contains the non-finance provisions and gives to local authorities greater freedoms, such as the trading powers that I have described. However, all local authorities will also have the freedom to hold advisory polls on any matter relating to the services for which they are responsible, and on matters connected to the well being of their areas. Councils will also be allowed to retain the proceeds from litter and dog fouling penalties and spend them on local environmental improvements.

I turn now to the fire service, which is a local government service and fire authorities are included in a number of the reforms that the Bill will institute. In addition, the Government will move an amendment in Committee to remove Whitehall's detailed operational control of fire brigades' establishments—the number of staff, the deployment of appliances and the location of fire stations.

Such an amendment arises from the Government's acceptance of the urgent need to facilitate a move to a new approach to fire cover, identified by the Bain review as the key to change in the fire service. The current detailed control makes modernisation on the ground more difficult. That amendment will repeal, in England and Wales, most of section 19 of the Fire Services Act 1947. My right hon. Friend the Deputy Prime Minister said on 16 December, when the Bain report was published, that we would introduce such legislation at the earliest opportunity, and he announced his intention to use the Bill as the vehicle to do so on 19 December.

My right hon. Friend also made it clear that we accepted in principle the Bain recommendations for wider legislation to modernise the fire service, to improve inspection and service delivery and to set up a new central body to drive modernisation. We will give further attention to those matters in a fire White Paper, which we intend to publish in the spring. We will therefore consider the issues raised in that regard by the Bain review during the next few months, and a Bill giving effect to the White Paper proposals will be introduced as soon as the legislative programme allows.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

I seek clarification on what the right hon. Gentleman has just said. Can he give us an indication of how much the proposals will affect the local determination of fire services run by local councils?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The measure is all square with our overall approach—to devolve power—and it specifically builds on the Bain recommendation that modernisation should be based on a risk assessment carried out in each fire authority to determine staffing and the correct location of appliances. Those issues should be determined by the fire authority in consultation with the senior fire officer for the area. In our view, such matters should not be determined by Whitehall. The current position is a relic of a previous centralising regime that goes back to the 1940s, which should be replaced in line with our overall approach.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I will give way to my hon. Friend, and then I shall give way to other hon. Members.

Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North

Will the amendment that my right hon. Friend has just mentioned be consistent with the findings of the earlier working parties that were set up jointly by the Government and fire service employers? The Bain recommendations should be considered, but the amendment should be consistent with the wider work that took place with the fire service.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

That amendment is warmly welcomed by the Chief and Assistant Chief Fire Officers Association, and I believe that it will be very warmly welcomed by employers. Certainly, the employers' representatives to whom we have spoken have been extremely enthusiastic to hear that we are making such rapid progress on implementing that firm recommendation of the Bain review. It is crucial to ensure that modernisation is carried forward on a proper, risk-assessment basis to ensure that, in every area, those people best able to determine how to respond to the risk of fire do so and that the deployment of appliances and crewing levels are sufficient to meet the needs of that area in the most effective way. That is the objective, and it should be achieved through local assessment.

Photo of David Curry David Curry Conservative, Skipton and Ripon

We have already heard that an amendment relating to section 28 will be moved in Committee, and we have now heard that there will be an amendment relating to elements of the Bain report. My understanding is that the Bill is intended to go into Committee on 21 January and to come out on 6 February. That is what the Local Government Association says, and it seems to get much more advance notice of such things than we do. Even though there has been some pre-legislative scrutiny of elements of the Bill, does the Minister seriously think that what is now becoming a parliamentary pantechnicon is capable of being examined in six sittings?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

As the right hon. Gentleman has rightly pointed out, the Bill has been subject to very detailed pre-legislative scrutiny. It was scrutinised by the Select Committee and was the subject of detailed observation by local government. We will certainly try to ensure that it receives the most effective scrutiny in Committee, and a programme motion will determine that—that is not the subject of this debate, but it will no doubt be considered later. I am sure that the Bill will be properly scrutinised in Committee.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I was about to say that we will publish a fire White Paper in the spring, and we will consider the issues raises in this regard by the Bain review over the next few months. The conclusions, which we will set out in the White Paper, can therefore be brought forward, as soon as legislative time allows, in a new piece of legislation.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I have given way to the hon. Gentleman once already, and it is time that we made progress.

This is an ambitious and far-reaching Bill, which extends substantial new freedoms and benefits to local government. It takes a very significant step forward in putting central-local relations on a sounder, more constructive footing. It will help local government to be more responsive to local needs and pressures, and will improve the delivery of local services. It will encourage councils to be innovative in developing new services and partnerships. It will encourage all councils to emulate the achievements of the very best performers, and will be warmly welcomed by all who care about the future of local government. I commend the Bill to the House.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government 5:36 pm, 7th January 2003

I beg to move, To leave out from XThat" to the end of the Question, and to add instead thereof:

Xthis House declines to give a Second Reading to the Local Government Bill because it is a centralising measure that will have the effect of undermining local democracy by imposing new duties and responsibilities on local authorities;
it places in the hands of the Secretary of State too much power to determine the management of individual local authorities;
it deprives local authorities of control over housing and capital receipts;
and it gives unnecessary powers to the Secretary of State on financial administration, particularly the powers to specify the level of local authorities' reserves and to monitor budgets."

It is pleasure to start the new year by following the Minister, who, as always, is a master of his brief and has a clear idea of where local government should go, even though, occasionally, it pays to go in the opposite direction from what is intended.

Let me start with a quote:

XThe Government promised to redress the imbalance between central and local government. This Bill fails to achieve that. It makes some small steps in the right direction but at the same time increases the power of the Secretary of State. Central Government seems to be terrified of trusting local authorities and allowing them their independence."

Those were the opening words of the Select Committee's verdict on the draft Bill. That Bill, unaltered other than by tinkering at the edges, is before the House today. I want to pay tribute to the work of the Select Committee—it has made the Bill easier to understand and has acted as a persuasive advocate for more freedoms for local authorities. It has not pulled its punches in that report or in the report that it published last Friday. I am sure that the House is grateful for its work.

Many high hopes and expectations were raised by the earlier White Paper. I shall make a small confession, which I pray will not get me into too much trouble with my party—I found the White Paper bold in its promises. Its general direction offered promise and a chance to address relationships between central and local government, which was long overdue. I had reservations, of course—who would not with this Government? I was not sure whether they would have the bottle to see it through, and we have seen evidence today that they do not. This poor managerial mish-mash falls well short of the radical overhaul promised. In the words of the Select Committee,

Xaspects of the Bill centralise powers unnecessarily".

At least I now have empathy with the plight of Labour Back Benchers. I, too, know what it feels like to be betrayed by new Labour.

My right hon. Friend Mr. Curry raised some legitimate points. We now know that important matters relating to the future of the fire service are to be considered, which will take a little time—although I suspect that we will support the Government's aims when they table the amendments, if they are in the terms that the Minister has mentioned. We have the prospect of the repeal of section 28 of earlier legislation, which will take some time.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

I will do so in a second.

We have just three weeks to consider the matter. The Minister made a promise about regulations, which I am sure he will fulfil. I hope that those regulations will be available in sufficient time for members of the Committee to be able to table relevant amendments. That will cause problems.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

In a moment.

I therefore hope that that time will be reconsidered. After all, a similar time was allowed for consideration of the Planning and Compulsory Purchase Bill. That is a complex measure, but it is nothing compared with this. If we get wrong the provisions for prudential borrowing, pooling, business zones and trading, we will rue the day. Local government deserves reasonable time for scrutiny of those issues.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

Earlier, we heard a ringing declaration from Mr. Bercow about section 28. Can we now hear the position of those on the official Opposition's Front Bench?

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

We will wait to see the amendment that is tabled. We very much regret that the Government have not had sufficient bottle and have twice failed to table their own amendment. Perhaps they will rely on the services of Kali Mountford, but I am confident that whoever tables the amendment will do their best to seek consensus across the House so that it receives wide support. No doubt, well before that, the Conservative party's Chief Whip will announce the whipping for that particular debate.

Photo of Kali Mountford Kali Mountford Labour, Colne Valley

I am interested in the hon. Gentleman's remarks. The House has had many opportunities to discuss what is known as section 28, but is, in fact, section 2A of the Local Government Act 1986, and the issue should not be used to play ping-pong on the programme motion. Does he agree that it is far too important an issue for that sort of parliamentary game?

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

I agree with the hon. Lady. The amendment should have been tabled by the Government. In due course, I hope that we will be able to debate this important issue. However, that point underlines the strong and overwhelming need for the Government to provide extra time in Committee to discuss it.

The Bill falls at the first hurdle over which any radical overhaul must jump. If it managed to negotiate this hurdle successfully, everything else would follow naturally. The hurdle is one of simple trust. The Bill plainly shows that the Government do not trust local government. It seeks to provide for prudential borrowing, but the Government retain draconian powers. It seeks to give new financial responsibility, but they will retain the powers over balances. It seeks to give more freedom to housing associations but introduces the pooling of capital receipts. It seeks to recognise the community advocacy of councils, but introduces business improvement districts.

Local government is marginalised in the eyes of the public. It is seen rightly or wrongly—I believe rightly—to be utterly the creature of central Government for pay, for rations and for policy. The recent settlement and the comprehensive performance assessment findings will have confirmed just that and the public's suspicion. What used to be a sea of vibrant vitality, innovation and new ideas is slowly turning into an ocean of bland uniformity. Local government has been diminished to the local delivery of central services. Little wonder that the electorate do not think it worth while to walk a few hundreds yards to put a cross on a piece of paper. We wring our hands and complain of apathy, but it is not apathy. The electorate have rumbled us. When a change to the grant regime can move tens of millions of pounds to and from an authority and when an authority can raise council tax by 6 per cent. to generate just 1 per cent. of income, the public draw their own conclusions as to who is running the show.

The Government think that the problem is voter fatigue. That is why clause 103 will give the Secretary of State the power to lay an order to make the date of the local and Greater London Authority elections in 2004, and therefore enable them to coincide with the European parliamentary elections on 10 June. There is no case for combining the polls. The suggestion that it might be done to avoid voter confusion and fatigue looks, even at the most cursory examination, as a thin veneer to hide partisan advantage.

The right hon. Gentleman's consultation paper does not address the problem of possible voter confusion by having to vote in elections with different voting systems on the same day and with the resulting set of complex ballot papers. Voters in London will face three, and possibly four, different voting systems simultaneously: a supplementary vote for the Mayor; the additional member system for the London Assembly Members; the regional list system for Members of the European Parliament; and the first-past-the-post system if there is a by-election in a borough for either a constituency or the council. Holding both elections on the same day will prevent a proper debate on the separate issues of Europe and local public services and London government. In particular, issues relating to local government will be squeezed out. It is a recipe for confusion and spoilt ballot papers.

The Bill gives powers to the Welsh Assembly to introduce similar measures. The Welsh have dealt with the problem before. I commend the words of the Labour Minister Edwina Hart, who said:

Xlocal government and National Assembly elections should take place on different dates. That would reduce confusion and, hopefully, encourage participation in democratic elections in Wales. It would help to clarify in the public's mind the accountability of local government and the National Assembly for their various responsibilities."—[National Assembly for Wales, Official Record, 25 October 2001.]

To combine the polls on the same day shows a lack of respect for local government and the clearest indication to the public of what the Government really think about the value of councils.

Even in this meagre Bill there are measures that the Conservatives can support and improve. We support the concept of prudential borrowing. The idea that local authorities can manage their financial affairs within their own resources should attract wide support. It is an important step on the long road towards establishing a healthy relationship with local government. It is such a pity that the Government find it necessary to have wide and catch-all reserve powers.

Mr. Tony Travers of the London School of Economics told the Select Committee that the

Xsame legislation would indeed allow the Government to operate a very different capital control system, one similar to or even more controlled than the present one."

I fully understand the need for the Government to manage the national economy and to control the amount of aggregate borrowing. Conservative Members are in favour of making the scope of the Government's intervention limited and transparent. More sensible people would want that and see it as reasonable. I recognise that the Government have offered a reassurance on that, which I suspect is about to be repeated.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am listening carefully. The hon. Gentleman says that he wants the Government's use of the powers to be transparent. I thought that I had made it clear, not just before the Select Committee but in the Bill itself, that there are two reserves powers. The first is in respect of the national economy and will be used only to protect the overall national interest. Is he seriously suggesting that any responsible Government should not have such a power? The second is in respect of individual authorities whose performance is unsatisfactory. He knows that that applies to only a small number of authorities. Is he suggesting that there should be no scope to intervene to stop an authority such as Hackney getting into a position in which it so mismanages its affairs that it creates a large debt that the Government have to bail out?

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

The Minister may be falling into the same trap as other occupiers of his post. They look at Hackney and think that is local government, but in fact it is an aberration and should be treated as such.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

There is much merit in the Select Committee's recommendations. In its report of July 2002, it suggested an amendment to clause 4 which set out the procedure by which the Government could act. If Ministers want broad consensus, I hope that a similar, if not identical, amendment will be accepted in Committee. If that happens, we can bridge the gap, square the circle, and be happy about the results.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

Perhaps I could intervene before my hon. Friend becomes too enthusiastic about the freedom to borrow, which rather concerns me. From his background knowledge, he will recognise that any prudent authority will assist the revenue aspect of the capital that it would borrow. He will also know that the people who hold the purse strings for the local authority revenue are, in effect, the Government. So the new borrowing proposal is actually a sham.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

My hon. Friend was party to the report; I commend the parts of it saying that without resources these provisions do not achieve much. My hon. Friend is right in his assertion. If that is the point that he is making, I agree with him, and I hope that he has the opportunity to serve on the Committee to ensure that that point is rammed home.

Photo of John Bercow John Bercow Conservative, Buckingham

In reflecting on the capital receipts provisions in the Bill, can my hon. Friend tell us what assessment he has made of the effect of the change in the last Parliament on the rules for the use of capital receipts from the sale of council houses on the size of interest repayments on local authority debt?

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

No, I am afraid that I cannot. I have not the remotest idea, and if that is my hon. Friend's idea of being helpful, I look forward to his next intervention. However, I will look at the matter and write to him. Let me say to him, XThank you very much."

We oppose the pooling of capital receipts which will penalise well-run authorities, particularly those which are debt free. This matter was raised in interventions on the Minister. For such authorities—there are more than 90—that is the only flexibility they have. The provisions will reward badly run authorities and those which have not acted prudently in the past. The Minister tells us that those which are debt free have, somehow, committed a cardinal sin and that any Member who intervenes will be ticked off. I do not think that this will work—it is double taxation on tenants. Not only have their rents paid off debt, they must now contribute to the national pool.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

Does my hon. Friend agree that if there is one thing better than prudential borrowing, it is no borrowing at all? The Government borrow nationally and they want to encourage councils to borrow nationally. Not borrowing and not being in debt means not being in new Labour.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

I am very pleased with my hon. Friend's intervention for two reasons—I understood it and I agreed with it.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

When my hon. Friend Mrs. Browning intervened on the Minister, she was upbraided for picking out debt-free authorities. However, in paragraph 27 of the Bill's explanatory notes, the Government have selected debt-free authorities for special and positive treatment related to capital receipts. Would my hon. Friend Mr. Pickles care to comment on that?

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

Yes, there was more than a hint that the Government were peeved in their response to the Select Committee. They said that they could see no reason why debt-free authorities should not be included in the pooling arrangements. I can think of many reasons. It may well have the perverse effect of working against the Government's intentions. The Royal Institution of Chartered Surveyors believes that it will provide a disincentive in terms of sales. It asked in the brief prepared for this debate why a local authority should sell its housing stock if it loses the money that it gains as a consequence. It said that the proposal may also encourage local authorities from selling some of their property to fund improvements to the remainder. The measure runs contrary to the Government's stated aim of giving more freedom to local authorities.

A similar pattern emerges over the new financial accounting arrangements bringing local authorities in line with modern accounting practices. A code of practice will be drawn up by the Chartered Institute of Public Finance and Accountancy, which will lay down sensible accounting practices. So why is it necessary to lay down the level of local authority balances? Too much statutory regulation runs through the Bill.

We will study the proposals on business improvement districts keenly. The irony that they are contained in a Bill that purports to give additional powers to councils while using the same instruments to pull the rug from under the feet of local authorities will not be lost on the House. There will be a democratic deficit in the management of the districts. They will be, to quote an American critic of the schemes, a Xcity within a city". Given that they are an American invention, it seems perverse to introduce them at a time when they are falling out of favour in the United States.

In Committee we will be paying particular attention to the rights and responsibilities of landlords and property owners and the protection of small business enterprises from undue burdens. The present threshold over which a successful vote must pass is too low and we will seek to make it more reasonable.

We recognise the need periodically to revalue properties for the purpose of council tax. It must be remembered that the tax was introduced partly as a property tax and partly as a reflection of services provided to a wider community. We support the revaluation being made on a regular and predictable basis. However, we have grave reservations about the introduction of an additional band. We know from reports in the media that some sections of the Labour party regard this as a way of soaking the rich and punishing the wealthy south.

If the newspaper reports are correct, it is the Government's intention to introduce a new band between bands G and H. That would have a severe effect on those on low to middle incomes in London and the south in general and would in particular affect owner-occupiers on low incomes living in high value homes. This phenomenon can be seen in parts of London, Kent and my county of Essex, but it is particularly noticeable in East Sussex. With levels of deprivation similar to those of the north-east, East Sussex property prices are nevertheless in line with the rest of southern England. These families will be badly hit by this latest Labour stealth tax.

There is also a strong case for saying that changes made to taxation by introducing an additional band should be debated on the Floor of the House and not done by regulation. I asked the Minister about the advantages of an additional band over a change in the composition of the bands, but his answer did not satisfy me. The Government would be very unwise to introduce an additional band. I believe that it would cause unforeseen problems and add considerably to the burden on people with low to medium incomes.

The Select Committee expressed concern about the trading arrangements for councils under the Bill. Its report referred to the tradition of ensuring as far as possible that when local authorities trade with the private sector, they do so on fair and equal terms. It expressed worries about the possibility of cross-subsidising the costs of providing traded services with other areas of councils' activities. I acknowledge that in their response the Government indicated that they were sympathetic to this view and that they would address the matter. Our worries go deeper than that, however. We believe that clause 95 could jeopardise the whole process of competitive tendering by enabling authorities to set up an in-house company for services which, under normal circumstances, would be put out to tender. The industry fears that they would have an enormous competitive advantage over private sector bidders.

We fear that the best value tendering process could be distorted unless there are strict safeguards against such companies receiving favourable or preferential treatment. There is a grave risk that the opportunities for private sector companies to operate services for the more successful best value authorities would simply dry up to the detriment of those authorities and the wider community.

If authorities best value companies are able to cream off successful undertakings, there will be a real danger that private sector companies would find it uneconomic to bid for some less profitable services and best value would simply cease to operate in practice. It would be very helpful if the Minister outlined what safeguards the Government intend to adopt to ensure that there is no preferential treatment. In particular, how will the assessment be made that the same performance criteria are being used for private sector companies?

All the commentators, the Select Committee and anyone who knows anything about local government agree that it is over-regulated and overburdened. It is a shame that, with the exception of high-performing councils, the Government have not sought to reduce regulation.Talk privately to officials at the Department and they will openly admit that the burden of regulation does little good and is positively damaging, despite its good intentions. Its only purpose now is to act as an incentive to councils for its own removal. It is a sad indictment of the Government that the only carrot for local authorities is the promise to stop hitting them with a stick, but that is indicative of their approach to local authorities, which can be summarised as two bands—trust and understanding. However, the Government neither trust nor understand local authorities, and it shows.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

Will the hon. Gentleman place in the Library a list of all the regulations that he would abolish?

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

I am grateful for that opportunity, but I have to say that I am surprised by the aggression of the hon. Gentleman's intervention, as I was largely following the lines taken by his Select Committee. In fact, I was quoting his Select Committee with regard to the amount of overburdening, but perhaps he is retracting.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

Let us be quite clear. I want to know which regulations, most of which were introduced by the Conservative Government, the hon. Gentleman is prepared to renounce. A list would be very helpful.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

I am not partisan. I am not suggesting that a matter is sacrosanct because it was laid before the House by a Conservative Government, but if the hon. Gentleman is retracting what he said in the comfort of his Select Committee, so be it. I happen to think that he was right when he showed courage in attacking the Government, so I am sorry that he seeks to retreat from that.

