Cities and Local Government Devolution Bill [HL] — Second Reading (Continued)

Part of the debate – in the House of Lords at 5:29 pm on 8th June 2015.

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Photo of Lord Goddard of Stockport Lord Goddard of Stockport Liberal Democrat 5:29 pm, 8th June 2015

My Lords, I rise with a sense of déjà vu from those who remember my maiden speech, where I admitted to getting lost in this Chamber, and sitting on the wrong Benches over there. I now sit over here, so I am working my way round the Chamber.

I have no embarrassment in returning to the subject of my maiden speech, which was devolution. I believe in devolution. It matters—and the Minister agrees with me on that. A long, long time ago, before the city deals, the growth funds and a lot of things that have come, when we had only the Association of Greater Manchester Authorities, we had one meeting where Sir Howard Bernstein brought in a fresh-faced young chap to talk to us about city size, productivity and globalism. That was one Jim O’Neill—now the noble Lord, Lord O’Neill. He spent an hour and a half with us and really opened the eyes of the leaders of Greater Manchester. That was a number of years ago but it was when we began to realise the importance of combined authorities and working closer together to deliver the objectives of us all: the economic regeneration of all 10 our boroughs. That is the reason we have been at the forefront of this. It was perhaps just lucky that the noble Lord came to Greater Manchester rather than going to Hull, Cornwall or Leeds. To our good fortune, he came to us.

I welcome the inclusive nature of this legislation, which provides cities across England with the opportunity to draw down similar powers and responsibilities to those set out in the Greater Manchester devolution agreement signed in November. It is important that all parts of the UK are able to secure greater devolution to ensure that they are able to take responsibility for growth and their own reform. The 10 Greater Manchester local authorities have run for a long time and have an unrivalled history of collaboration. We had a seamless transition from a “voluntary” federation to a formally integrated governance system to a combined authority. We always believed in a bottom-up approach, evolving over time to meet the needs agenda of Greater Manchester, and also the needs of each and every borough within it. As long as the bottom-up approach carries on, I can give some succour and faith to those noble Lords who feel that the homogenisation of combined authorities is a bad thing. It is not: there is an ability to retain your identity while being part of the bigger team thinking.

However, I have two concerns regarding the Bill. One is around accountability of the elected mayor; the other is around scrutiny. I can be very quick on the elected mayor, as that argument has been had with Government. In reply to the noble Lord, Lord Heseltine, I say that there was no referendum in Liverpool because the Government offered Liverpool more powers if it did not have one. In a negotiation, that is a pretty powerful argument. I think that the noble Lord did the right thing in taking more powers without the referendum. A similar thing was offered to Greater Manchester. Greater Manchester did not, in principle, want an elected mayor but the deal was that if it wanted full powers then that was the price. Looking at the full deal, the 10 leaders felt that it was a price worth paying. For the avoidance of doubt for anyone else, I say that you will get limited powers from the Chancellor. If you want full powers, the caveat is that an elected mayor is the cornerstone of that. I am afraid that that is the top and bottom of it.

In Greater Manchester, we managed to get a deal where we appointed a mayor for 18 months who will represent us until we have a full-blown election. Mind you, we still managed to nearly mess that up. It was a quite simple contest between Peter Smith—the noble Lord, Lord Smith of Leigh, who has been a leader of AGMA, the combined authority and the city deal growth fund—and Tony Lloyd, the ex-Manchester MP and police and crime commissioner. The 10 members had to pick the winner and move on. There were eight Labour members, one Liberal Democrat and one Conservative. Two and a half hours later, at 5-5, we were still locked in a room. It took the Conservative leader changing position to ensure that Tony Lloyd is now mayor of Greater Manchester. To me, that does not bode too well. If this was a company that had the business turnover of Greater Manchester, the board wanted to elect a new chairman and it was 5-5 after two hours, I think they would have to reopen the process of selection—but they did not in this case. I wish Tony Lloyd well. I have known him a number of years and he is quite a good operator, clearly. My commiserations are with the noble Lord, Lord Smith.

One or two points from the devolution Bill will give comfort to some noble Lords—such as the right reverend Prelate and the previous speaker, the noble Baroness, Lady Hollis, who spoke about homelessness—because it gives powers to borrow in respect of the combined authority functions, subject to compliance with the prudential borrowing code. It provides a combined authority with the flexibility to issue a levy or precept in respect of expenditure relating to combined authority functions, thereby providing a more secure basis for borrowing. At present, for the combined authority to take forward any arrangement which requires borrowing, one of the constituent councils has to take responsibility for that. That is unsatisfactory, administratively burdensome and inconvenient. An example is the £300 million Greater Manchester housing investment fund, which will deliver up to 15,000 new homes across Greater Manchester but is underwritten solely by Manchester City Council.

The transfer of transport powers and funding to the elected mayor are a major step forward in creating an integrated transport network that will improve connectivity and support residents to access key employment areas and the jobs that are created. The devolution of addressing skills and worklessness will ensure that service provision is delivered more efficiently and effectively to improve outcomes for residents and meet the needs of employers. There are more innovative mechanisms to invest in low-carbon infrastructure. All these details in the Bill will make real differences to people in the conurbations.

However, I would also welcome a debate around more fiscal devolution. Without more tax retained locally or more local flexibilities, it will be impossible for all parts of the country to achieve their maximum economic potential and the rebalancing of their economies. Examples could include more flexibility in the way stamp duty is applied or exploring differential rates of air passenger duty, which could have a significant impact on business growth and the development of new routes in overseas markets. We have made a start with the retention of growth on business rates. The public consultation is now taking place. I think the result of that will be that we should have full localism within a stable setting as soon as practicably possible.

I heard some noble Lords ask why we need combined authorities of such size. Size matters—and more so than ever before. Firms now need access to increasingly deep pools of human capital. When these big jobs are created, we need people close by with good transport links to get to those jobs. People of talent and ambition want to live in places with great schools, good jobs, fast transport, sport and culture. That is why our cities are now filling up again. Economic evidence shows a powerful correlation between city size and the productivity of its inhabitants. The top 600 cities in the world contain just 20% of the global population but contribute 60% of global GDP. That was the powerful thinking behind the City Growth Commission that the noble Lord, Lord O’Neill of Gatley, led with such imagination. It is the thinking behind the collaboration of the local authorities—which works.

Within 40 miles of Manchester, you have Leeds, Sheffield, Liverpool, Cheshire and—a bit further—Hull. That conurbation has in excess of 10 million people, more than Tokyo, New York or London. We must harness that talent. Yes, I will go back and see Sir Richard Leese. We have HS2 but just as important to the people of Greater Manchester is the link spoken of by the noble Lord, Lord Prescott—from Liverpool to Leeds. If that access from Liverpool to Leeds was made available as a priority, it would unleash the real northern powerhouse. I leave noble Lords with one thought. If the top 15 metros were to realise their true potential, that would generate an additional £79 billion for the UK. That is the real prize for getting this Bill right first time.