The Government know that they should release their grasp, but they seem unable to do so and the Bill is no more than a pause in their march towards centralisation. I commend the amendment to the House.

Several hon. Members:

rose—

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I remind all Members that Mr. Speaker has placed a 15-minute limit on Back-Bench speeches.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish 6:03 pm, 7th January 2003

I am grateful to be called, Madam Deputy Speaker. First, may I make it clear to Mr. Pickles that we look forward with pleasure to seeing his list in the Library so that we know which regulations covering local government he would repeal? Then, perhaps, we could have some common ground. My disappointment with the legislation is that it does not go far enough or fast enough, although it is easy for him to have a general feeling that there are too many regulations without being prepared to be specific. It would be helpful if we had a list of those that he would repeal.

I want briefly to deal with the question of scrutiny of the legislation. I very much welcomed the Government's publication of a draft Bill in the summer, although it would have been nice if they had given the Select Committee a little more time to scrutinise it. I understand all the difficulties for the Minister, however. In a sense, the difficulties involved not the Select Committee, but the people outside who gave evidence. The strength of a Select Committee report is the quality of the evidence it receives. I make the point to the Government's business managers that if we are to get pre-legislative scrutiny right, we need a little more time for it.

May I also place on record my appreciation of those who advised the Select Committee? I must refer in particular to Rita Hale, Professor Michael Lyons, Anna Capaldi and Amanda McIntyre, whose help was important. I also want to place on record my appreciation of the Clerk, David Harrison, and our special assistant, Claire O'Shaughnessy. They all worked very hard. I also express my appreciation of all members of the Committee, as we had to carry out the scrutiny in a week. A little more time might have made our efforts that bit better.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

Given that the Select Committee had so little time to scrutinise the draft Bill, does the hon. Gentleman share my concern about the Government allowing the Standing Committee only six sittings to scrutinise the real Bill?

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

The question is, are we getting scrutiny in the House right? It seems to me that the key to scrutiny in the House is what goes on beforehand. A draft Bill was available in the summer, so almost everyone involved with local government had a chance to study it then, and the Bill itself was published about five weeks ago. People outside have had a good—opportunity to consider the legislation and the fact that the Bill will be considered in Committee for a relatively short time does not mean that there is a problem with the scrutiny.

I have wasted lots of time in Committee filibustering, which does not take the arguments forward. The question is, how effectively is time used in Committee? I believe that a Standing Committee of the House will be able to deal with the Bill very effectively. If I were an Opposition Member, I would not be complaining about the time available in Committee. I would be rather more concerned to ensure that there is adequate time for consideration on Report. The legislation can be adequately scrutinised and a good job has already been done, up to this stage at least.

I am pleased that we had the chance to scrutinise the Bill, but I would like the Government to have even more confidence in local government. I believe that the Minister has that confidence, but the difficulty lies in convincing some of his colleagues in other parts of government that we should provide that extra power. I hope that we can move in that direction.

The question of giving greater powers to excellent local authorities lies, unfortunately, in the hands of the Audit Commission. Anyone who considered the scrutiny process and the evidence given by Paul Kirby of the Audit Commission would have been flabbergasted by its quality. We were totally baffled by the end. If that person is supposed to be setting out the league tables, we cannot have much confidence in them.

I am very worried about the local authority league tables. In football, the teams at the top of the league have usually scored more goals than those at the bottom. That is pretty objective, but it would be difficult for a football referee to judge whether one team had played better than another without referring to the goals scored. Some Audit Commission decisions are extremely subjective and some people who come out from the Audit Commission to study local authorities do not have a clue what is going on.

One of my great complaints about Reddish is the fact that so much rubbish is left behind by the cleansing department when it clears the bins, yet that local authority has been commended for its refuse collection service. Instead of relying on the Audit Commission, why do not the Government rely a little more on the local electorate? If they are going to give the local authorities more powers, let the local authority and the local electorate decide whether they will be used, rather than depend on the Audit Commission league tables.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

Does the hon. Gentleman acknowledge that a Select Committee recommendation was that it should be possible to appeal against the decision of the Audit Commission, although the Government did not accept that and it is not in the legislation? Will he urge the Standing Committee seriously to consider that matter?

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

There is a case for an appeal process, but that would just make everything even more bureaucratic. I should prefer to get rid of the whole thing and tell local people to make up their own minds about whether they trust their council with the extra services, rather than telling them that because their council was just above the relegation zone on one bit of the table it would be allowed to have those extra powers.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

Has the hon. Gentleman formed an opinion as to the real costs for authorities of the scrutiny and inspection processes in terms of officer time and actual outlay?

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I cannot remember the exact figure that the Audit Commission is charging local authorities, but it is pretty appalling. It worries me greatly that officers are being taken away from actually running services to hold discussions with the Audit Commission's representatives. I have great reservations about the amount of inspection, but fortunately the Government are starting to move in the right direction by reducing it. Services need a push to get them going, but once they are rolling they have their own momentum. It worries me that the Audit Commission may not be able to step back but will want to carry on pushing.

Photo of Chris Mole Chris Mole Labour, Ipswich

My hon. Friend will be aware that I had not joined the Select Committee when it was considering those aspects of the Bill, but surely he appreciates that inspection will be reduced for several years in authorities that did well under the comprehensive performance assessment process. Indeed, many local authorities have welcomed the process of self-analysis and assessment and found it useful in undertaking their corporate business.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I understand that many local authorities have benefited from the process. I have been told regularly by people who have helped with the process in an authority other than their own that they found such work useful and learned much from it.

However, I am a little concerned about some of the quirks in the league table. I have been pressed by Tameside metropolitan borough council because Wigan received a much better result, which appeared to turn only on the question of when their respective social services departments were inspected. Wigan has done an outstanding job in the north-west but Tameside is a good authority, too, and my electors would rightly be a little suspicious if Wigan received extra powers and Tameside did not.

Revaluation is important, but the key point for local government is that it should have a form of buoyant income. Whenever there is revaluation, there is an outcry from people and local authorities usually take the flak, even though they are not actually involved in the process.

I was very disappointed that the Opposition were not prepared to support the proposals on bands. They do not understand the problems in places such as Denton and Reddish and the east side of Greater Manchester. When properties are losing value due to the weakness of the housing market and people cannot even sell them for #10,000 or #15,000, yet similar houses only a short distance away go for #30,000, #40,000 or #50,000, there is considerable concern that council tax bands do not reflect economic reality in those areas.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I will, although I am reluctant to do so because of the time restrictions.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

Will the hon. Gentleman answer the question that the Minister did not want to answer? What is the advantage of an additional band as opposed to adjusting the existing bands or introducing a regional variation?

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

The advantage of extra bands is that in areas such as mine they would deal with the fact that band A currently covers a wide range of properties. Although redistribution or lowering of the bands might have some impact, the easiest solution would be to increase their number. We should remember how we got into this mess. Some people were keen to get rid of the rates. Then we got the poll tax and we are reaping that harvest in our current problems. I make a strong plea for splitting band A. There is also a case—although it is not so important in my constituency—for increases at the higher end of the scale.

I very much welcome the proposals for business improvement districts although there are some problems to be sorted out, especially between owners and tenants. In many business improvement areas, the tenant of the property will make the contribution but if, as we hope, the area succeeds, the owner of the property will receive the greatest benefit. We should try to ensure that everyone in a successful business improvement area where property values increase should have made some contribution. We need to do further work on that.

It is also important that some of the business improvement schemes should be for small areas. In my constituency, there are problems due to competition between the town centre and out-of-town shopping areas, but the hardest-hit places are the small shopping parades which used to have the butcher, the baker—although perhaps not the candlestick maker. They included a small range of shops but they have almost all disappeared. Boarded-up shops give the whole neighbourhood a depressed look so I hope that local authorities can undertake improvements in small business areas as well as in town centres.

I apologise to my right hon. Friend the Minister if I pressed him too hard and too early on clause 28. I thought that he was going to tell us that there would be separate legislation, but I welcome his comments. I hope that we can include those suggestions and that the official Opposition will support them instead of dodging them as they did this afternoon. If we can get all-party support we could get the provision out of the way with very little debate. We have, after all, spent a huge amount of time debating it in the House; it will have a big impact outside but it probably does not need so much debate.

I hope that when the Deputy Prime Minister makes his statement on housing in a few weeks time we can look into the powers for local authorities to regulate landlords. I realise that legislation is proposed in the future, but it would be most helpful if we included a clause that allowed local authorities simply to undertake the preparations for registering and regulating landlords who want to benefit from social security payments.

I commend the Government. The Bill may be only a modest step, but we are moving in the right direction and I very much hope that it will quickly reach the statute book.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister) 6:17 pm, 7th January 2003

The House is indebted to Andrew Bennett and his Select Committee. Their report on the draft Bill, which, as we have just been reminded, was compiled in only a week, was hard hitting.

Many of the Committee's criticisms of the draft Bill apply to the current measure. The Committee may have been influential in persuading the Government to change a few things—it is especially good that the proposal for one special single formula grant has been dropped—but many of the Committee's other pertinent criticisms still apply to the Bill; the hon. Gentleman held back a little when mentioning them.

The Liberal Democrats will support the Bill for at least three major reasons. First, we support the new prudential capital regime, albeit with reservations. Secondly, we support the proposals on business improvement districts, which are an important step forward, and I shall spend some time discussing them. Thirdly, the council tax reforms are extremely welcome, as far as they go, and will help many councils and, more important, council tax payers throughout the country. Those significant prizes should not be lost by opposing the Bill. However, we have serious reservations that we shall press hard in Committee and, indeed, in this debate.

The Government are retaining many reserved powers, especially in respect of capping borrowing powers and minimum reserves. Along with many others, I am concerned about the potential for party political meddling. We are particularly concerned about the pooling arrangements, about which many right hon. and hon. Members have already spoken but which I shall consider in some detail. Furthermore, I have counted at least 38 new regulation-making powers in the Bill, many of which are unnecessary.

I agree with one thing that Mr. Pickles said. The public have undoubtedly rumbled the Conservative party. When the hon. Gentleman criticised the Government for centralising powers, many Members shook their heads in disbelief. Given its record in local government, the extent of forgetfulness in the Conservative party makes amnesiacs seem like nostalgics. Conservative Front Benchers have a lot to apologise for, and the current weak state of local government is a direct result of many years of centralising measures by the Conservatives.

We shall argue, both on Second Reading tonight and in Committee, that the Government should have a much greater vision. They should put the Conservative years much further behind them than they seem willing to do. They should abolish the Tory council tax—the real reform that the country needs. In many ways, we also want to abolish the Secretary of State. He has far too many powers over local government, and they should be removed from many areas. We need to rebuild local government, and to show that central Government trust local government. The Bill does not provide for that.

I want to make some detailed comments about the prudential capital regime. The regime it is replacing was quite disgraceful. The credit approval regime, with its basic credit approvals and supplementary credit approvals, was not just a complex regime that undermined local democracy and meant that councils and councillors had to go cap in hand to Whitehall; it was also very inefficient, and prevented sensible investment. Credit approvals could not be carried forward to the following year, which made a mockery of the long-term planning necessary for many capital proposals. It also prevented best value and invest-to-save schemes. Indeed, it also reduced local expertise in local finance departments. I am, therefore, very pleased to see it going.

Liberal Democrats have campaigned for a prudential capital regime for many years. I could read out a long list of Liberal Democrat policy papers in which we have proposed such a regime, but I can see that that would be just too popular tonight. I will simply refer to the Liberal Democrat LGA group's submission in 1998 to the Government's Green Paper, XModernising Local Government Finance" on capital finance. The group said:

XWe believe that capital controls should be removed, but that guidelines are needed to control the total level of debt within each authority."

That is a policy that we continue to support.

The problem is that the Government's implementation of that very sensible idea does not go far enough. Reserve powers, especially under clause 4(1), contain the potential for the creation of a universal capping regime for borrowing. The Minister said, in response to various interventions, that that was not his intention and that the reserve powers to limit the borrowing of all local authorities, for Xnational economic reasons", or of individual local authorities would be used very sparingly. I suggest that there is no need for such powers. The prudential regime, which could be worked through with the Chartered Institute of Public Finance and Accountancy and the Local Government Association, would be sufficient. Even if the Government were still worried about national economic conditions, those issues could be dealt with in far less threatening ways than those proposed in clause 4. For example, I am concerned that the provisions in clause 4 for retaining borrowing capping powers do not spell out what the Xnational economic reasons" are. Perhaps the Government intend to do that in the subsequent regulations. It is important that the Chancellor and the Deputy Prime Minister should not suddenly say, XRight, we have decided to use these powers and stop the borrowing." That power is excessive, and needs to go.

Local authorities could take other routes. If an authority wanted to exceed the guidelines for prudential borrowing set by CIPFA, a trip mechanism could be put in place. For example, there could be a local referendum allowing local people to decide what level of borrowing would be appropriate, if it were to exceed CIPFA's recommendation. This is a real weakness in the Government's implementation of a prudential capital regime. As Sir Paul Beresford said, there are great limitations to the new freedoms, particularly in respect of the revenue that would be required to service the debt that would spring from the Government's failure to reform the tax regime and the taxation powers for local government. This problem also applies to the failure to reform the housing subsidy scheme, because borrowing for investment in housing is linked to the rent subsidy scheme that the Government have for housing. That is not being reformed, so, again, there will not be the revenue to support increased debt for investment in housing. The effect of pooling will also restrict the ability of local councils to borrow within the new framework. These are serious weaknesses.

When might reserved powers be used? Would they be used halfway into a project in which a local council had decided to invest? That might deter the investment in the first place. The pooling proposals will bring great instability to the setting of prudential borrowing limits. The Secretary of State's regulations on pooling, which we have not yet seen, could easily be changed in future. A council could therefore find that it had to contribute more to the pool than it had expected, thus reducing its prudential limit and its ability to borrow. Of course, the reverse could also be the case. The instability built into the new capital regime will make the regime far less effective. So, while I am happy to give two cheers for the new prudential capital regime, I am afraid that the remaining central powers make it less effective than it could otherwise be.

The remaining centralisations that are retained in the Bill concern me particularly. Clause 26, for example, will allow the Secretary of State to set minimum reserves for each local authority. That is a new power—a new centralisation—and it is unnecessary. The Minister will know that section 114 of the Local Government Finance Act 1988 gives chief finance officers powers to take action if they see overspending during the year. I cannot see what the extra powers in clause 26 add to that system.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman will be aware that the existing CIPFA guidelines on finance officers' powers have been in place since 1995. Despite that, we have seen clear evidence recently that a number of authorities have got into serious financial difficulties—Hackney, Walsall and North Tyneside, for example. All those cases seem to be associated with a failure to maintain adequate reserves. The Government had to provide some #25 million of additional finance to cover the position that Hackney had got itself into. Is the hon. Gentleman seriously suggesting that we should simply turn a blind eye and do nothing at all? The reserve powers are designed to cope with circumstances such as those—which, as I stressed in my speech, are exceptional, but they happen—and it is necessary that there should be a safeguard against those eventualities.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I am afraid that the Minister does not make his case. There are other ways of dealing with this—for example, by improving the powers that currently exist. I mentioned section 114 of the Local Government Finance Act. That power could be developed to ensure that the Minister would not be able to put his mark on every budget and budget-making process up and down the land.

The hon. Member for Denton and Reddish spoke of the centralisation in respect of the comprehensive performance assessment under clause 100. The fact that the CPA has been linked to some of these new freedoms gives the lie to the idea that this is really a devolution measure. The CPA is a centralising measure, whereby the Government set the regime and can subsequently change it. This is a flawed concept. The idea of earned autonomy—which can, in fact, be taken away—is not really what is meant by real freedoms and real flexibility. It creates instability and it is extremely bureaucratic.

I said that the Bill would give the Government 38 new regulatory-making powers. I wonder how many regulations will be made under the 38 new powers. The Government claimed that the draft Bill was a deregulatory measure, which was bizarre. The Local Government Association and individual councillors cannot understand how the Government can use such rhetoric and then introduce the Bill that is before us. The situation is particularly disappointing given that we would expect a draft Bill to reduce the need for regulatory powers in the first place and to ensure that we get the legislation right and therefore do not need to return to it and do not give extra powers to the Secretary of State to have another think. Unfortunately, that has not proved to be the case.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

Given the hon. Gentleman's catalogue of concerns, why will he and his party support the Bill this evening?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I said at the outset that we are in favour of the prudential capital regime, of business improvement districts and of some of the council tax reforms. Those are the main reasons why we shall support the Bill. However, the hon. Gentleman will be surprised to hear me make a criticism.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

The hon. Gentleman has said that he would abolish council tax. Surely the small reforms that are being proposed would not go far enough. I am intrigued to know on what basis he feels that his party can support the Bill.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The hon. Gentleman should learn to be grateful for small mercies. We waited many years for the Conservatives to produce a fair system of local government finance: they failed, even at the second attempt. We shall not take too many lessons from the Conservatives.

The proposal to pool the proceeds of asset sales is nothing less than a stealth tax. It legalises the theft of council tax payers' money by taking it from areas that it was not raised for or not meant for. It is one of the worst examples of a stealth tax. Furthermore, there will be huge distortions and disincentives. Only Labour could produce a system that will discourage debt reduction. Surely we want to encourage debt reduction, but the Government are building into the system a disincentive for doing so. Debt-free administrations will be penalised. Many of us in this place are concerned that the proposal will discourage debt-free authorities from sensibly managing their capital portfolio. They will be discouraged from cashing in some assets to use the money elsewhere. It cannot be right that the Government should create such a barrier. I believe that the measure will prove to have a counter effect to that which the Government intend. It is a recipe for lose, lose.

Authorities with assets will not sell them. There will not be any money for authorities that might otherwise have benefited from the pool. The pool will not be very large and there will be inertia in the management of local government capital stock. It is an ill thought through measure and it should be dropped.

Expert comment on the proposal is increasingly insulting and the Select Committee was vehement in its opposition to it. The evidence that it heard from bodies such as CIPFA entirely undermined the Government's case for pooling. The London Government Association has consulted councils throughout the country. Even some of the councils that will benefit from the measure oppose the proposal. They recognise that it would undermine many other local authorities. The majority of local authorities are against the measure. The Government's analysis of the consultation shows that 134 respondents were against the pooling proposals. I challenge the Minister, when he replies to the debate, to give the House a list of the respondents who are in favour of the arrangements. I think that there will be very few, if any.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

Does the hon. Gentleman agree that the matter is of grave concern and that it stands as a threat to authorities that have resources, which they would like to spend for the benefit of the communities they are elected to serve? Authorities are being stopped from spending such resources because they know that if they do so they will face considerable debt. The proposal is freezing programmes that might otherwise be implemented to improve the condition of life in many areas.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The hon. Gentleman is absolutely right. What will a finance director and a council do? They will say, XMaybe in a few years the Government will come to their senses and get rid of the scheme. Perhaps they will get rid of pooling. We would be mad to sell assets now and to lose all the proceeds elsewhere." The asset portfolios of many local authorities will be put in aspic.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

The hon. Gentleman has not quite got the point. In addition, authorities will be held to have the capital asset in stock, as it were, even if they have acquired something with it. They then face a double whammy: they will not be able to hold on to the asset because they will be forced to account for the resource even if they have acquired something with it.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The hon. Gentleman will note that the Minister is shaking his head. Perhaps he will explain why that is not the case in due course.

Another aspect of the Government's proposals is that when a council makes a sale and the proceeds go into the pool it will not even earn interest. As I have said, it is an ill thought through proposal. If the Government persist with it, I suggest that in a few years' time we shall see the repeal of a rather silly measure.

I move on to a slightly less esoteric issue—council tax. I have made it clear that Liberal Democrats want to abolish it because it is such an unfair tax. It is the tax that I receive most letters about, and I am sure that right hon. and hon. Members have had the same experience. I receive letters especially from low-income pensioners, who cannot understand why their council tax is increasing year on year above inflation, irrespective of the party in control of the local authority. The entire local government finance system is involved because it is such a non-buoyant tax. It hits those on fixed incomes especially badly. It is time that we got rid of the tax, and there are many other reasons for doing so.

Council tax is quite costly: there must be a system to administer and collect it in every town hall throughout the country. When the Bill is implemented, it will be necessary to meet the costs of revaluation. It is not a particularly efficient tax. The failures—the unfairnesses and the inefficiencies—are becoming worse as we see a shift from central taxation to local taxation. The Government are asking the council tax payer to shoulder even more of the burden. It is time that the Government crossed the rubicon and said, XThis was an unfair tax that was introduced by the Conservatives." The Government do not have to live with that inheritance. They can take a bold decision and abolish council tax.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

The hon. Gentleman has referred to the shift of the tax burden from central Government to local government. Is the Liberal Democrat party in favour of raising more money locally, or against it?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

We are in favour of raising money more locally if the tax base is a fair one and if—this is another important criterion, which I mention before the hon. Gentleman puts out a leaflet—national income tax is cut as we raise local income tax. The net tax burden may not increase under our proposals for local income tax.

I should be fair to the Government. The proposals for reform of council tax would improve the tax, albeit at the margins. The proposal for more bands must be right. We have heard some sensible and articulate reasons for introducing more bands at both ends of the scale. Revaluation is inevitable, and I think that the way the Government have gone about that is extremely sensible. Abolition of council tax benefits subsidy limitation schemes is welcome in the area that I represent. The reduction of discounts on second homes is also welcome. We shall disagree about whether the extra 10 per cent. or the minimum 10 per cent. is needed. I am still not clear from the Minister's arguments whether it is necessary to keep that percentage. I think that it should be got rid of entirely and that the local authority should be allowed to keep the proceeds.

Similarly, the Government say that they intend to abolish the council tax discount for empty homes, so why will not local authorities be allowed to keep 100 per cent. of the proceeds? That seems rather odd, and it goes against the Minister's argument for simply reducing the discount on second homes. There are a number of specific wrinkles in the council tax proposals that we want to iron out in Committee, but their general thrust is welcome.

Business improvement districts are a very welcome innovation, and they have enthusiastic support among at least some Members of the House, although the hon. Member for Brentwood and Ongar did not seem too enthusiastic. In a speech a few years ago, my noble Friend Lord Ashdown was one of the first British politicians to look to the United States' experience of BIDs and to suggest that we should introduce them here. When one listens to businesses' views about the proposal, whether the CBI or the chambers of commerce express them, one is impressed by the level of support. The benefits are wide, and we welcome the fact that there will be earmarked funds that businesses, working with the local authority and the community, can use to improve the area for the collective good. That will help to regenerate rundown areas, and to spruce up and revitalise even successful ones.

Photo of Patrick Hall Patrick Hall Labour, Bedford

Does the hon. Gentleman agree that the Conservative spokesman's contention that a business improvement district would represent a city within the city wholly misses the point? If such a scheme were to go ahead, there would have to be a strong local partnership, and it is inconceivable that the local authority would not be part of that.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The hon. Gentleman is absolutely right. BIDs would provide the dynamic for engaging the business community with the local council to produce even stronger partnerships working for their area.

Of course, there are caveats. The additionality point is important: we want to make sure that extra money produces additional funding for additional services. I share the concern of the hon. Member for Denton and Reddish about whether property owners and landlords will have to pay the extra rate. Will they get the vote before the BID is set up? The Government need to clarify that. The Government need to ensure that they are fair in their treatment of different businesses in the community, and I hope that their guidelines will ensure that that happens.

I am proud that Kingston, the area that I represent, is to be a pilot for the whole of London. We are grateful for the London development agency's funding for us to develop our bid. Kingston is already a successful town.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

Indeed, I once parked there.

The hon. Gentleman is very enthusiastic about business zones. Would he care to comment on research evidence on such zones between 1980 and 1990, which shows that they were no different from other areas in terms of progress and economic benefit, and in some cases the conditions in business zones were inferior to those without the zone?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

One always has to be careful about interpreting such research. It may be that areas with a BID would have declined significantly without it. Without having read the research, I shall not take the hon. Gentleman's word for it. I would be grateful if he sent it to me, and I promise that I will look at it.

I was talking about the success of Kingston upon Thames. We have 18 million visitors a year, and in the south-east the town is second only to the west end as a favoured retail venue. We are taking that success further with the new Rotunda development, the Charter Quay development and the new theatre, which is to open in spring 2004. However, it would be sensible for Kingston to have a BID. We cannot be complacent and there are negative aspects to our town centre. It is dirty, and we suffer from graffiti, litter and chewing gum. Signage in the town needs to be better maintained.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The hon. Gentleman worries about my point on chewing gum. If he takes a walk down Clarence street in Kingston, he will see that chewing gum litters the town and needs to be cleared up.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Although it may be interesting to hear the hon. Gentleman's comments, it would be appropriate for hon. Members to come to the subject of the debate.

Photo of Eric Pickles Eric Pickles Shadow Secretary of State for Communities and Local Government

The hon. Gentleman really should look at the evidence for business zones, and perhaps speak to Lord Ashdown, because the zones are about much more than picking up chewing gum. They are far more fundamental to the economy than chewing gum.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The great benefit of these schemes is that businesses, working with their local community and local authority, can decide what is right for them. In Kingston we have the problem that our town centre is dirty, and it needs to be cleaned up. These proposals are exciting for Kingston and other towns, and they will improve partnership, reduce problems and lead to greater regeneration.

There are many other issues in the Bill on which we could comment tonight: the reforms to the housing revenue account, which are welcome; the proposals for the housing strategy; the reform of non-domestic rates, and the small business rate relief, which has much to recommend it. On the latter proposal, I simply ask whether it should be revenue neutral or whether the Exchequer should add more money. Should there be more local flexibility in that scheme? An allowance system might be a better, fairer and more efficient way to make sure that small businesses get more relief from non-domestic rates. There are welcome proposals for charging and trading regimes, although again the Government seem to have taken a narrow approach. We will consider all those matters in Committee.

Although the Bill is extremely welcome, it does not merit Ministers' rhetoric. When the Bill was first published, the Deputy Prime Minister talked about a historic change in the relationship between central and local government. I am afraid that this is rather a timid Bill that will not go down in history as making a major change to that relationship. The smile on the face of the Minister for Local Government and the Regions suggests that he, too, thinks that. However, the Bill contains welcome measures. We particularly welcome the prudential capital regime, and we hope that that at least will improve local government throughout the country.

Photo of John Battle John Battle Labour, Leeds West 6:47 pm, 7th January 2003

I want to offer some words of welcome to the Bill. It introduces significant new features for local councils and it makes a good move towards restoring confidence in the capacities of local government genuinely to serve local communities.

It was my privilege to serve in local government before I served in the House, and I emphasise the word Xprivilege". That was a great experience, and years later, I still feel that we must be careful not to turn local government into an arcane debate for archival accountancy types which fails to connect with local people's needs and interests. The Bill is part of the process of restoring the faith of people in local government and in the local political process.

In the 20th century, the great environmentalist Schumacher urged us to think global and act local. Our world is more complex now. It is increasingly interconnected, interdependent and vulnerable, and it is a world of increasing personal mobility in which we constantly have to rebuild local communities of diverse groups, ages and backgrounds. Perhaps we need to think and act globally and locally at the same time, realising that the two are inextricably connected. In other words, I suggest that, in the 21st century, the local is as significant as the global.

I passionately believe that restoring faith in the capacities of representative, democratic politics can come only from building from the base upwards. We must affirm and support efforts at the local level, and we must sustain active, progressive councils as the means of democratic participation and management of resources for the common good.

I want to raise four themes in the Bill: much-needed capacity building; match funding; the insensitive analysis of local needs to which the Chairman of the Select Committee, my hon. Friend Andrew Bennett referred; and, to use his words, the league-table problem that can distort that analysis. The proposed new capital finance system, the financial management duties on the local authorities and the new powers to issue grant assistance are welcome but are only part of the process. As was said earlier, capital spending has a revenue impact. In practice, the Government have increased resources from the centre to localities, and have introduced myriad welcome initiatives, including the single regeneration budget, neighbourhood renewal funds, resources for anti-crime measures, and sure start projects to name but a few. All those initiatives from the centre address local issues, social exclusion and the need for local service provision. However, I suggest to my right hon. Friend the Minister that we need to look seriously at how top-down initiatives and resources can lock into local needs and engage local people. There is not a great yawning gap in resources but there is a lack of capacity in the local neighbourhood or at street level. There is no reaching up to the downward stream of initiatives—they are not rooted in the locality or bedded in for the long term.

We cannot assume that that amorphous, abstract and pliable noun Xthe community" exists at the local level. Communities are not innate organisations of people who have been thrown together by circumstance—they need to be patiently built and supported. In the past, we have paid far too little attention to the basic need to build communities, particularly in inner-city neighbourhoods such as that in which I live in inner-city Leeds.

I recall a letter from a constituent some years ago. He had moved into rented accommodation in a local terrace, and said that I had been his MP for about two years. In all that time, he had never been introduced to his next-door neighbour—what was I as his MP going to do about it? At the time, the Tories were in government, so I succumbed to the temptation to remind him that every single year under the Tories, local government budgets were reduced—they were cut again and again. As a result, the local Labour council could not afford to pay Xneighbourhood introducers" to help him to get to know his neighbours.

On reflection, local capacity building is what is needed—people working to connect people and build basic community organisations that are fully representative and supported and that can engage with top-down initiatives and resources. We need massive, sensible and proper investment in local capacity building to facilitate the gearing of top-down and bottom-up approaches. We cannot have joined-up government at any level if we do not facilitate the joining together of local people. Capacity building needs to be built into the Bill's budgetary approach.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I hope that I do the hon. Gentleman no disservice if I say that I recognised a note of irony in the letter from which he quoted. However, I am not sure where the irony began or ended. Will he tell the House whether he believes that capacity building, which is a terrific objective, is the same as community building, and whether the great problem with communities is the fact that it is easy to destroy them but difficult to build them?

Photo of John Battle John Battle Labour, Leeds West

I basically agree, but assumptions are made about communities that already exist. I am suggesting that we must start by addressing supportive capacity within communities.

In recent years, a key concept in encouraging engagement and local rethinking about funding has been match funding: central Government grant matched by a similar amount from elsewhere—sometimes, it is assumed, the private sector. In inner-city neighbourhoods, where there is not much private sector investment to start with, the matching has come from other sources, and the result has been a virtual matching from local government or other public resources. They are forced to meet half the costs, with little say in the delivery, and usually without any extra resources to fund the matching. Increasingly, matching means that central and local government resources are put together, but with a mass of bureaucratic form-filling in between. The results are insecure projects, a waste of time and inefficiency.

Can we look again at the purpose and reality of matching, and have enough confidence in local government to agree that, if it has to provide the resources to keep projects going, it ought to play a proper role, rather than being a late-in-the-day funder of last resort? The Youth Justice Board, and the schemes for youth offending teams and youth inclusion programmes are classic examples. The need for real grants, rather than phoney matching with leftover allocations of single regeneration budget grant, could be sorted out in the Bill.

Turning to insensitive analysis, what do we mean by a best-value authority and prudent financial systems? Again, top-down approaches often ignore detailed local analyses of need. Leeds, my city, is acknowledged as thriving and is undergoing renewal, not least as a result of the prudent and visionary management of the Labour council during the hard times of the 1980s and early 1990s. Yet the indices of need for the city as a whole—a city of 750,000 people—can disguise the needs of the 230,000 people who live in the inner city, 160,000 of whom live in 10 of the poorest wards in Britain. Life between the prosperous central business area and the thriving suburbs beyond the ring road can be disguised by averages. Average and mean figures, and the greatly misunderstood difference between them, completely disguise deep pockets of poverty, ill health, social isolation, lack of training and work opportunities, and the prospects of inner-city neighbourhoods.

In inner-city areas, average figures from cake-slice shaped wards radiating from the city centre, such as Kirkstall, Armley, Wortley and Bramley in my constituency, bury the deep needs of the poorest who live near inner-city prosperity. Statistics from the outer areas disguise the problems of the inner city, smoothing over need in a general trickle-down theory. The theory that the rising tide of economics will lift all boats does not work—in particular, it does not lift holed boats. Recently, our local paper, the Yorkshire Evening Post, has featured vignettes of divided Leeds—inner-city neighbourhoods are missing out on initiatives in the shadow of a thriving retail and business centre.

Where I live in the inner city, a ward may not qualify for a single regeneration budget grant because of the weighting of the better-off who live out near the ring road. Instead of the usual ward indices, we need subtler, more detailed analysis and a more localised response to tackle the complex clusters of inner-city poverty and need. If we are to try to root out urban poverty and close the widening gap between the better-off and the poor, we should accept that there is a dangerously divisive scar in inner-city neighbourhoods.

On the analysis of league tables, I could argue that my city of Leeds is penalised for doing rather well. In recent years, because of prudential financial management of precisely the kind advocated in the Bill, the redistribution of grant formula—the gearing that was referred to earlier—has resulted in Leeds receiving an increase of 5.7 per cent where other metropolitan districts received 7.3 per cent.

That was a welcome increase, unlike our experience under the Tories. However, because council taxes were not pumped up to force its citizens to compensate for deep Tory cuts, the council is caught in a double bind: a great unacceptable council tax hike, or being unable to spend as much as the Government are encouraging it to spend. In those circumstances, how can the city break out of the box and start using resources to tackle those deep pockets of poverty that are disguised by the average and need extra support and investment?

We are not calling for a recasting of a complex formula that has been worked out well by the Government but simply suggesting a more sensitive local analysis and an acknowledgment of what is really needed. In practical terms, I suggest a more imaginative approach. For example, use of the enhanced neighbourhood renewal funds may be a means of addressing local poverty pockets and engaging people at the local level. It might also provide opportunities for exploring new capital investment in genuine basic community capacity building, and for exploring the possibilities of local neighbourhood provision of services, such as care of the elderly, cleaning and meals services, care of the sick, child care and family support. Such services could all be provided locally, at the street level, employing local people instead of resources bought halfway across the city.

We could explore investment in the local environment, recycling potential, waste and energy management, investment in the local provision of basic needs, shopping and finances, and better use of derelict land and property, using the new business improvement district idea as an innovative template for getting down to the micro level and promoting long-term change.

At the urban summit in Birmingham on 31 October last year, the Deputy Prime Minister said:

XThis is an exciting time, with a big agenda and a big challenge for us all. That challenge is about developing sustainable communities—a new type of urban development. But it's also about a vision, about doing things differently, with imagination, and lifting our horizons."

I welcome the Bill. It could be a catalyst for such a step change in thinking, and contribute to developing a local neighbourhood perspective to the rebuilding of much-needed basic supportive communities, building sustainable local economies, and perhaps equally important, restoring confidence in local government and in local representative democracy. The Bill should kick-start that process.

Photo of George Young George Young Chair, Standards and Privileges Committee 7:02 pm, 7th January 2003

Mr. Battle made a thoughtful speech about the needs and challenges of local communities on the one hand, and the resources of Government on the other—a subject on which he has strong and clear views. I do not share his optimism that the Bill will unlock the new vision that he described, but he delivered his speech with great conviction. I hope that he will excuse me if I do not follow him down that path.

Another new year, another Local Government Bill. I find this a Bill without any theme. Bits of it are deregulatory and welcome; bits of it are highly regulatory and less welcome. Bits of it are decentralising, but most of it is centralising. Even the general secretary of the Labour party made a speech last month criticising the amount of ring-fencing and the use of specific grants, and said that the Government have not done what they could to reverse the trend.

Not only does the Bill suffer from having no theme, but in parts it is very boring indeed. Many of the clauses contain unexciting provisions that the Department has been trying to get on to the statute book for some time—I believe that I recognise one or two from my days there a decade ago. Ministers should not claim too much for the Bill. I fear that it will not re-ignite interest in local government, as the hon. Member for Leeds, West suggested. It will not bring forward a fresh generation of local councillors or increase the turnout in May's elections, and our debate this evening may not engage the attention of the nation's press. However, there are some important points that need to be made.

Before turning to the detailed provisions, I shall pick up something that the Minister said right at the beginning. It is worth making the point that he has a more benign environment, where local authorities are not challenging the elected Government of the day. In the 1980s, a few local authorities decided to take on the Government. Commissioners were put into Norwich, which refused to implement the right to buy. Councillors were threatened with suspension for not fixing a legal budget. The Government contemplated suspending Lambeth and Liverpool as they faced financial meltdown. Indeed, some of the provisions in the Bill dealing with the evasion of capital controls date back to those days of confrontation—confrontation certainly not sought by the Government of the day. The present Government are fortunate that local authorities are more compliant now and more willing to work with the elected Government than some of the more bloody-minded and extreme authorities that were around in the 1980s, so the background for a Local Government Bill is more favourable.

I welcome in general terms the thinking behind clauses 1 to 11 relating to capital finance. The clause in the original draft Bill that would have allowed the Secretary of State to require non-housing capital receipts to be paid to the government has been withdrawn. That is appreciated. The major change brought about by this part of the Bill is the duty in clause 3 imposed on a local authority to determine how much money it can afford to borrow. That is a welcome change, providing more scope to incur short-term borrowing costs on investment in projects that will be self-financing in the medium term, either by saving running costs or by enabling the generation of capital receipts.

I wonder whether clause 4, which nationalises, as it were, local authority debt, is really necessary. Surely the Government do not anticipate a return to boom and bust. I thought that we had so many golden rules, so many self-correcting mechanisms, and so many independent monetary regulators that an economic crisis was unthinkable. It is not quite clear how the country's economic interests would be challenged by clause 3. Is local government to be singled out for special treatment if and when the crisis comes? Will the Government's own capital programme be subject to the same sort of restrictions as those envisaged for local government?

Ministers may have overestimated the impact of clause 3 on the freedom to manoeuvre of many local authorities. Given all the pressures on budgets and the necessity of increasing the council tax way beyond the rate of inflation to get the investment in social services and education that the Government want, I do not think that local authorities will conclude that they can use the freedom under clause 3 to afford additional costs for servicing borrowing that is not backed by Government grant. Certainly in Hampshire, where we got the minimum cash uplift in grant for next year, and where a big increase in council tax is inevitable, there is no scope to go on a capital spending spree.

The position is made more uncertain because the Government have yet to decide how to support new local authority capital investment—whether by capital grant or by revenue grant towards borrowing costs. Knowing how the Treasury operates, I see a risk. Once the Government no longer have to approve local authority borrowing, they may well no longer provide adequate grant aid for capital investment, so further burdens may be placed on the council tax payers.

Clauses 7 and 8 seem to introduce one rule for local government and another for central Government. We are told in the notes that local authorities used to engage in innovative deals to evade controls on borrowing. Clauses 7 and 8 will stop that. We are told that the definition of a credit arrangement will rely on the accounting concept of long-term liabilities. I hope that the same concept will apply to Government borrowing, and that where the Government stand behind Network Rail, the private finance initiative for the tube, or the channel tunnel rail link, those long-term liabilities will also be brought within the definition of borrowing controls. What is sauce for the local government goose should be sauce for the Chancellor's gander. Clause 18 is also relevant because it stops local authorities getting round capital controls by operating through companies that they own or influence. Network Rail is a similar ruse used by central Government.

Clause 11 deals with capital receipts, and I have several concerns about that. I am not sure that the new system is fairer for different groups of council tax payers than the old one. It is indeed the case that housing capital receipts accrue faster in the shire districts, where the right to buy has taken off, than in the inner cities, where the right to buy has generated less in capital receipts. Under the old system, we dealt with that by obliging the shire districts to use the right-to-buy receipts to pay off debt, and we increased the borrowing powers of the inner-city areas so that they could invest in housing. Under that regime, ratepayers in the shire districts benefited because their local authorities' debt was paid off. Under the new system, if I have understood clause 11(2)(b) aright, the cash receipts are to be paid directly to the Secretary of State. If that happens, there will be no benefit to the ratepayers who provided the capital asset in the first place. I think that that needs explaining, as it strikes me as unfair.

There is a second problem with the proposed new regime. It will hit constituencies such as mine hard because housing costs are high and more affordable homes are desperately needed for teachers, nurses, policemen and other key workers. The proposed pooling of housing capital receipts destroys the current regime, under which the capital receipts of Test Valley borough council and Basingstoke and Deane district council are focused on local housing priorities. If the Minister looks across the south, he will see that approximately two thirds of the affordable development programme funding comes from local authority social housing grants; only one third comes from the Housing Corporation's ADP. Pooling the capital receipts knocks away the foundations of the local affordable housing programme. In no way will the Housing Corporation make good the deficit, because it has a regional agenda and has already stated that it will direct its future funding at specific areas of growth such as the Thames gateway.

Prior to the transfer of its housing stock, Test Valley council could produce only 30 affordable housing units a year through the Housing Corporation's ADP. With a combination of the local authority social housing grant and the ADP, it now produces 100 affordable housing units a year. That increase in investment in the provision of new dwellings was one of the main reasons why the council decided to take the route of large-scale voluntary transfer. However, if it can no longer access its capital receipts, the affordable housing programme will dry up.

Indeed, the change compromises the basis of the deal with the local authority tenants. Part of the deal and understanding with tenants was that the money received from the sale of the housing stock would be used to provide affordable housing in the borough. As has been mentioned in relation to part 2, the Government have underestimated the impact on future large-scale voluntary transfers. The programme may die, as there will be little motivation for any council to consider LSVT if one of the major benefits of the capital receipt is removed. I have deep concerns about that part of the Bill.

Even if the Government could claim that part 1 is deregulatory—I have some doubts about it—they certainly cannot say the same about part 2, which creates a wholly new and unnecessary regulatory burden with controls on the adequacy of reserves and the monitoring of budgets. The Bill would be improved if the whole of part 2, which contains clauses 25 to 30, were omitted.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Does the right hon. Gentleman care to recall the similar provisions relating to local authority housing revenue accounts that his Government—and possibly even he as a Minister—introduced? They were very similar in many respects to those in part 2, which relate to general local authority funding. If he wishes to do away with part 2, why did he introduce similar measures relating to housing?

Photo of George Young George Young Chair, Standards and Privileges Committee

My speaking notes contained a section on part 2 that I skipped over because of time pressure. The Government have produced no evidence to show that the controls in clauses 25 and 28 to 30 are necessary other than for a few poorly performing local authorities, and nor am I convinced that the controls would have much impact on such authorities. They simply impose further central prescription on the setting and monitoring of budgets. For most local authorities, existing financial reporting arrangements are wholly adequate.

On clause 78, which deals with bands, I have a lot of sympathy with the points that have been made about the need for a new band at the lower end of the scale, where a number of properties are caught up in a band that is too broad. I have deep reservations, however, about the introduction of a new band at the top end. In the south-east, where house price inflation has taken off, people would suddenly find themselves in a new band and discover that their bills had increased without any change in their circumstances or the services that they receive. If the Government continue piling pressure on the council tax payer, they may find that the consensus on the council tax as an acceptable means of funding local government disappears. In that case, they would be in choppy waters indeed.

I welcome clauses 87 and 88, which deal with housing strategies, although the housing strategy for many local authorities in the south-east will have to be revised because of the impact of the new capital receipts regime. I pause over clause 89, which implies that tenants of indifferent local authorities are to be doubly penalised. First, they have to put up with a bad landlord, but secondly, their housing revenue account will get less subsidy from the Secretary of State because of their having a bad landlord and their rents will therefore be higher. I would like to attend the meeting at which the Minister explains that measure to the tenants of a Labour-controlled inner-city authority.

Clause 90 makes a major change to the housing revenue account, but leaves unaddressed the grievance of tenants in that regard. It is indeed the case that better-off tenants resent subsiding less well-off ones. The notes on the clause criticise the current arrangements because they are not well understood. The trouble is that they are only too well understood by the tenants who have looked at them. They want the subsidy that is provided to less well-off tenants through housing benefit to be removed from the HRA so that their rents can decrease. Clause 90 achieves the first objective but not the second. Housing benefit is taken out of the housing revenue account, but an identical sum is instead paid to the Secretary of State. I doubt whether tenants will derive any comfort from the fact that their rent is no longer going to their neighbour, but to the Government. I believe that we considered that solution, which in my time involved something called negative E7s, and rejected it as more difficult to explain to tenants than the current system. I wish the Minister good luck with that.

I should like to make two short final points. First, I hope that the Government will look again at the impact of pooling on the housing programmes of authorities in the south-east, where there is a desperate shortage of affordable housing currently funded by the local authority social housing grant and where that may be removed. Secondly, notwithstanding the fact that there may be only six Standing Committee sittings on the Bill, my interest on Second Reading does not extend to serving on that Committee.

Photo of Barbara Follett Barbara Follett Labour, Stevenage 7:16 pm, 7th January 2003

It is always a pleasure to follow Sir George Young. Unlike him, however, I do not find the Bill boring and or lacking a theme. Its theme is the devolution of powers to the local level. Its aim is to use those powers to drive up standards in the vital services that our local authorities deliver. I am extremely pleased that it is before the House and that my right hon. Friend the Minister is putting it before us.

It is anything but boring to talk about business improvement districts, which are desperately needed in areas such as my own. It is also anything but boring to look at the way in which elections impact on people and schools. Holding two lots of elections in 2004 would do a disservice to the schools in my community. [Interruption.] Yes, it would. Schools would be closed twice. Also, the public can get election fatigue. There is no danger of a very intelligent public confusing the two elections. They will simply be grateful that we are giving them the opportunity to vote once instead of twice. Even though we may not consider that politics can occasionally get boring, believe you me, it can. In the context of all the other pronouncements that I have heard about local government, which can, dare I say it, be extremely boring, the Bill is not. In fact, it verges on being exciting, although I hesitate to use that adjective in terms of local government.

I am concerned about one provision, however, as my earlier intervention illustrated: clause 11 and, in particular, the subsection dealing with capital receipts and debt-free authorities. I represent the new town of Stevenage. I turned 60 on Christmas day and Stevenage is just a little bit younger than me. [Hon. Members: XNo."] What gallant hon. Members we have in this House. However, I can assure hon. Members that, underneath the facade and the decorative application, I am wearing, just as Stevenage is wearing. However, Stevenage does not have the benefit of the decorative application, and of the Polyfilla that I put on before appearing in this Chamber.

In fact, bits of Stevenage are really showing their almost 60-year-old age. One school has seven miles of flat roof. Has anybody got any idea what it costs to repair seven miles of leaking flat roof? Most of the public buildings in Stevenage have flat roofs, because in the late '50s and early '60s, which I remember well, we thought that it was a Xbrave new world" thing to do to build flat roofs. Now we do not, because we now know the problems that flat roofs cause, but we have them in Stevenage, and Harlow and Hemel Hempstead have them too. In fact, six debt-free new towns have huge infrastructure problems. Although I and others in Stevenage understand the redistributive drive behind the need to pool capital receipts, it will cost us dear and will make it impossible for us to deliver the regeneration that we need in these ageing new towns.

We in Stevenage need a completely revamped town centre. We have huge parking problems because when the town was built in the '60s, it was built for people who had one car or, in the main, no car at all. There is a real problem with parking on grass verges, which we have to address. Part of the #14.4 million that my right hon. Friend rightly said has not been spent on housing in Stevenage has been spent on trying to improve the infrastructure and other local services. The population of Stevenage happens to be particularly needy. We have the highest level of teenage pregnancy in Hertfordshire, and we have to devote a great deal of time and money to social services. Stevenage is one of the few authorities that still gives free milk to school children in the morning. We do this because many of our children come to school having had no breakfast. My husband is the chair of governors in what used to be the worst performing school in Stevenage—thankfully, it has now risen to the middle ranks—and one area that was pinpointed was the fact that the children are hungry. So we give them milk, but this costs money.

Stevenage also has a very high proportion of pensioners. Because it is a new town, most of the people moved there at about the same time, and like me, they are all ageing together. In fact, in Stevenage my age is quite average. Members who got married 20 to 30 years ago, and who suddenly find that every towel is threadbare and that they put their feet through every sheet and duvet that they pick up, will understand the problems experienced by a new town. It is a trousseau problem—everything wears out simultaneously, and that is what is happening in the new towns. We desperately need our capital receipts to provide regeneration, and to provide the services that a slightly hostile, Conservative-controlled county council is not being very helpful with. We need our youth services and the children's play schemes that we run during the school holidays to enable mothers—we have a lot of single mothers—to go out to work.

I therefore beg my right hon. Friend to look at the new towns in particular, and to consider some alleviation in the pooling of capital receipts. I know that he said that we will get back what we say we will spend on housing, but unfortunately some of our need relates not just to housing but to services. Unless we deliver those services, we will be failing the people of our towns. I should point out with the greatest sincerity that it is very difficult indeed for Stevenage borough council—it has been Labour controlled ever since Stevenage became a new town, and is currently the only Labour authority in Hertfordshire—to deliver what it wants to deliver for the people of the town without some alleviation.

I am proud of what Labour has done for Stevenage, and I am very proud indeed of what it has done since 1983. My right hon. Friend said that the new towns received a gift of free housing, but I know that we did not. When that housing was transferred in 1983, we incurred a debt of #66.6 million, which was repayable on a 40-year annuity. We repaid that debt up until 1996, when it was cancelled in return for a reduction in our housing subsidy. So we are still paying it, and I beg my right hon. Friend to look again at how the new towns have repaid that gift of housing stock. I should also like him to consider the state of that gift when we received it. A lot of it consists of poor and experimental housing, and some of it is prefab housing. There are two extremely needy wards in my constituency, and the reason why they are so needy is because of the state of the housing.

I welcome the Bill and the aims of my right hon. Friend, but I ask him to pay particular attention to the needs of the ageing new towns, which, like Stevenage's ageing MP, need a little tender loving care.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley 7:27 pm, 7th January 2003

There is nothing wrong with my eyesight, and if Barbara Follett is ageing, she is ageing a darned sight better than I am—even when I pull my jacket in.

I have great sympathy for the hon. Lady's point about the pooling of capital receipts. In fact, as she knows the Select Committee felt exactly the same way, but we did not restrict the argument to the new towns. Indeed, many of the points that she made apply to local authorities throughout the country. Capital receipts are assets that they wish to use for various facilities in their own areas. They paid for them, so why should they not use them? For those that have not made use of that opportunity, the pooling of those receipts is not a good idea.

The Minister spoke at length—both today and before the Select Committee—about how superb and positive the Bill is, and how it will introduce huge freedoms, and so on. However, as he is probably aware, the Committee was underwhelmed by it, and in this regard he seems to be on his own. It is perhaps worth quoting from the first paragraph of the list of conclusions in the Committee's report on the draft Bill. It states:

XOn the whole the draft Bill appears to be far from a radical overhaul and in many cases gives more powers to the Secretary of State. The way in which it is drafted could enmesh local authorities in more regulation. We are furthermore concerned that aspects of the Bill centralise powers unnecessarily."

It is probably worth touching on that particular aspect in the short time available. This is yet another classic example of Government spin. They talk of freedom and of greater democracy, but in fact they are providing exactly the opposite. At best, the Bill redefines the methods of restrictions, and at worst it actually increases bureaucracy and regulation.

Most of the Minister's spin has concerned authorities having much greater freedom to borrow for capital expenditure, but his own Department's explanatory notes point out that this applies only

Xwhere they can afford to service the debt."

It is clear that any local authority has to estimate the availability of revenue to cover that aspect of any capital borrowing. Particularly following the announcement of the grant regime for next year, with central Government direction on levels of expenditure in many areas, coupled with target grants and ring-fenced grants, the Government's hold on local government revenue expenditure is tighter than ever.

There is no doubt that, for ordinary capital spending, local authorities are heavily dependent on annual Government support. No prudent local authority will assess that long-term borrowing as affordable in any ordinary sense of the word unless there is a good expectation of full Government support. Such an expectation is the basis on which local authorities have borrowed for many years, as credit approvals have automatically generated additional annual grant under the standing spending assessment.

I understand that local authorities are still awaiting the Government's proposals—which were promised last summer—for future grant arrangements to support capital spending. The natural expectation for many local authorities, following the Government's deeply entrenched centralisation techniques, is that the current controls, though credit approvals, will be replaced by an equally restrictive regime of conditional grant approvals. To back their claim of further freedom, the Government are relying on the Chartered Institute of Public Finance and Accountancy to develop what is called a prudential code to define what borrowing is affordable, and what is not.

I understand that the institute has prepared a draft code that will impose more performance yardsticks and more bureaucratic procedures on local authorities—as if they did not have enough already. I further understand that the draft code focuses only on the first three years, and that it therefore cannot address the fundamental problem that local authorities are not in a position to assess affordability for many years ahead—in other words, over the whole period of the standard time of local authority debt.

In essence, the overall effect of these proposals will be an increase in bureaucracy, with little or no worthwhile gain of freedom from Government controls. Is all the pain worth the bother, given that there will be such little gain?

Clause 11 has been touched on already. It gives a general power to the Secretary of State to confiscate the housing capital receipts of local authorities. I suppose that few people will be surprised about that, given the political machinations relating to the formula for distribution of revenue grant. Here again, the Government are intervening by giving to themselves the powers to confiscate housing capital receipts and consign them to a central pool. Although I guess that that procedure may be the Deputy Prime Minister's way of killing dead the right to buy—a constant blind spot in his tunnel vision—this manoeuvre, on local practical grounds, will destroy any interest in maintaining incentives for the good management of public assets.

The Minister assured the Select Committee that that confiscation would not be allowed to have a retrospective effect. That was very welcome. It is therefore with great concern that, according to my quick reading of the explanatory notes to the Bill, the effect of the assurance applies only to debt-free authorities. I hope that, when he winds up the debate, the Minister will reassure the House on that matter.

This Government, and in particular the Minister of State and his predecessor, constantly say that they trust local government and wish to give it more freedoms. If that were really so, clauses 25 to 28 could be deleted. They contain a high-handed and unnecessary range of procedures and prescriptions about local authority reserves and budgetary controls. The absolutely irresponsible behaviour of a few authorities in the late 1980s, and especially of some Labour authorities in that period, is no longer evident. Small changes made since then now protect public expenditure and, as a consequence, we do not need all the proposed restrictions. Indeed, no other public bodies are subject to this degree of legal prescription. In essence, all local authorities are being treated as if they were less capable of running their finances than colleges and housing associations.

As I have already said, legal safeguards currently exist. They require the appointment of properly qualified officers to take charge of financial administration, the adoption of proper accounting practices, and internal and external audit. Furthermore, there is a requirement that each local authority must review its reserves before it decides the level of council tax. Even if the Minister can point to any cases where these legal safeguards have proved inadequate—and he mentioned one—methods already exist that make it possible to alter one local authority's approach without imposing extra burdens on other authorities, as clauses 25 to 28 do.

The cost and delay caused by the restrictions imposed by these further bureaucratic burdens will tend to degrade overall performance and increase financial costs.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Earlier, I asked Sir George Young a question to which he did not make a complete response, so perhaps I can ask the hon. Gentleman the same question. Why, if the measures are so objectionable to Conservative Members, did the previous Conservative Government impose rather more stringent controls on local authority housing revenue accounts? The controls were designed on exactly the same lines as those proposed in the Bill, in that they required minimum balances and reserves, and very specific observation of budgeting rules. Why was that acceptable under a Conservative Government, but not under this one?

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

It is an interesting question. I do not want to dodge it, but I must point out that I was not here at the time. Did the Minister support the Conservative proposals, or vote against them? Moreover, the Conservative proposals applied to only one element of a local authority's budget, whereas this Government's proposals apply to the whole budget of every authority.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

Does the hon. Gentleman agree that the previous Conservative Government had a highly centralising approach to local government, whereas this Bill purports to be liberating and devolving?

Photo of David Curry David Curry Conservative, Skipton and Ripon

The verb Xpurports" is an interesting one to use.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

As my right hon. Friend notes, the verb Xpurports" is interesting in this context. If the hon. Gentleman reads the Bill carefully and talks to his local authority's finance officers quietly behind closed doors, he may find that he supports many of the concerns expressed by Conservative Members. The Bill purports to be decentralising, but in reality is not.

The draft Bill included references to the general formula grant. Presumably, those references related to the ministerial speeches and papers that preceded the Bill, when Ministers explained that the Government's intention was to improve the general grant system, giving more predictability and stability in order to support long-term planning and strengthen local authority accountability. The proposals have since been dropped and replaced by clause 31, which proposes an unrestricted power to enable Ministers to

Xpay a grant to a local authority towards expenditure incurred or to be incurred by it".

Furthermore, clause 32, contains an Xancillary" power to require a local authority to formulate policies in relation to any matter and to supply such information as the Minister may require.

That is an absolute monstrosity. The power is much more wide ranging than any that I know, and it will allow direct opportunity for funding by ministerial whim. There are no safeguards, as Mr. Davey noted. There is no requirement for prior consultation with local government, nor even for a statement to be made—for instance, within six months of the end of each financial year—showing all the grants paid to each individual local authority in exercising this power. The proposal is yet another example of central direction that will enable Ministers to provide grants to local authorities as they see fit. In other words, it is the specific, targeted grants system taken just a little further.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The hon. Gentleman will recall that the Minister intervened on me when I made that point. He said that parliamentary scrutiny would be provided by means of the estimates debates. However, does the hon. Gentleman agree that the estimates procedure is in such a sorry state that it will not provide real scrutiny of the new grants, which will therefore be open to the abuse that he has described?

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

One problem with the present scrutiny system is that there is so much to scrutinise and so little time available. I believe that the proposed system could be manoeuvred by Ministers, who will face no risk of intervention.

The next station on the centralisation line is the new approach to the housing revenue account. The Bill introduces a subjective basis for determining annual subsidy. That will destroy the improvement in predictability achieved in the past year or so. That predictability was welcomed by housing authorities, but the Bill will replace it with confusion and uncertainty. To add to the difficulty, and to exacerbate the continued trend of centralisation, clauses 89 and 92 will allow the Government to determine by formula the rent of every council and housing association dwelling in England. The proposal will destroy the previous provision in the Housing Act 1985, under which housing authorities must have regard to the pattern of private sector renting in deciding rent distributions for their own dwellings, thus ensuring that differentials reflected tenants' own experience.

Finally, it is worth referring to clauses 101 and 102, which have not been touched on, but which provide the opportunity for the Secretary of State to interfere even in the minute detail of contracting-out exercises. Clauses 101 and 102 will essentially remove the opportunities for any of the benefits to local council tax payers and residents of the discipline of competitive tendering. Perhaps that is a suitable note on which to end a Bill from this Government. In essence, this restrictive, centralising Bill will further damage the freedoms of local government, while flying under the Government's tarnished flag of the so-called expansion of local government freedoms.

Photo of David Lepper David Lepper Labour/Co-operative, Brighton, Pavilion 7:40 pm, 7th January 2003

I wish to concentrate on part 4, which relates to business improvement districts, but I should like to welcome some other aspects of the Bill before doing so, such as the help that it will provide to small businesses, and, despite what Sir Paul Beresford has just said, the measures to protect the rights of local authority staff, especially their pension rights when councils contract out their services.

I welcome the ability of councils to trade, and mine is likely to be one of them as Brighton and Hove city council achieved a good rating. The right to vary the discount for empty private properties and second homes will be much welcomed in areas such as mine with very real housing need and where several hundred private accommodation units are still empty.

I also welcome clause 82 on quashing liability orders. I have raised that issue with Ministers on several occasions on behalf of a constituent who understandably felt that, although it was acknowledged that a liability order served on him was a mistake, a blot would remain on his character unless the council went through the expensive higher court action procedures, which the Bill will replace with a simple recourse to magistrates.

I welcome what my right hon. Friend the Minister has said about a possible amendment to section 28. It seems to me that, despite the nit-picking comments made by some hon. Members earlier, it does not matter whether the Government or a Back-Bench Member introduces that proposed amendment to repeal section 28. The important thing is that an item on the statute book that remains to many gay and lesbian people a threat and a powerful symbol of prejudice and discrimination is removed. Through their action on adoption and their forthcoming proposals on partnership rights, the Government are already doing much to combat that discrimination and prejudice. I hope that when that proposal is introduced—I am sure that it will be—official Opposition Members who wish to support such an amendment will at least be free to do so, even if they are not whipped to do so.

I come now to business improvement districts. I pay tribute to the Association of Town Centre Management for the ceaseless work that it has undertaken over the years to promote the idea of business improvement districts. I am glad that the all-party group on town centre management issues, which I have the honour to chair, has been able to play its part in that lobbying. I am also pleased—I have to declare an interest—that I have been asked to chair the steering group on business improvement district pilot projects, which is being administered on behalf of the Office of the Deputy Prime Minister by that association. That steering group brings together the Office of the Deputy Prime Minister, the Countryside Agency, English Partnerships and the private sector.

I also pay tribute to the many town centre managers and their teams who brought together the public and private sectors in town and cities across the country to improve their areas, to bring new prosperity to local businesses and generally to revitalise town centres as places in which to work, to do business and to live. I pay tribute especially to the work of the Brighton city centre business forum and its manager, Tony Mernagh, and its chair, Derek Maddison. Not the least of their achievements has been bringing together businesses, the council and the police to make Brighton the first of the south's cities to receive the Home Office safe shopping award, combating retail crime.

In 1999, Lord Rogers' urban taskforce report proposed town improvement zones, recognising the problem with many town centre management schemes was the difficulty of securing sustainable funding. That problem was underlined by the study undertaken by the Association of Town Centre Management on behalf of the then Department of the Environment, Transport and the Regions on schemes in six towns and cities. The study showed that the time devoted to fundraising weakened the effectiveness of the schemes themselves and that making funding dependent on voluntary contributions generated a sense of vulnerability. It also showed that there was some resentment against those who did not make the voluntary contributions but who still benefited from the cleaner streets, safer environment and the increase in customers that the town centre management scheme brings to the area.

The proposals in part 4 are welcome, as they will provide a way to find sustainable funding for those improvement schemes by allowing a levy of businesses to be used, with the agreement of those businesses, specifically for agreed improvements to make areas safer and cleaner and to deal with crime and grime. Some hon. Members may be sceptical about the idea of business rate payers being willing to pay more. To those sceptics, let me say that more than 80 councils across the political spectrum expressed an interest in becoming pilot bid areas and more than 50 have subsequently submitted formal applications.

The intention is that when the legislation is in place, as it should be by the summer, some 20 or so pilot areas should be ready to test and, I believe, demonstrate the benefits that BIDs can bring to an area. May I reassure my hon. Friend Andrew Bennett that it is certainly the intention that those pilot areas should be representative not only of city centres, but of suburbs, market towns, coastal towns and all the regions of England as well.

Those who have had the opportunity to talk, for example, to Robert Walsh, New York's commissioner for business improvement districts, will have no doubt about the benefits of those schemes. The statistics that I would use are rather more up to date than those referred to by Mr. Pickles, given that they apply to the past five years or so.

In New York's BIDs, empty commercial properties have been filled, graffiti has been dealt with effectively and 40,000 new jobs have been created during those five years. Similar results are on record for Philadelphia and Washington DC. In Washington, there has been a 28 per cent. drop in serious crime, thefts from cars are down by 71.6 per cent. and pick-pocketing is down by 50 per cent.

This is new territory, bringing together the public and private sectors. The Government's proposed ballot process—the total rateable value of those in favour of such a scheme has to exceed that of those against—seems to be a way to guard against domination by large multiple retailers or the independent sector. It is also a way to maximise turnout and to secure a democratic mandate before schemes can go ahead for an initial five-year period. However, as I have said, this is new territory, so I wish to indicate two issues on which I hope that Ministers will ensure that there is clear guidance and which need detailed consideration. The money raised in BID areas must ensure true additionality for the services provided, and the criteria for defining that additionality must be absolutely clear if the proposals for a BID are to command support.

Secondly, I believe that the use of the business rating system as proposed is the clearest basis for the levy. Through the CBI and the British Property Federation, however, landlords have expressed genuine support for BIDs and a wish to play a formal role. Complex arrangements could no doubt be devised to bring the property owners and the tenants into the voting process. I am not sure, however, that that would be the most profitable way to proceed at present. I urge Ministers, however, to give proper consideration to ways in which property owners can be involved formally in a relationship with those who have voted for the BID.

Photo of Patrick Hall Patrick Hall Labour, Bedford

In relation to the role of property owners, I take it that my hon. Friend refers to freeholders. If so—and if they are to make a contribution, which sounds fair in principle—perhaps they would also like to have a vote. That would entail the grave difficulties of identifying those people. In many town centres, the freeholders are remote, they hardly ever visit, and their property portfolios are looked after by managing agents. That is a problem.

Photo of David Lepper David Lepper Labour/Co-operative, Brighton, Pavilion

I thank my hon. Friend for his comments. I remind him that, as a representative of part of the city that provided a home for Mr. Nicholas van Hoogstraten—until Her Majesty provided a home for him outside the Brighton and Hove area—I am aware of the difficulties of tracking down the property owners. I hope that I have indicated that my view is that the business rating system is the best basis for voting on BIDs. I hope, however, that Ministers will consider carefully—and that the Committee will consider—the possibility of a formal relationship between property owners and tenants in the BID, to enable property owners to manage some form of contribution.

I am mindful of the wish of many Labour Members, if not official or unofficial Opposition Members, to take part in this debate—that may be a comment on the value given to local government by the different political parties—and I will end my contribution with those remarks. I look forward to my right hon. Friend's comments in his summing-up.

Photo of David Curry David Curry Conservative, Skipton and Ripon 7:53 pm, 7th January 2003

My right hon. Friend Sir George Young indicated that, with regard to serving on the Bill Committee, he might wait for the film. I may be a glutton for punishment—or a sufferer from excess nostalgia—but I am willing to serve on the Bill Committee. It is not merely that the Minister's company is invariably entertaining and agreeable, but that once one has got into a habit it is difficult, as all old lags find, to get rid of it. This area is so frequently abstruse that one might as well maintain one's reputation for having expertise in it, especially as few people would even aspire to have such expertise.

This is yet another Local Government Bill and, as we are in a period in which we are giving fundamental consideration to what we must now call the governance of the United Kingdom, it might be sensible to look at what it tells us about the relationship between central and local government: mainly, to lament that the Government do not seem to want to stand back and look at where the proper balance lies between the two authorities, and at the whole issue of authority and accountability.

The political architecture is changing considerably. Multinational decision-taking structures are growing, and although the European Union tends to preoccupy us because of its relationship to the authority of this place, it is far from being the only one. A diversification of authority has taken place within the United Kingdom, with the creation of a semi-federal system, and if we move towards regional government we will have an even more federal system, although a remarkably heterogeneous one, as it will be far from uniform in application. Equally, a process of atomisation as opposed to globalisation has taken place, with devolution "à l'outrance" to the local citizen on the school board, for example. That is passing through the instruments of democratic accountability. Much is therefore changing. At the same time, we see a much more diversified service delivery between the public sector, the private sector and voluntary bodies of one sort or another. Without wishing to trespass on the quarrel between the Prime Minister and the Chancellor of the Exchequer, that is likely to be one of the dominant themes of the next year in politics.

Why are the Government so persistently anxious to maintain their hand on the brake of local government? Why are they anxious to be the back-seat driver and, on many occasions, sit in the front seat too? There are three reasons. First, as the Minister mentioned—this is an excerpt from my speeches as a Minister and the speeches of my predecessors—local government spends 25 per cent. of all public expenditure. The figure was #40 billion in my day, and it is more now. No Government trying to maintain national competitiveness in a globally competitive marketplace can afford not to take a view on what is the correct volume of that expenditure. There is no point in pretending otherwise or looking back for a lost golden age in which that did not happen. We are in a modern world in which that is an inescapable imperative.

Secondly, there is a need to get value for money in an age of restraint on the share of GDP that Governments feel that they can take, partly for the reasons that I have just mentioned and partly because of the allergies that have overcome the political system about the raising of more money in taxation, particularly in highly visible direct taxation. The Government may be finding some way out of that allergy through their persistent tax increases.

Thirdly, there is the distrust of a political culture in local government, which all parties share. Ironically, the last Conservative Government had the same problem as this Government: old Labour and local government. I do not know which of those Governments have been more inconvenienced by that. We have certainly both been inconvenienced, and that was the cause of a great deal of distrust of what was happening in local government, even though old Labour was often new polytechnic when translated into local government terms. That manifested itself under the Conservative Government in instruments such as capping. There were a series of tough settlements, although the suggestion by Mr. Battle that there were cuts in real terms year after year was a fictional element in his contribution. Compulsory competitive tendering was important as many local authorities had no way of assessing what was a proper place for a service before an element of competition was introduced into the tendering process. The Audit Commission, which has now become a sort of super-gendarme in the firmament of this Government, was an invention of the previous Conservative Government.

The Tory Government used weapons that were largely financial as instruments of control of local government. Under this Administration, the instruments used are much more managerial in approach, although not exclusively so, as that does not take account of the financial instrument of a very great increase in direct grants—a kind of challenge to non-hypothecation—which has been carried out over the last few years. Best value was the great instrument that replaced compulsory competitive tendering through the wonderful regime of the gendarmes that attended almost every move of local government. The then Secretary of State for Transport, Local Government and the Regions, Mr. Byers—who is now, in political terms at any rate, deceased—confessed at Harrogate that the machinery had become too heavy and would have to be unwound to an extent. It was certainly oppressive and time consuming.

Subsequently, we have seen the prescription of how councils were to run themselves, of which the Tory Government never even aspired to dream, and the choice of a mechanism by which they were to discharge their political function, let alone their services. We had elected mayors, a process that went catastrophically wrong in the places where it was tried, cabinets and the mayor plus manager. All those systems were prescribed on the basis of token notice being taken of the views of the general public as expressed in referendums with extraordinarily low thresholds for turnout and the majorities needed to bring about change. The proposals for regional assemblies have further implications for the planning role of local government. We therefore have an incredibly confused architecture of government and confusion as to where the Government see the broad thrust of their strategy leading. I fear that there is no clear strategy.

There have been more generous settlements recently but, because of the way in which council tax works and the gearings that are involved, there have been spectacular increases in the council tax needed to deliver services. At the same time, there has been an increase in micro-management, with the daftest increase of all being that whereby the Government take money off the national health service to give it back to local government so that it can it repay the NHS to deal with the problem of bed blocking. If ever tautology was written into legislation, the Government have managed it with that particular provision.

There is much talk of freedom, which is the new buzzword in local government. However, there are two sorts of freedom: the freedom from and the freedom to. It is important to draw a distinction between the two. Much of what has happened of substance is of the freedom from variety rather than the freedom to. For example, a policy classifies councils in a range from excellence to Hackney, which I suppose is the effective classification for councils at that end of the range.

The rewards offered to councils include a reduction in ring fencing, the removal of the requirement for statutory plans, a reduction in the level of the intensity of inspections and the removal of the never used threat of capping. They are part of a local government parole system. Councils are allowed out on parole after a period of good behaviour, but the classification itself is still a central mechanism that is too dependent on Ofsted's classification of education spending and the way in which Ofsted defines that. There must be greater equivalence between the way in which Ofsted judges education services and the judgment that is made of other services if the classification is to operate fairly.

The inevitable question that we ask ourselves about the Bill is whether it contains more freedoms. As many speakers have said, it contains more freedoms, but we are also moving in the opposite direction simultaneously. It is an itsy-bitsy Bill, like so many other itsy-bitsy Government Bills. The freedoms in it are far from clear cut or they represent an ambiguous new direction. For example, while the Minister talks about freedom, he will no doubt be aware that the Department for Education and Skills, which has always been the most Stalinist Department when it comes to controlling its expenditure, is even now telling local authorities that it must passport through to schools a volume of their budgets. Local authorities that have received a baseline increase in their budgets have been told that the Department has to passport more than the entire increase in their resources to schools. That is prescription in its most extreme form and lives alongside the Minister's claims that it is a greater freedom.

On balance, I welcome the proposals on capital finance. However, they do not involve freedoms US-style. Although one or two local authorities will have their own credit ratings—they are very much at the limit—they are not companies going to market. All local authorities will continue to borrow from the Public Works Loan Board and will all pay the same rates of interest. I hope that arrangements will be made so that, if there is early repayment of debt, they do not suffer from some of the disadvantages that have occurred with voluntary transfers. That would constitute a serious disincentive. Furthermore, as my hon. Friend Sir Paul Beresford pointed out, we do not know what the support arrangements will be for the continued capital borrowing that will continue to form the lion's share of the capital investment made by local authorities.

I think that I am in favour of the proposals to trade and change provided that there are the obvious safeguards for competition between local authority and other suppliers. Some of the other measures in the Bill introduce sensible flexibilities, including the new stab at rate relief for small businesses. If I may make a forecast that is born of the scars that I bear, that proposal will be welcomed and then immediately dismissed as being wholly inadequate for the needs of small businesses.

I am hesitant about the proposal for the pooling of housing capital receipts for precisely the reasons that my right hon. Friend the Member for North-West Hampshire has already outlined. I will not repeat what he said other than to say that I hope that we will receive clarification in Committee so that we can understand how the proposal will work.

I am also cautious about introducing too many changes to council tax. It has the advantage of being a very efficient tax in terms of its rates of collection. Many local authorities are very close to collecting the practical maximum of what can be collected. However, I accept that there is a problem, notably for lower-value properties, and Andrew Bennett has already mentioned that. If we could introduce a little more logic into the system, we could all escape from the silly political business of swapping arguments about which party charges council tax payers less. We all know that the answer is fundamentally a function of the proportion of houses of different grades that are in each local authority area. The Minister must accept that, because of inflation in house prices, people will be deeply concerned to find themselves suddenly in a new band when the level of services provided remains the same. The council tax is designed to create a balance between capital values and services delivered, and that balance must be maintained.

Where does the Bill leave us? It leaves us with small increases in discretion and flexibility; it maintains a largely command-and-control system from central Government; and the prevailing culture is still that of reward for performance. We have not really considered whether and how we can reassert representative democracy, so it is not a case of paradise gained or even of nirvana deferred. It is a small earthquake in Walsall, with not many shaken.

Photo of Patrick Hall Patrick Hall Labour, Bedford 8:07 pm, 7th January 2003

I will concentrate my remarks on part 4 of the Bill as I strongly support the proposal that business improvement districts be enabled. It will turn out to be an extremely positive and welcome initiative that could yield wide-ranging and lasting benefits throughout the country. My remarks have been encouraged by the views of the Bedford Town Centre Company as well as by my experience as the former town centre manager for Bedford and as a member of the all-party group on town centre management.

It is difficult to write down a formula that would produce a successful town centre—so many ingredients and variables are involved. None the less, when we enter a successful town centre, it is clear that our experience is very different from what it would be if we were in a town that was failing. I had better resist the temptation to devise a formula for success. A thriving town centre, however, is successful economically, socially and environmentally. It has achieved that state of affairs because certain functions and activities are integrated and working together rather than operating in an isolated and fragmented way. It is all too easy for isolation and fragmentation to be the order of the day in town centres.

The private sector is, by definition, individualistic. It mainly comprises individual shops, services and businesses that are in competition. It is self-evident that shops in a town centre are often in direct competition with each other. The public sector, which looks after the public realm in the town centre—street lighting, cleansing, policing and so on—is the responsibility of different agencies and departments. They can act without reference to each other, which all too often happens, even with bodies in the same local authority. If left to itself, the town centre can be characterised by a lack of co-ordination. It has increasingly been acknowledged over the past 20 years or so that deliberate action must be taken to encourage different interest groups to talk to each other, to work together and to act in partnership to achieve common goals. That is what town centre management is all about. When it works, it benefits everyone: trade, the shopper, the visitor and the public realm as a whole.

There are many successful examples of town centre management initiatives across the country. The establishment of the Association of Town Centre Management in the early or mid-1980s considerably boosted the status of town centre management. It has helped to generate debate, raise awareness, undertake research and promote good practice by being in touch with what is happening on the ground daily. My hon. Friend Mr. Lepper referred to the association.

One of the consistent features of town centre management identified by the association that has been experienced by town centre managers around the country and by town centre partnerships is that although everyone clamours for initiatives such as Christmas lighting, Britain in bloom projects, shopping guides and competitions from which all parties gain, few are willing to pay for them. Apart from that being inherently unfair and causing ill feeling, it also suggests that it is possible to achieve even more if only all the parties were to contribute. I believe that the potential is considerable, which is where business improvement districts come in. It is inherently fair that costs are spread among those who might benefit. In addition, the necessity of working in a partnership to draw up the business plan for a local business improvement district and the need to campaign to advocate a BID to win the vote should generate even more ideas and commitment, as well as the sustained additional income that current town centre management arrangements are able to provide. That is the great benefit—the great beauty—of the idea.

In my opinion, a successful system of BIDs could represent a breakthrough in town centre management. That is also the understanding of the Bedford Town Centre Company and the perception of the Association of Town Centre Management. I echo the congratulations that my hon. Friend extended to the association on having the foresight to prepare for the enabling primary legislation by promoting pilot BIDs in different parts of the country. That is important because it will take time for a BID proposal to be properly prepared and to stand a fair chance of winning a yes vote in a local ballot of business rate payers. By encouraging the work to be undertaken now, a number of proposals and ballots could be launched next year, when we hope that the legislation will come into effect. Schemes will be ready to hit the ground running, which is welcome. The selection of pilot BIDs is a matter for the Association of Town Centre Management. I am pleased that the Bedford Town Centre Company, among others, has put in its application. It has done so with strong support from many interest groups and people within Bedford. That is the result of its enthusiasm and hard work, and I wish it well.

I wish to question one aspect of the BID proposals: the nature of the ballot of business rate payers within the defined bid area that is required before a scheme can proceed. Clause 52 requires that a simple majority of those voting must vote in favour for a BID and the levy to go ahead. That is uncontroversial; we all understand it. It goes on to say, however, that, for a scheme to proceed, the total rateable value of the properties of those voting yes must be greater than the value of those voting no. So even if a majority of small businesses voted no, a scheme could go ahead anyway because the big boys say yes—or vice versa. That would be a bizarre situation, and I do not see it creating consensus, partnership and credibility. After all, life will go on, and there will be a need to address town centre management issues after a ballot has been held.

We abolished the property qualification in the general franchise more than 120 years ago. A person's vote is not worth more because his or her property happens to be more valuable than someone else's. I think that Ministers have missed an important point.

Business improvement districts can open up effective town centre management schemes by drawing in ideas and commitment from the smallest business as well as the largest. They can all operate as equals and in partnership, paying a levy according to the scheme agreed locally, which may, as we see in the Bill, vary according to turnover or rateable value—something for the local partnership to determine before the ballot is held. That is very different from saying that the value of a vote in the initiating ballot should be weighted according to rateable value.

I am extremely concerned about this proposal. Why complicate matters? Having counted the votes, the returning officer of the local authority will then have to identify and add up the rateable values. There is a lot of scope for dispute, uncertainty and error, especially if the result is close. I ask Ministers to keep this simple and credible and to stick to a system that everyone respects and understands. The only system with legitimacy is the one that encourages people to vote yes or no and the majority wins.

Photo of Patrick Hall Patrick Hall Labour, Bedford

I am about to conclude.

I do not think it wise for the Government to be prescriptive. We heard some comments about the lack of prescription in the Bill, but it is not necessary here. I urge the Government to think again and not to allow this aspect of the BID proposal to undermine an otherwise excellent initiative.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster 8:17 pm, 7th January 2003

I, too, want to concentrate on business improvement districts, as the hon. Members for Bedford (Mr. Hall) and for Brighton, Pavilion (Mr. Lepper) did. However, I should like to start with some more general comments.

My background is in local government, although it is not as illustrious as those of many of today's speakers. That is no longer a matter of embarrassment in the Conservative party, as it might have been in the past. I am a great believer in the concept of localism, and it seems that localism will be achievable only with far greater financial autonomy. The Bill is deeply centralising, and in that regard I endorse the comments of my right hon. Friend Sir George Young and my hon. Friend Sir Paul Beresford.

In London we have had a dire experience since the mayoral election two and a half years ago. There is a lack of financial transparency. The battle between the Mayor of London and the Treasury means that Londoners have lost out. That is evident from our public services, not least London Underground.

The Bill makes some significant claims on council tax issues. I confess that I disagree profoundly with the second home provisions in clause 75, which seemed to have almost universal support earlier. The clause displays a strong misunderstanding of the notion of the council tax, introduced in 1991, which was designed to be partly a property and partly a personal tax. That is the basis for the 50 per cent. second home discount. However, I accept that Government pressure on local authorities, particularly Conservative local authorities, has forced a number of the Tory shire counties to lobby for this change, which I suspect will be made.

In general, I support the concept of revaluation, but I disagree with the power in clause 78 to change the valuation bands, with one caveat that was referred to forcefully by Andrew Bennett. Obviously the point is unknown to me from my constituency experience in central London, but clearly, if there should be a subdivision of band A in a number of our bigger northern cities it would make sense to have one.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

I am sure that my hon. Friend, with his knowledge of local government, can cast his mind back to the introduction of the council tax bands in 1991. He will remember that a large number of appeals were made, because people were aggrieved at finding themselves in a certain band. If we restructure the bands, exactly the same thing will happen. Does he agree that that would place a huge burden on local authorities?

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

I could not agree more, and a wholesale revaluation or rebanding in that regard would not make a great deal of sense. Interestingly, when all those appeals took place 10 or 11 years ago, a lot of people felt aggrieved because the property market was somewhat questionable—it was coming down. Within a short time—perhaps this applies mainly to London and the south-east—a lot of people were keen for their properties to be revalued into a higher band for council tax purposes, which obviously made a difference to the resale value of their property.

I am concerned that the proposals to extend the number of bands beyond eight to perhaps 10 or even a dozen are, effectively, another stealth tax on middle class London and the south-east. We have already seen something of a gerrymandering of the grant system to favour the north of England and Scotland. There is no doubt that the old standard spending assessment was a complex system for local government finance, but the new system does not seem any more straightforward or transparent to me. Transparency must be at the core of the council tax, not least because if we are to move towards more local autonomy we should consider more local taxes. We should examine the American example, which involves raising a sales tax locally and using it on local matters.

As Ministers have rightly pointed out, we face a great concern that goes back to when my party was in government: more than 80 per cent. of local authority expenditure comes from central Government grant or the uniform business rate, so it is perhaps unsurprising that we have concerns over centralisation.

Business improvement districts are of key importance in my constituency, as they are in that of the hon. Member for Bedford. They are, of course, an American concept that was pioneered to provide a mechanism for private sector leadership in the general improvement of a locality. In my constituency, we have the New West End Company, which takes in Oxford street, Bond street and Regent street. I am inclined to think of the dark green spaces on a Monopoly board. Perhaps the idea would not have quite so much success in Old Kent road or Whitechapel road. Thankfully, neither is in my constituency.

One benefit of the proposal is that it would allow people to work alongside local stakeholders. The private sector, therefore, would be able to take a lead on long-term projects, over and above the general local authority services. However, as a number of Members have pointed out, we must ensure that there is a genuine sense of additionality rather than a feeling that local government funding is simply being replaced.

We also need to ensure that there is greater public reassurance as to the deterrence of crime. I support zero tolerance on quality of life issues such as illegal street trading and graffiti. We must also ensure that we spruce up open spaces and enhance sanitation in many of our inner cities.

I also support the Government's safeguards for the minority interest, which are in clause 52 and which were referred to somewhat less favourably by the hon. Member for Bedford. It strikes me as fair to have a twofold test involving, initially, the majority of stakeholders. However, the test must also represent a majority of rateable values. Interestingly, in New York, for example, a 60 per cent. values test applies. However, we must ensure that there are at least some safeguards against the Xno taxation without representation" argument, which could equally be put by unreconciled minorities.

I hope that we shall be reassured in Committee on the organisation of ballots—regulations need to be set out in more detail than in clause 57—and we must also consider the potential use of a veto by any relevant local authority.

The key long-term effect of business improvement districts, however, is that they result in increased property values so, as has been pointed out, property owners and not just tenants stand to gain most from their success. In the United States, for example, property owners pay rates but in the UK it is envisaged that the occupiers will pay, although owners have a greater vested interest in the long-term success of the area.

There is genuine concern that the UK approach will not be workable as that unfairness could impede initial interest in BIDs as well as their longer-term sustainability. I realise that we shall discuss these points in greater detail in Committee but, notwithstanding the Minister's earlier comments, there should be more detail in the Bill rather than leaving the matter for regulation at a later stage. I accept the argument that we need a sense of flexibility—it is an entirely new area and we do not want to take an overly prescriptive view. However, there is a real worry that unless there is a clear idea in the minds of local businesses in areas that are subject to a BID scheme, there will be no BID at all.

The experience of Westminster city council in joint partnering with the private sector to fund such improvements is that land owners rather than occupiers are willing to contribute. Their engagement in business improvement districts should remain explicit. That experience is confirmed by the New West End Company, to which I referred earlier. The whole initiative has been driven by property owners; more than two thirds of the #1.6 million budget of the past three years was funded by owners rather than tenants. I appreciate that what goes on in the west end of London may be somewhat different from what happens in many other parts of the UK, but it shows the importance of bringing owners on board at an early stage.

Comparisons have been made both with New York and with other US cities, especially by Mr. Lepper. However, one or two of those comparisons do not entirely pass muster and when we are setting up BIDs we should ensure that we do not have such high expectations for them that they are disappointed. In New York, for example, BIDs came in only after a large increase in police numbers and a commensurate fall in crime rates. Similarly, New York could generate specific quality of life legislation in some localities. Even though we can make use of byelaws in this country, such legislation would not be appropriate in the UK. Furthermore, New York has a 24-hour transport system and is able to disperse large crowds rapidly—that is especially relevant for London—so it is far easier to deal with quality of life issues there.

I have grave concerns about several other points to which my right hon. and hon. Friends have already referred. However, the BIDs initiative is positive. It needs far more scrutiny in Committee, which I hope will ensure that a robust business improvement district regime will come about.

Photo of Kali Mountford Kali Mountford Labour, Colne Valley 8:28 pm, 7th January 2003

Many Members have said that the Bill is confusing, but I think that the debate itself has been confusing. The Liberal spokesman, Mr. Davey, told us that he supports the Bill but is critical of certain aspects of it. A more intriguing contribution came from an old friend of mine, Mr. Pickles. I am sad to see that he is not in his place, because I greatly enjoy sparring with him. He told us why he did not support the Bill, yet many of his hon. Friends said that some parts of it had merit. It is thus not surprising that I feel somewhat confused by the different positions adopted within the two Opposition parties.

I strongly agree with my hon. Friend Mr. Battle, who talked at length about the essence of community and community life. He described how we reach up from our communities to local government, to central Government and even beyond to the European Parliament to find ways of improving our lives. For that reason, business improvement districts are a good idea.

My constituency has hardly any areas that might attract objective 1 or objective 2 funding for investment in their communities. In areas such as mine, where the communities are largely rural, BIDs will give us the chance to reach out and invest in our businesses and deal with them in ways that are locally accountable. In a very short time, on 10 February, I shall meet business people and the many partners that work with the local authority to discuss how to develop Holmfirth, which many hon. Members will recognise from XLast of the Summer Wine". That community is highly developed, and the people there know what the essence of their community is.

For the purpose of this debate, an element of our communities is missing. Certain members of the community have been vilified by pernicious legislation, and this should be an opportunity for us to remove it. Many hon. Members know it as section 28, but its proper title is section 2A of the Local Government Act 1986. The Act has been in place for 17 years, and, to my knowledge, has never been used by any local authority. We have heard about freedoms of many kinds today. Mr. Curry—with whom I enjoyed sparring when he held the office of Minister with responsibility for local government and I was chair of finance on a metropolitan council—captured the essence of the argument for me in asking whether we have Xfreedom from", or Xfreedom to". He did not, however, extend that argument to the freedom that we ought to allow teachers and parents in educating our children.

We are leaving on the statute book an onerous responsibility for local education authorities that they cannot use and which has no place. The right hon. Gentleman also talked about the atomisation of local government, down even to governor level, yet he did not go on to say that local governors, teachers, parents and the children themselves in a school community have clear ideas about how sex education ought to be dealt with. Indeed, many other pieces of legislation have been placed on our statute book over the last 18 months to two years. I am thinking of different aspects of health Bills, and of the Sexual Offences (Amendment) Act 2000. I am also thinking of the Bill before us today, which could offer us the opportunity to put right this situation.

Photo of Desmond Swayne Desmond Swayne Opposition Whip (Commons)

Does the hon. Lady acknowledge that, since local management of schools came in, what is taught in schools, particularly in respect of sex education, is entirely a matter for the discretion of the governing body and therefore not affected by this legislation, which merely constrains what local government can properly spend its money on?

Photo of Kali Mountford Kali Mountford Labour, Colne Valley

The hon. Gentleman makes my point for me. Since those matters are the responsibility of governors, that piece of legislation should not be left in a Local Government Act when it is no longer required. It is an anachronism, and it is time that it went. We ought to tidy up the law, and now that we have given that responsibility to school governors, we should allow them to do their job, and use this debate—the earliest opportunity since we last discussed the issue—to say that the House of Commons has made its position clear in previous votes and now believes that it is time to remove a pernicious piece of legislation that is an outdated anachronism.

Communities, if they are anything at all, are the development of society, and society has moved on greatly in recent years. A Government who lag behind as society moves on not only fail to show leadership but are not even in tune with the very people they represent. Here we are, debating a Bill about the representation of the people at local level, yet we are leaving with them this onerous task that they have never wanted to use, have never used, and are never likely to use. Is not this the right day, the right time and the right place to say that we will have no more of it? Let us allow local democratic accountability to be more meaningful. The measures in the Bill relating to changing voting systems, bringing together timings, and looking at how we relate to people and engage with the business community, local tenants' groups or council tax payers all relate to people who are the parents of children who might be gay. They are the parents of children who are going to school and need to learn. They are the members of the community who are attending schools as governors. They are members of the local activist groups that engage in our community. These people are not split up into different salami slices for the purposes of one Act against another.

I feel encouraged by the remarks of my right hon. Friend the Minister. I hope that during our consideration of the Bill, the Government will accept a sensible amendment and that the House will develop a consensus. If there cannot be agreement on some aspects of what I have to say, let us at least agree, given what Mr. Swayne has said, that section 28 is an anachronism. It is no longer needed. We have given the powers to somebody else. Let us allow that person to do the job that has come through the democratic process. Let us get rid of a pernicious piece of legislation during our consideration of the Bill. I hope that my right hon. Friend the Minister will accept my remarks.

Photo of Ms Sue Doughty Ms Sue Doughty Liberal Democrat, Guildford 8:36 pm, 7th January 2003

I return to the problem of clause 11, which heavily affects debt-free local authorities such as those in my constituency: Waverley and Guildford borough councils. We heard graphically about the problems of new towns from Barbara Follett. I shall cover some of the housing problems in what are apparently hugely prosperous areas. However, there are people living in these areas who are certainly not prosperous.

It is easy to think that certain constituencies are part of the gin-and-jag belt. It is easy to dismiss their needs and say that somewhere such as Surrey generates wealth for the rest of the country. We do not deny that we are successful economically. We pay our taxes and contribute to the wealth of the country. We do what we can. We accept that redistribution is part of the great economics of the United Kingdom. That is the role that we play here.

There are some, however, who are not participating in the process. We have a need for social housing and council housing as well as those in the poorer parts of the country such as the south-west, the north-east and the north-west. We have areas of social deprivation. We do not have empty homes or houses going for a song. On our council list, we do not have three and four-bedroomed houses available for people as their families grow. It may take many years to get a council house in Guildford or Waverley. Such housing is likely to become available only if someone's needs are so desperate that he or she finally gets the points that take them to the top of the list. The idea that a decent low-income family will get a suitable house is a myth in the area that I represent.

It is a scant comfort to know that people in other parts of the country may benefit from the pooling of revenues when a shop assistant is trying to find somewhere in which he or she can afford to live with their family. What is the position of a bus driver who is trying to house his family? We do not have enough bus drivers because they cannot afford to live in the area that I represent. They cannot find anywhere.

Week after week, Members who represent constituencies in my part of the world have people coming to their surgeries who present heart-breaking cases of desperation. For half the weekend, I had phone calls from a family who were again desperately in need of housing. There was abuse and all sorts of problems. They were almost losing the will to keep on trying to stay together as a family because of the lack of housing. They cannot move away.

What do I say to a couple in their late 20s—a nursery nurse and a gardener—who have never been able to move away from the family? The other siblings are still there. When the baby comes, they will have room for the crib in the house but there will not be room for a cot. What will that family do?

The average price of a house in Surrey is #250,000. Members will know that private houses for rent are affordable only to people with a large income. Private sector rents are high. Very few properties are available for less than #1,000 a month, and in the best areas, rents go up to #15,000 a month. I cannot tell constituents who come to me with problems to try the private sector—the houses are not there. The Government must recognise that we need our social housing and our council housing, and, above all, local authorities must be able to invest in those. We have problems with housing key workers and, in other schemes, those who do not even get to key worker level are desperately needy.

Photo of Desmond Swayne Desmond Swayne Opposition Whip (Commons)

Will the hon. Lady acknowledge that the problem is, at least in part, of the Government's making? New Forest district council wants to deploy more of its budget in building houses that are desperately needed, but it is prevented from doing so by a Whitehall-imposed policy that requires it to spend that money ripping out perfectly good kitchens and putting in new ones. Frankly, in the New Forest, the need for new houses is greater than the need for new kitchens, and such decisions should be made only by locally accountable politicians, not by Whitehall.

Photo of Ms Sue Doughty Ms Sue Doughty Liberal Democrat, Guildford

I agree that it is essential that councils can determine their housing needs and their strategies to ensure that they have adequately maintained housing stock. They should also be able to invest in new housing where necessary. That should be a local decision, not a national one.

When a constituent asks me, XWhat am I going to do with my three teenage children? We live in a two-bedroomed house, and by the way my husband has a mental illness, cannot stand the stress and is about to walk out," it is no good my replying, XWell, you shouldn't have had the children." The family, including the children, have needs. We must remember that there is housing need across the country, and it is not something that can be subsidised in one area by funds from another.

In Guildford, we have invested well in our housing stock and in maintenance. Maintenance has been paid for by rents, which are set so as to allow us to make that investment. Tenants invest in their own homes, and council tax payers invest in those homes. Properties built before the war have, over the years, received huge investment from local people and they are a local asset. Guildford has been prudent; it has been listed as above average in managing its housing by the Government office for the south-east. However, if property is sold off under the right to buy, we could lose that money. We need to build more properties. We have #35 million in the bank from right-to-buy income, and we cannot invest it as we would like.

Clause 11 is unjust and unreasonable. Local government has to mean exactly that, and it must be locally run. I support everything that my hon. Friend Mr. Davey said about the need for local government. Central Government have a role in allocating resources, but the notion that they can purloin a council's assets and give them to someone else is totally unacceptable.

On 18 July last year, the Deputy Prime Minister stressed that not only do we need more homes but more homes that people can afford. Councils work in many ways to develop affordable housing, but taking away their capital receipts is a way of preventing them from doing so. Councils such as Waverley need to be able to spend their receipts on meeting the decent homes standards. Waverley will struggle in that respect, and it needs that money. The council is patching up holes in woodwork instead of replacing windows.

The Government need to recognise our problems with our dwindling housing stock. They must recognise that not all high-cost areas are populated by affluent people. I spend a lot of time trying to explain the problems of the public sector and the pay and housing needs of its employees. There is a constant drain on the numbers of police officers, qualified teachers and experienced people away from the south-east, because they cannot afford to live here. The problem is even worse among lower paid people.

I urge the Government to rethink the clause. The towns and the countryside in the south-east need a balanced community, not only people who can afford to be here. It is essential that our communities have that balance, but the proposed pooling of receipts will not deliver it. The need for good housing across the country is not a party political issue—there is no logic in not housing bus drivers in the south-east so that we can house bus drivers in the north-west.

If the Government are not prepared to reconsider the clause, perhaps they will consider what councils want to do with the money and what investment they want to make. Before pooling the money, they could ask councils what they would otherwise do with it. Would councils use it to bring themselves up to a decent standard, and how many homes would they fail to provide if the Government took it away? If they are going to start putting controls on local government finance, they should use them constructively to encourage councils to invest as best they can in housing for people with the greatest need.

Photo of Neil Turner Neil Turner Labour, Wigan 8:45 pm, 7th January 2003

First, may I congratulate Mr. Pickles on his bid for the 2003 brass neck award? He occupies the pole position in such a contest, and made a good job of getting off the starting blocks quickly.

I was a member of a local authority from 1979 to 1997. During that time, I recall only one Conservative Secretary of State introducing plans to reduce the regulations on local government. After a lot of huffing and puffing and vanishing into the jungle, he introduced a number of proposals. In the 15 years during which I chaired Wigan council's highways council not once did I avail myself of the opportunity to introduce cattle grids in Wigan's roads without reference to the Secretary of State for the Environment—that was the sum of Conservative attempts to reduce the burden on local government. It is therefore a bit rich of the Opposition to start to complain now about a measure that does just that.

Photo of Kali Mountford Kali Mountford Labour, Colne Valley

Did the scales fall from my hon. Friend's eyes, as they did from mine, when Mr. Curry told the House that such difficult legislation was imposed on local authorities at that time because of the Labour councillors he had to deal with? If he had not had to deal with them, he would not have introduced the legislation.

Photo of Neil Turner Neil Turner Labour, Wigan

Certainly, scales fell from my eyes several times when previous local government Ministers spoke. Sir Paul Beresford and the right hon. Members for North-West Hampshire (Sir George Young) and for Skipton and Ripon (Mr. Curry) gave tremendous reasons for doing all sorts of things at the time. Now they come along and say that we are not doing enough to repeal measures that they introduced.

I want to deal with clauses 77 and 78, which deal with the extremely important matters of property revaluation and council tax banding. Revaluation is essential—nobody can be in any doubt that since 1991 there have been huge changes in property values, not just nationally, but within and between regions, so we must make sure that that is reflected in council tax bands. There is an extensive home ownership market in this country, and house values represent closely people's ability to pay for housing. If they can do so, they can pay for their council tax as well. A council tax band that does not accurately reflect the real value of a house will in the long term bring banding into disrepute.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

Does my hon. Friend agree that if band A is split into, say, band A1 and band A2, with A2 people paying the current band A and A1 people paying rather less, there will have to be compensation for the difference in revenue? It would therefore make sense to split band H at the other end.

Photo of Neil Turner Neil Turner Labour, Wigan

I shall deal in a moment with banding and the splitting of bands. If my hon. Friend will bear with me, I shall finish the point that I was making about council tax valuation and the need to ensure that that is done at least every 10 years. Sophisticated information is available from the building societies and other bodies, which would allow us to revise house valuations on a more regular basis than that. Why can we not carry out a regional uplifting every year and a complete revaluation every 10 years to bring the two together? That would provide buoyancy for council tax income without the need to increase the council tax rate and levy each year, as those on the Liberal Front Bench suggested would be beneficial.

On the council tax ratios, my hon. Friend Andrew Bennett pointed out forcefully the problems that we have in many areas of the north-west. I am sure that his authority is similar to mine, where 70 to 75 per cent. of houses are in band A or band B. Of 120,000 properties in the Wigan borough we have 141 in band H. That shows the disparity that exists. We need to consider not merely splitting those bands, but introducing a more realistic ratio between the value of those bands and the amount of council tax that people pay. At present, someone living in a band A property worth #30,000 pays six ninths of the standard rate. Somebody with a property worth #300,000—10 times as much—or #400,000, #500,000 or #1 million will be in band H and will pay only twice the band D rate. In other words, somebody at the top of the scale will pay only three times as much as somebody at the bottom.

That cannot be right. It is hugely regressive, and there is no doubt that the reason why the Opposition do not want the introduction of new bands or the splitting of existing bands is that they prefer a regressive council tax to a progressive one. I hope that the Minister will make sure that we consider splitting the bottom range and that we introduce a number of new ranges at the top, so that through the bands and the ratio between them, the system reflects people's ability to pay.

Clauses 40 and 41 deal with housing finance. I was disappointed with this aspect of the Bill. It does not level the playing field between local authority housing and registered social landlords. Only by transferring from local authority housing to a registered social landlord will the overhanging debt be written off. That is the wrong way of using the available finance. It should be used for additional investment in housing, rather than paying off debt to transfer the ownership of those houses.

There may be good reasons for transferring housing ownership to registered social landlords and away from local authorities. The local authority may not be a particularly good landlord, and it should not be allowed to continue in those circumstances. However, we should recognise that there are dangers involved in transferring to registered social landlords. A registered social landlord usually has a fairly small number of properties, so only a small group of people can do that. Even so, in small district councils, the consequent reduction in the size of its housing department may represent a quarter or a third of the intellectual mass that goes into that local authority's corporate ability to deal with problems. That seriously diminishes such an authority's ability to take corporate actions to solve housing and other problems. In all good authorities, there is corporate accountability and local authority chief officers act together to discuss and resolve problems. If part of the intellectual mass is taken away, particularly in district councils, that limits their ability to tackle problems.

There is another issue relating to registered social landlords. People who live in social housing usually face a host of problems, including educational, social, financial and health problems. We are trying to create a system to ensure that all those problems are dealt with on a corporate and partnership basis. Taking away the housing aspect and giving it to a registered social landlord means taking away the ability of the local authority to control the issue directly and deal with it properly. The needs of tenants will be suborned to the needs of the registered social landlord's finances and other priorities. We must be very careful of that danger in the transferral to registered social landlords.

Clause 103 deals with voting on the same day in both the European and council elections. I welcome that and I can see why the Opposition have doubts about it. One of the major reasons why they had a better result than they might otherwise have achieved in the elections held in June 1999 was that they took place only one month after other elections and people had become tired of voting, so they voted with their feet by staying at home. Holding the two elections together will ensure that that does not happen, and I am sure that Opposition Members will be pleased to have properly elected members on the basis of a full ballot rather than a diminished one.

I hope that the Minister will take on board my concern about the fact that the Bill currently mentions only 2004. However, in 2009 and 2014 we will run into exactly the same problem, so I suggest that we consider amending the Bill in Committee to ensure that, after a debate in the House, the Secretary of State can move local elections to the same date as European elections or general elections, which sometimes happen at about the same time, without necessarily introducing another Bill.

Photo of Desmond Swayne Desmond Swayne Opposition Whip (Commons)

The hon. Gentleman suggested that we should change the system because my party did rather better last time and he wants it to work to his party's advantage. Will he not at least acknowledge that there are difficulties with voting in as many as four different voting systems on one day? Does that problem not occur to him at all?

Photo of Neil Turner Neil Turner Labour, Wigan

I think that that is rather insulting to the electorate. The last general election took place on the same day as county council elections. I am sure that the hon. Gentleman is not trying to suggest that people were so confused that they voted for parties for which they would not otherwise have voted merely because they had to vote in a county council and general election at the same time. There are difficulties, but most of them concern the counting of votes, their separation from different ballot boxes and the delay that that causes, rather than any problem that the electorate have in putting a cross on the appropriate ballot paper. We should consider some of the examples from abroad. For example, the American ballot paper often looks more like a toilet roll than a traditional English ballot paper. If the Americans can deal with that, I am sure that the British electorate can do so as well.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

How does the hon. Gentleman square the provisions to allow the elections to be held on the same day with the Welsh Assembly's postponement of the Welsh local elections from 2003 to 2004 so that they would not coincide with the main elections? How does he square those two events?

Photo of Neil Turner Neil Turner Labour, Wigan

I shall not try to square anything that the Welsh do with anything that we do. I merely point out that it is entirely up to the Welsh to decide when they want to hold their elections, although I believe anything that applies to the British electorate as a whole could apply to the Welsh electorate. They might not wish to hold their elections at the same time, but that is a matter for them.

I welcome the Bill. It is not the sort of Bill that I would have wanted, as I would have liked it to go much further. Nevertheless, it makes a lot of very good proposals. Some of them are modest, but some are positive and some bold. Once it is enacted, I am sure that local councils will be much better able to serve the needs and meet the aspirations of their communities than they have been previously.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight 9:00 pm, 7th January 2003

It is a pleasure to follow Mr. Turner, and I should like to begin by dealing with his final point concerning elections held on the same day. The reason why my election to this place was not announced until 2.30 on the Friday afternoon following the day of the general election was precisely because we were trying to hold three elections on the same day. [Interruption.] It does no harm to remind the House that my victory was indeed a Conservative gain.

The point about holding such elections on the same day is that they are elections about different things. Doing so means that people concentrate on different issues, because different campaigns will be waged on different issues. If possible, one wants to encourage an improvement in turnout by giving people information on a specific election. I did not notice the hon. Member for Wigan pointing out that there was a low turnout in the county council and general elections in 2001 because they were held on the same day. Perhaps that was entirely a coincidence.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

There is a more fundamental point. Elections are the fount of a democracy, and holding general, local government and European elections on the same day restricts the amount of discussion that could otherwise take place on them. Democracy is therefore diminished by holding such elections on the same day.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

My hon. Friend is absolutely right, but democracy is also diminished if Ministers and Governments seek to move elections for party political advantage. Indeed, that is an even more significant diminution of democracy.

Local government has been responsible for some of the best services—from the time of Chamberlain in Birmingham, to that of my hon. Friends the Members for Christchurch (Mr. Chope) and for Mole Valley (Sir Paul Beresford), who gave distinguished service to Wandsworth council. However, local government has also been responsible for some of the worst services. As a former parliamentary candidate for Hackney, South and Shoreditch, I had great opportunity to experience and observe the appalling quality of its local authority services. My last job before being elected to this House involved helping to sort out the failing local education authority in the London borough of Southwark. I doubt whether many Conservative Members have done that job—that is probably better for the borough of Southwark—but I did. There were problems in that authority not because the officers were poor—in fact, there were many very good middle-management officers—but because they were unable to exercise the control and discretion that would have been good for the delivery of education in that borough. In part, they were prevented from doing so by excessive political intervention, but also by excessive, sustained and continually changing Government intervention. I have to say that such intervention began with the Government whom I supported, and it has continued with the Government whom I did not support.

Local government is not the creature of Government, but it is and remains inescapably the creature of this Parliament, so there are some things on which Parliament is entitled to pronounce. For example, it is entitled to limit the ability of local councils to trade at the expense of, and in competition with, the business rate payers who operate in the local areas. However, Parliament should be able to set a limit on only a restricted number of matters. Many hon. Members on both sides of the House will undoubtedly agree that local government needs greater stability of regulation, which would ensure greater responsibility on the part of local authorities. Greater responsibility itself engenders, and entitles local authorities to exercise, greater autonomy. The more we can stabilise the systems of local government finance and regulation, the better the public will understand them. People will therefore be better able to exercise their discretion at the ballot box, on the day of the European elections or otherwise.

I hope that we will move towards a more transparent local government system that everyone understands. The least transparent part of the present system for electors is the annual finance settlement. The Minister for Local Government and the Regions is not in his place, but I thank him for agreeing to see a delegation from the Isle of Wight authority next Tuesday. On 18 December, he stated that the local government settlement for the Isle of Wight took account of my area's special circumstances. I hope that he will be able to convince councillors from all parties in my constituency that that is the case. It might help if he were to let them know in advance exactly how the specific needs of the area are taken into account. I asked him whether the settlement took account of the cost of delivering statutory services on an island. I know of no reference to those costs in the local government settlement, but I am prepared to be convinced.

The Bill gives many additional discretions to the Secretary of State, rather than to local authorities. One such is contained in clause 31, and in clauses 36 to 42—the ability to make grants unconstrained by any regulation by this House, or by any resolution of this House. Indeed, that ability is unconstrained by anything but the wording of the Bill. It may not be what Ministers intend, but that is an invitation to pork barrel politics.

Photo of Chris Mole Chris Mole Labour, Ipswich

Would the hon. Gentleman welcome the use by the Secretary of State of one of these powers to award a specific grant to authorities that exist on islands?

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

Of course, but I should prefer the Secretary of State to place in regulation objective criteria according to which such grants would be made available. Those criteria could then be discussed by this House. The point is that such criteria must be objective and transparent, and able to be scrutinised by the House.

I shall give the House an example. It comes from the Department for Education and Skills, but is none the worse for that. It is one of 12 different schemes by which that Department gives money to local education authorities. One third of all LEAs do not benefit from any of those schemes. They are not distinguished by being suburban authorities as opposed to shire county authorities, nor by their prosperity or their super-duper results. That is because so few objective criteria are set out for the distribution of the grants.

I shall refer to the criteria set out by the Secretary of State for Education and Skills for the allocation of Xdiversity pathfinder" grants. The first criterion is that the LEAs involved should have Xa good track record", but that is not defined. The second is that they should be Xinnovative" in their approach, but no objective measurement of Xinnovative" is supplied. I accept that the third criterion—that the LEAs should have good Ofsted reports—is objective. The fourth criterion is that the LEAs should be a mix of rural and urban areas, but in what proportion is not specified. The fifth is that the LEAs should have

Xdemonstrated good change management strategies in the past", but when in the past is not specified. The final requirement is that the benefiting LEAs should have implemented

Xstrategies to develop the specialist schools model."

That criterion is modestly objective. The money went to Birmingham, Middlesbrough, Cornwall, Hertfordshire, Newham, Portsmouth, Essex, Wigan, Medway, Leeds and Tower Hamlets. That is good for them, but poor for the other LEAs, and especially for the one third of LEAs that received no money at all because of the lack of objective criteria to govern the distribution of the grants. What criteria there were could not be scrutinised by the House.

If the Minister for Local Government and the Regions is to take the power to allocate money in that way, I hope that he will set out objective criteria. I acknowledge the fact that he said earlier that there will be clear criteria and that they will be scrutinised objectively—excellent, but does he mean that they will be scrutinised by the House? That is what is needed.

I shall move on to other aspects of the grant and council tax arrangements. I welcome the proposed changes to the second homes rebate. I have always thought it curious that there is so much objection to the second homes rebate at local council level because it is, in fact, a subsidy from the national taxpayer to those who are fortunate enough to own second homes, but it is no more justifiable for that. I wonder why it is necessary to retain a 10 per cent. mandatory minimum payment for second homes, or maximum payment—[Interruption]—I am not sure which it is.

I welcome the changes to the empty property rebate. I ask that local councils should be able to keep that element of rebate as well, but I question clause 76, which will give billing authorities the power to reduce the tax payable for any class of council tax payer. Is that not a curious power to give to local authorities? It is one thing to say that they should acknowledge when someone has gone bankrupt and cannot afford to pay the tax, but to say in advance that the council tax payer or a class of council tax payer need not pay anything—again, without objective criteria—seems particularly difficult to justify. I hope that the Minister will justify that clearly if he attempts to do so, and I am sure that, if I am wrong, he will tell me clearly as well.

A final element of council tax that causes a great feeling of injustice, although possibly less injustice than a feeling of injustice, is so-called dual taxation. In fact, it is the non-taxation of non-parish, as compared to parished areas, in rural authorities. There is a feeling of injustice where a local authority provides a service in the non-parished area but expects the parish and town councils to pay for that service at the cost of the parish and town council tax payers in the parished areas. Of course the taxpayers in the parished areas are contributing to the cost of providing the service not only in their area, but in the non-parished areas through their local authority council tax. Although local authorities have the discretion to add an element to the council tax in the non-parish areas, they have no obligation to do so, and it may be appropriate to impose that obligation in the interests of fairness.

I should like to discuss briefly issues relating to the new council structures. I doubt very much whether the new council structures are any better than the old ones, but the fact is that we have got them. I wonder whether we should examine how effective scrutiny committees are, especially in local authorities where one party has the majority on every scrutiny committee and the chairmanships of those committees are held by members of the party that forms the majority on that local authority. That happens in my local authority, and it is felt that scrutiny in such local authorities is not of such high quality as it is in those areas where there is a diversity of chairmanship and perhaps a greater diversity of membership on those committees.

My last point but one relates to the creation of local partnerships and community forums. I am concerned that local authorities are handing over powers and cash to local partnerships and community forums, which are allowed to meet in private. It is a long time since, I think, my noble friend Baroness Thatcher introduced the legislation that required local authority committees to meet in public. Many of the responsibilities are now being passed to community forums, which are meeting behind closed doors. That seems to be a means of evading some of the responsibilities of parish and town councils.

Finally, my hon. Friend the Member for Mole Valley spoke of the Bill interfering in the setting of rents by local authorities and rents for social housing. I hope that the Minister will examine this issue. In my constituency, the maximum rent set by his Department, through the Housing Corporation, for new social housing is so low that it cannot pay enough to construct a decent house. It is as simple as that. Construction costs are high on the island, although housing values are low relative to the rest of the south-east. The amount of money that our housing associations are allowed to charge in rent is inadequate to support the cost of constructing a decent house. I hope that Ministers will be prepared to address that issue in this Bill or elsewhere.

My right hon. Friend Mr. Curry described the Bill as itty-bitty. It is itty-bitty because it contains quite a lot of new regulation and very small elements of freedom. In fact, the elements of freedom are so small that they might be described as itsy-bitsy bits—itsy-bitsy and teeny-weeny. I wish that there were more, and I hope that we can improve the Bill in Committee.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead 9:16 pm, 7th January 2003

It is a privilege to be the last to speak in this excellent and wide-ranging debate, which shows that we need a Local Government Bill. My reaction to the Bill is that although it contains some welcome improvements to the administration of local government, it is essentially an opportunity missed. As the Bill relates to my constituency, I wish to reiterate some of the points made much earlier by my hon. Friend Barbara Follett, who also represents a Hertfordshire new town. She handled the matter with great good humour and reflection, but I am more inclined to foam at the mouth and go ballistic, although I shall try to avoid that on this occasion.

My hon. Friend Mr. Battle talked about how the Government have displayed what he termed rather gently, as an ex-Minister, an insensitive analysis of local problems. I would put it more strongly: local government has been the Government's Achilles heel. We want delivery of a huge range of policies. We have shown great imagination and determination, and we have been willing to brook policies that might be unpopular in the short term for the greater benefit of our population and our country in the longer term. Those policies, of course, need delivery. The agents of delivery, for policy after policy, must be local government. The misery endured by communities when they are terrorised by young thugs requires the implementation of antisocial behaviour orders through a co-operative arrangement between the police and the local authority. The abandoned car that drags a neighbourhood down to the point that the elderly are frightened to walk the streets must be removed by the local authority.

In my constituency, an extraordinarily large demand exists for social services, not least because Hertfordshire grew up as the place where people in London dumped their mentally defective relatives. Hertfordshire had a huge number of mental hospitals, but, in the aftermath of the misnamed care in the community policy, those individuals were pushed out, many of them bereft of any kind of help. Hertfordshire has a huge problem with its social services budget even now. The number of people with mental health difficulties in the county is very high, and the local authority has to support their needs.

We all encounter road safety issues. The other day I asked my right hon. Friend the Secretary of State for Transport about the problem faced by one of my constituents who does not have a car—I did not give the details—and who used local transport to visit a relative in a residential home. It took three buses two hours and 40 minutes to travel seven miles. Leafy Hertfordshire may be all right in some respects and it may share some of the qualities that Guildford has and that were described earlier—but people's needs are the same everywhere in the country and local authorities have an extraordinary responsibility to deliver the policies that will help. When I consider a Bill that says that it will remove millions of pounds from my community, my heart sinks.

Hemel Hempstead is very used to being deprived of resources by central Government. It was set up as a new town in 1947, and I talked to an 87-year-old lady the other day who remembered coming there from the east end of London. She confessed that she kept coal in the bath and that she was not the only one to do so.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

My hon. Friend suggests that they still do that in Wigan. That is an interesting aside.

People moved to an extraordinary place and had never seen such houses and fields before. When the town was established, central Government came along as Santa Claus but did they say, XHere is a resource. Now look after it and manage it."? Did they heck. They said that they would set up a quango—the Commission for the New Towns—and would make damn sure that all the gifts that they had given the town would be looked after very carefully. It is a bit like Santa Claus bringing us presents and making sure that we play with them in exactly the right way. If one of the presents begins to have a higher value than it did originally, he wrenches it back. The Commission for the New Towns ensured that the land that it had enriched by developing it would repatriate funds by the million to the Treasury. That still goes on, but now under the name of English Partnerships. Recent welcome changes by the Government have made English Partnerships a bit less like the Commission for the New Towns and a bit more like a body that is trying to work with the community to create a better life for people.

For nearly 60 years, funds have been pulled away from our community at every hand's turn. What does that mean? Go to Hemel Hempstead library in leafy Hertfordshire; like most of the other public buildings in the town, it has a flat roof, and we heard about them earlier. The best thing that could be done to the local college would be to raze it to the ground and flatten it. However, that has already been done to the only facility other than the pubs that provided young people with somewhere to go in Hemel Hempstead town centre in the evening. The place where the local theatre and dance clubs used to meet has been razed to the ground. It was built totally ineptly in 1960 and cost #500,000 a year to run. The local authority said that it could not afford it and so knocked it to the floor a couple of months ago.

The local authority fears the Bill and what it means for its finances. It is right to do so. Clause 90 talks about negative subsidy. Most Members have not had to do much about that issue, but if they go to the Library and ask for the negative subsidy handbook they will find in it many of my speeches. That is probably not a recommendation, but I have had to become involved with the issue of negative subsidy. Clause 90 in its old form would have meant #10 million a year being taken away from my local authority, which has a standard spending assessment of #12 million. I had to negotiate with the then Minister for local government so that the Government would give it #500,000 a year each year. I am now told that no local authority will lose out, but we will.

Not much has been said about needs, although we used to talk about them all the time in local authority lingo. The rate support grant used to be based on needs and my hon. Friend the Member for Leeds, West mentioned them in his welcome contribution. If the people in my constituency were living in clover and their needs were being addressed, the Government's request to take #3.5 million from us this year in negative subsidy would be acceptable. I would say, XTake it. Put it to use for the people who put the coal in the tub in Wigan", although I am not sure whether my hon. Friend Mr. Turner accepts that there are any.

Photo of Neil Turner Neil Turner Labour, Wigan

We will take the #3.5 million.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

I am sorry to disappoint my hon. Friend, but I cannot say that. The public sector buildings form the core of my constituency, but we should be ashamed to ask people to use them for their cultural and leisure activities. In fact, there are hardly any facilities. The library would not grace a town of 10,000 people let alone 80,000. As my hon. Friend the Member for Stevenage emphasised, the infrastructure is rotting at the core. We have asbestos-ridden buildings that need an enormous amount of attention. I do not want money to disappear until I am assured that those who have plans to use it effectively to address needs will be given the opportunity to do so. Clause 90 will have an important effect on my constituency. I hope that I am put on the Committee to argue my case at greater length and to defeat the clause, although I suspect that in light of my comments that will not happen.

All hon. Members mentioned clause 11 and capital receipts. I commend what my hon. Friend the Member for Stevenage said. Many of the assets in new towns which accumulated through capital receipts were deemed to be housing receipts when they were in fact just land. The problem arose because they were denominated housing land in the initial formulation of the new town. However, we cannot use housing receipts for non-housing. The biggest need in my constituency and many others is housing. By the way, we have nowhere to put homeless people. They are either put in a church overnight at Christmas or they go to St. Albans.

Affordable housing is a problem. Sue Doughty asked where the bus driver lives. If there is nowhere for him to live, the bus service is lousy because there are not enough drivers to run a service that allows the people who need buses to get around by them. That is a basic element of life. The nurse shortage in London is 6 per cent. and patients suffer badly as a result. In leafy Hertfordshire, it is 8.2 per cent. According to the explanatory notes, my local authority is one of the richer authorities and will be required to redistribute its funds. Under the definition, Dacorum borough council in my area is the richest authority in the country. Its standard spending assessment is #12.4 million and last year it spent more than #20 million. It is debt free, so it is rich. However, it does not use that money to keep the rates low—they are fully consistent with those of other boroughs. It uses the money to make up the deficiencies that Hertfordshire county council is unable to meet. When I wanted my mental health team to get #10,000, I went to Dacorum borough council. My hon. Friend the Member for Leeds, West spoke of a vision of how local authorities could be—my local authority has been like that, but it is being stripped away, piece by piece. It can no longer make up for the deficiencies of Hertfordshire county council.

This is a welcome Bill, which contains many good provisions, but we need to empower local authorities and move away from the arrogant belief that things need to be run from the centre because local authorities cannot do it. It is time to ditch that attitude once and for all.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government) 9:31 pm, 7th January 2003

This has been a wide-ranging, constructive and good-tempered debate. The only issue on which I agree with Mr. McWalter, whom I am pleased to follow, is that the Bill is an opportunity missed. It could have included so many good things to strengthen local government and devolve power to the lowest possible level. Instead we have the reverse: a highly centralising Bill that gives huge powers to the Secretary of State and introduces 34 order-making powers by secondary legislation.

We heard some excellent speeches, particularly from some very experienced right hon. and hon. Friends. My right hon. Friend Sir George Young made an excellent speech—I did so agree with what he said about pooling capital receipts. His council is similar to mine in many respects, and had my council not been able to make a large-scale voluntary transfer of 500 houses and spend the interest on the receipts, it would have not been able to build 400 new affordable houses in the past four years. If the Secretary of State insists on the pooling of capital receipts, I suspect, as many right hon. and hon. Members have said, that we will not see so many affordable houses built with the proceeds from large-scale voluntary transfer. The only crumb of comfort is that the provision will apply only to capital housing receipts.

My hon. Friend Sir Paul Beresford is another colleague with extensive local government experience. I particularly agreed with his comments about the restrictions on local authorities' prudential borrowings regime. How will they be able to operate CIPFA's draft code if they do not know what grant they are likely to be given by the Government in future years?

My right hon. Friend Mr. Curry also made an excellent speech. He made some very interesting points that I should have thought would appeal to Labour Members, if they were listening, about the interaction between the voluntary, public and private sectors—an extremely important point that will be one of the main political issues in the next year. I am not sure that the Bill does a huge amount to encourage that interaction. My right hon. Friend described the Bill as a small earthquake in Walsall, and I think that he was probably right.

My hon. Friend Mr. Field used his experience to point out some of the deficiencies in the BIDs regime proposed in the Bill. He said that it is an American concept, but that the difference between these proposals and those in America is that in this country it is mostly the tenants who pay non-domestic rates, whereas in America it is the landowners. Landowners in this country, of course, will benefit largely from the BIDs proposals. Bizarrely, tenants who pay non-domestic rates might vote for a scheme from which landlords might benefit. We must look at those proposals carefully in Committee.

We heard an excellent speech from my hon. Friend Mr. Turner, who made his usual special pleading for the island. He is right that his is the largest constituency in this country, and it has specific problems. He correctly focused on the proposal to pay specific grants wholly at the Secretary of State's behest. Conservative Members believe that we should move away from specific and special grants and give local authorities more discretion over how they spend their money through the rate support grant mechanism.

This huge Bill has 123 clauses and seven schedules, yet the Government propose a timetable with just 12 Committee sittings. Members should compare that with the fact that the considerably smaller and less complex Planning and Compulsory Purchase Bill has also been given 12 sittings. I appeal to the Minister across the Dispatch Boxes and in a non-partisan way: we still have time before the Bill is debated in Committee to consider, through the usual channels, giving it more than 12 sittings.

I am sure that the Minister wants, as I do, to ensure that all colleagues in local government feel that the Bill has received proper scrutiny in this place. That is all the more pertinent as he has announced today a completely new proposal to amend section 19 of the Fire Services Act 1947, which we welcome. We look forward to seeing the detail. The proposal accords with Professor Bain's report, so we shall consider it and we hope to give it a fair wind in Committee, but that will not take five minutes.

We have also been told by Kali Mountford that section 2A of the Local Government Act 1986 is to be amended. If that is so, no doubt it will take up further time in Committee. Therefore, I say to the Minister and the usual channels that the time allocated for consideration in Committee is not adequate.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

As my hon. Friend says, it is an outrage. I hope that we can consider the matter before the Bill reaches Committee.

My hon. Friend the Member for Mole Valley made pertinent remarks on the prudential borrowing regime and the reserves included in the Bill. Those matters are complex and they need careful examination in Committee. He also made the point that we are swapping one regime for another—the permission to borrow for the new capital and special grants scheme. We need to consider that carefully to see whether we are not just making a huge nutcracker to crack a very small nut represented by bad councils such as Hackney and North Tyneside, which the Minister mentioned.

My hon. Friends have referred to the pooling of capital receipts as well as the fact that the Minister is taking to himself some draconian powers to deem that such receipts have been received and to direct how they should be pooled for other, less efficient councils. Members on both sides of the House, particularly those representing new towns such as Hemel Hempstead, have criticised the Minister over those proposals, so we must consider the matter very carefully.

Indeed, some while ago in a reply to a parliamentary question, the Minister told me that the proposal is aimed at encouraging debt-free authorities to take up their borrowing allowances. My hon. Friend Mrs. Browning made the point that there are 48 debt-free authorities in this country. Some may have achieved that status through good fortune or the assets that they have been able to sell, but I put it to the Minister that most have achieved debt-free status through good management. Some councils have managed their affairs prudently for many years, which has enabled them to become debt free, so forcing them to borrow is draconian step. I ask him to consider that very carefully.

The Chartered Institute of Public Finance and Accountancy drew up the draft code on prudential borrowing, which has been refined from that which was originally proposed. Here, the whole House owes a debt of gratitude to Andrew Bennett and to the Select Committee, which has worked on the Bill and made some pertinent criticisms. Through his Committee, the hon. Gentleman is achieving a considerable reputation for the thorough scrutiny of draft Bills according to the short timetables set by the Government. The Bill was published only on 21 November, so it was a commendable achievement to come up with such a substantive report in the time available.

The Government should take note of that point. There is no earthly reason why Bills should be rushed through in such a way. The Planning and Compulsory Purchase Bill is being rushed through in exactly the same way. My hon. Friend Mr. Pickles made the highly pertinent point that if there are 34 order-making powers in the Local Government Bill, we want to see draft copies well before we reach the relevant stage in Committee so that we can table appropriate amendments.

If we cannot do that, it will be an abrogation of democracy and neither the House or the Standing Committee will be able to do their jobs properly. For all of us who want to uphold the reputation of the House, those procedures are bad practice and I hope that the Minister and his colleagues will take note of our comments and ensure that Bills are not rushed through in future.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

Does the hon. Gentleman not realise that he should be congratulating the Government? The promise about regulations is firm. Will he promise us that the list of all the local government regulations that the Opposition want to get rid of will also be available by the same date?

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

It is the Government who are making the proposals; it is the Opposition's job to scrutinise them, not to offer alternatives. If the hon. Gentleman serves on the Standing Committee—I hope that he will, given his knowledge—I can give him the categoric assurance that we shall scrutinise the proposals with all the vigour that we can muster. What we lack in numbers, we certainly make up for in intellectual argument, rigour and vigour—[Interruption.] We can all get excited about that, but the Bill includes other important proposals and if I do not deal with one or two of them I shall not have properly summed up the measure.

Much comment has been made about the proposal that the elections for the European Parliament and the local government and London Assembly elections should be held on the same date in 2004, even though they are all subject to different election regimes—as my hon. Friend the Member for Brentwood and Ongar pointed out. The proposal amounts to gerrymandering; altering the dates of elections sets an unfortunate precedent. Elections are set for certain dates for good reason, so that people have a proper time to carry out their mandate, whether for central or local government. It is an abrogation of democracy to gerrymander the dates in such a way.

The latter part of the Bill deals with trading and local authorities. The proposals that local authorities should be involved in trading will set a difficult precedent, unless they are carefully constrained. To allow local authorities to set up trading companies would evade prudential borrowing regimes and other regimes. The Minister referred to the matter in his opening speech, but when the Under-Secretary sums up will he assure us that he will make doubly certain that such companies will be subject to resource accounting? As the Minister will know, that means that they have to make a proper return not just on revenue but on all capital assets employed—on all the property that they employ. The Opposition will be scrutinising that point carefully in Committee, because the powers to trade could distort competition, which is a cause of real concern.

I do not see why a local authority should trade in any service that is not included in its normal delivery pattern. As Dr. Iddon pointed out—although he is not listening to the debate because he is talking to his colleague—if one was to sell double glazing just because there was a particular double glazing firm in one's constituency, it would set an extremely difficult precedent indeed and I caution the Government—

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

No, I will not. I have only one minute in which to sum up.

To sum up, Mr. Deputy Speaker—Mr. Speaker, I do beg your pardon! Happy new year!—this is a highly centralising Bill that will introduce redistribution on a grand scale: redistribution of housing receipts, housing revenue accounts, and rent limitation subsidies. Indeed, it will set rents in the public sector for the future in this country. The Bill gives the Secretary of State huge order-making powers. We will oppose it root and branch and we will seek to amend it in Committee with all the vigour that we can.

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Office of the Deputy Prime Minister) 9:45 pm, 7th January 2003

It gives me great pleasure to follow Mr. Clifton-Brown in summing up this debate. I certainly agree with him on one issue at least: I also wish you a happy new year, Mr. Speaker.

The relationship between central and local government is at a crucial juncture, and it is entirely proper for the Government to help to ensure that all communities have their right to decent local services fulfilled. It is also right, however, that Whitehall should begin to have more faith in local councils to deliver quality local services. We need to put more trust in local government to do the right thing, and the Bill takes us further forward in that regard. Relations between local and central Government are improving, power is being devolved, and more freedoms and local responsibilities are being given to councils.

The Bill proposes that unnecessary controls and regulations should be replaced with a more appropriate, targeted approach, recognising and rewarding the best-performing councils and encouraging improvements in others. The Bill is designed to help local government to be more responsive to local needs and local pressures—precisely the point made by my hon. Friend Mr. Battle in his excellent contribution earlier. I am pleased to say that the Local Government Association has welcomed the Bill, and the significant new freedoms that it contains. The Welsh Assembly also supports the specific clauses relating to Wales. The Bill is a key ingredient in our wider policy approach, and, of course, needs to be looked at in the wider context of the White Paper and of other changes that we have made to devolve power, raise standards, invest more, increase funding and give greater freedoms and flexibilities to local government.

At the outset, I would like to say a brief word about the fire service, as my right hon. Friend the Minister for Local Government and the Regions mentioned earlier. The fire service is a local government service, and, in the light of the publication of the independent review of the service under the stewardship of Sir George Bain, the Government are determined to press ahead with changes in line with the principles that he set out. The fire service needs modernisation, but fire chiefs are often hampered in making changes by antiquated requirements to get the Secretary of State's permission, as set out in section 19 of the Fire Services Act 1947. Fire chiefs need to be given more freedom to manage and to modernise, so the Government will repeal the relevant parts of section 19 to help local chief fire officers to implement a risk-based approach to fire cover. The Fire Brigades Union has today tried to paint that change as the removal of the right of the public to be consulted. Nothing could be further from the truth. Chief fire officers and fire authorities will want to involve the local community in shaping their fire and rescue services, but there is no longer any need for every dot and comma to go through the Whitehall machine. Reform and modernisation have to proceed.

There are many detailed provisions in the Bill, but it will be impossible for me to go through every one of them in the time available. Many hon. Members talked about the provisions relating to council tax reform, and the Liberal Democrats—in the shape of Mr. Davey—now want to scrap council tax altogether. Perhaps we will hear a little more in Committee about what they intend to replace it with, although I suspect that they are less clear on that. The proposals to give councils the power to reduce the second home discount to 10 per cent., to reduce or remove the empty homes discount and to introduce other council tax discounts have been welcomed. I realise that they have been opposed, in part, by Mr. Field, but they have been welcomed in other ways by Mr. Turner. We shall have to see which of those hon. Members gets on to the Committee.

Few Members mentioned the exemption for students from joint and several liability for council tax, although many students in further and higher education will welcome that provision. The hon. Member for Kingston and Surbiton welcomed as sensible the introduction of the new statutory revaluation cycle, to take place every 10 years. Many hon. Members took note of the new power to change the number of valuation bands. Mr. Pickles did not want this, but I believe that it may be necessary to improve fairness and the level of progressiveness in the council tax system. We have not made decisions on that yet, but it makes sense at this stage to take the position that we have adopted. My hon. Friends the Members for Denton and Reddish (Andrew Bennett) and for Wigan (Mr. Turner) have rightly pointed out the economic realities. Some people feel that they are being penalised by the low value of their homes, with band A being too wide. I am pleased that at least we have the support of the Liberal Democrats in that regard.

There are many changes relating to business rates. Very few Members went through them, so I shall not dwell on them too much. However, I believe that they are necessary and administratively sensible.

Many Members referred to housing capital receipts. In particular, the pooling arrangements have been criticised and questioned. The hon. Member for Kingston and Surbiton and the right hon. Members for North-West Hampshire (Sir George Young) and for Skipton and Ripon (Mr. Curry) were worried about the provisions. They were queried too by my hon. Friends the Members for Stevenage (Barbara Follett) and for Hemel Hempstead (Mr. McWalter). I shall make three points. First, clause 11 applies only to housing receipts, not to other capital receipts. Secondly, it is principally right-to-buy receipts that will be pooled alone. It is—[Interruption.] Perhaps the hon. Member for Cotswold should listen to this because he was incorrect on this matter earlier. It is not stock transfer—large-scale voluntary transfer receipts—that will be involved in the pooling. The right hon. Member for North-West Hampshire was also incorrect on that matter. The receipts did not accrue, therefore, as a result of prudent debt management, but as the result of individual decisions of householders to buy their properties. It is not a question of penalising prudent authorities. It is principally right-to-buy receipts that will be pooled.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

In his clarification mode, will the Minister clarify the matter further? Can he confirm that there will be no element of retrospectivity and that there will be receipts only after the Bill receives Royal Assent? Can he confirm also that there will be no element of pooling of clawback from previous sales—that is, uplift in value and clawback from previous sales?

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Office of the Deputy Prime Minister)

I am happy to be able to confirm those points. However, I shall go further and say that I hope that the hon. Gentleman will be persuaded that the principle of pooling is the right approach to take. It is the fairest approach to ensure that we treat equally all authorities throughout the country and spend on the basis of need, bearing in mind especially deprivation and disadvantage.

We have increased spending on housing by more than two and a half times. It is precisely to tackle the issues raised by Sue Doughty that we need to ensure that investment in housing is made on the basis of need for social purposes.

Sir Paul Beresford rather peculiarly attacked clauses 101 and 102, which are designed to protect employees of local authorities where contracting out is to be conducted on the basis of staff transfers on preserved terms and conditions unless there are exceptional circumstances, and where transferees are to be offered either retention of their local government pension scheme or a broadly comparable scheme. I believe that it is important to institute a measure of protection for local government employees. I am glad that the Bill contains such provisions.

There are important provisions that relate to better accounting and financial management practices. For example, we will ensure that we have a prudent level of reserves set in local authorities. The hon. Member for Kingston and Surbiton opposed these provisions. However, there are some extreme cases—for example, Hackney, Walsall and others—that we cannot ignore. We need to have a safeguard against some of the more extreme eventualities. I am concerned that the Liberal Democrats are perhaps looking slightly reckless and imprudent. None of us would want that, would we?

It is important also that the provisions to ensure that councils monitor their own budgetary performance are approved. That is not about intervention but simply about following good practice. I believe that when these matters are considered in Committee, Members will come to realise that point. There are many other technical provisions about resource accounting in terms of the housing revenue account. I believe that we are taking an equitable approach. It is simply an accounting change. The financial position of authorities will not be affected.

My hon. Friends the Members for Denton and Reddish, for Brighton, Pavilion (Mr. Lepper) and for Bedford (Mr. Hall), the hon. Members for Cities of London and Westminster and for Kingston and Surbiton and others, dwelt on the provisions relating to business improvement districts. I am pleased to have their support. The official Opposition oppose the measures, despite the fact that the Confederation of British Industry has given them its full support. BIDs will create partnerships between businesses and local councils, which will work together to improve their area. I heard the point made by my hon. Friend the Member for Bedford, and there are safeguards in the provisions. There is a double lock on the vote because there is a requirement not only for a simple majority but for one based on the aggregate rateable value. That is very important. The nature of the activities of the business improvement district and the levy must be set out before the vote.

Photo of John Butterfill John Butterfill Conservative, Bournemouth West

Will the Minister confirm that the change in the arrangements for transitional relief on business rates will mean that the Treasury grant, which was over #300 million last year, will now be withdrawn? Does he agree with the Royal Institution of Chartered Surveyors that the measure will penalise the poorest areas and those where values are falling?

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Office of the Deputy Prime Minister)

We certainly intend revenue neutrality in the transitional arrangements. Obviously, arrangements for the revaluation of business rates have existed for much longer than those for council tax, which has not gone through a revaluation process. We can consider those provisions in more detail in Committee.

The power to make grants to councils for any purpose has been criticised, in particular by Mr. Turner. However, the Local Government Association has welcomed the measure as providing freedom and flexibility. Indeed, the hon. Member for Cotswold welcomed our intention to move away from special grants. The current arrangements are too restrictive on local government because special grant reports are not amendable. Treasury consent will still be required of course, and parliamentary accountability can still be exercised in the normal way via the scrutiny of departmental votes and estimates. That, I believe, is quite sufficient and answers the point made by the hon. Member for Isle of Wight.

I am surprised that the hon. Member for Cotswold and the Conservatives now so vociferously oppose even looking at the combination of local government elections and European elections in 2004. I would not want to ascribe to them any malign motivation concerning that not being to their party political advantage. I am sure that that has nothing to do with their stance. Their belief that electors cannot handle a combined poll displays a patronising attitude to the general public. The electorate are capable of doing more than one thing at a time, and the Conservatives should have more faith in them.

There are many new freedoms and flexibilities in the Bill, too many to mention. I shall refer to only a couple. The first is the trading freedoms. In Committee, we can discuss the assurances that the hon. Member for Cotswold sought on charging for discretionary services. There are also freedoms in the new prudential borrowing regime, which does not require Government consent. The Opposition criticised the fact that there is a reserve power, but we need that to protect the national economic interest and to prevent unreasonable or reckless debt in exceptional circumstances. In any case, the Conservatives never gave any such freedoms to councils.

My hon. Friend Kali Mountford and Mr. Bercow were keen to raise section 28. I confirm that the Government will support a suitable amendment to repeal that measure that is compatible with our manifesto commitment, and I look forward to debating that with my hon. Friend and all hon. Members, even if they are from the other side of the House.

Before the hon. Member for Cotswold got to his feet, I was worried that he would get carried away, and indeed he did. It is very sad. The Conservatives have a history of poor policy in local government, and he needs reminding of that. From 1979, they imposed a whole range of outrageous and regressive measures on local government. They gave the Secretary of State control of spending and introduced rate capping. They abolished the Greater London council and six metropolitan county councils.

The Conservatives introduced compulsory competitive tendering, and who can forget their introduction of section 28? Who can forget the ever popular poll tax? They set aside capital receipts. That was a dark period for local government. The Labour Government changed all that, and the Bill builds on those foundations. The Opposition will fool no one with their lack of grasp; they are out of ideas and out of control, and they will be staying out of power for a lot longer. I commend the Bill to the House.

Question put, That the amendment be made:—

The House divided: Ayes 141, Noes 370.

Division number 38 Local Government Bill

Aye: 141 MPs

No: 370 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on second or third reading):—

The House divided: Ayes 368, Noes 142.

Division number 39 Local Government Bill

Aye: 369 MPs

No: 142 MPs

Ayes: A-Z by last name