Local Democracy, Economic Development and Construction Bill [HL]

I hope noble Lords will not have withdrawal symptoms after today, since I sincerely hope we will finish this afternoon. I am grateful for the amendments in this group because they allow me to clarify issues that have been raised and to reassure noble Lords. The amendments tabled by the noble Baroness, Lady Warsi, are about the functions of the EPB and the role of the Secretary of State. Amendments 189, 190A, 190B, 189A, 190 and 191A, which include those tabled by the noble Baroness, Lady Hamwee, seek clarification on the role of the Secretary of State—indeed, the first amendment removes the Secretary of State’s power to make a statutory order—and the intention that the functions relate to economic development and regeneration, which is what EPBs are all about. The suggestion made by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Tope, is similar to that made by the noble Baroness, Lady Warsi, in that they would make the Secretary of State’s power in relation to functions exercisable only, ""at the request of the local authority in question and with the agreement of the EPB"." I shall not reiterate anything I have said in previous debates on the purposes and functions of the EPB, not least because the Chief Whip is sitting beside me. We debated them thoroughly. We want to create an opportunity for local authorities to acquire significant benefits. I think we all agree that we want more opportunities to tackle economic issues at the sub-regional level, which best reflects real economic markets. I think the noble Baroness, Lady Warsi, agrees with that. We have already encouraged local authorities to work together by introducing MAAs, and EPBs would bring further advantages by creating a coherent legal body—a single conversation—that would provide a clear framework for joint decision-making. It is interesting that the Conservative Party seems to have reached a similar conclusion. In its recent Green Paper on localism, it proposes that local authorities should be able to set up business-led enterprise partnerships, sub-regional bodies, ""that truly reflect natural economic divisions"," which would be signed off by the BERR Secretary of State. I leave that for the Committee to consider. Much of the process of passing functions to EPBs is alluded to in the amendments, so let me reiterate briefly what that process is, and in particular reassure the noble Baroness, Lady Warsi. Any functions which will be transferred to the EPB from constituent local authorities—the "when" and the "how", as she put it—will indeed be decided by the authorities concerned and set out in the scheme which they draw up. The legal definition of a function is any legal power or duty, and we are looking at some very important powers. Any transfer of functions should be clearly set out by the statutory order establishing the EPB. Amendment 189 would remove the functions from the order creating the EPB and would allow member authorities to "agree" to transfer functions. Nothing divides us on that. I absolutely agree that member authorities should first agree the functions that they would like to share with the EPB to achieve their objectives of greater prosperity. However, in all seriousness, because it is a major undertaking, it should be done by statutory order. It is a proportionate and proper use of the Secretary of State’s powers. This also provides an opportunity for the proposal to be scrutinised. As I said last week, these will be affirmative orders whereby Parliament could make its views felt. Finally, the functions cannot be changed without a thorough process involving consultation with all partners, as the Bill provides for in Clauses 95 to 97. There is a security blanket around that issue. In our previous sitting, the noble Lord, Lord Greaves, was concerned about an EPB gradually accreting additional functions over time. That is another strong argument for functions being exercisable only by the EPB by order of the Secretary of State. Amendment 189A suggests that the functions ought to be conditional, ""at the request of the authority in question and with the agreement of the EPB"." I agree entirely that is exactly what we have aimed to provide in the Bill. Perhaps I may clarify the process for transferring functions to an EPB, as that will take care of some of the issues raised by the noble Baroness, Lady Hamwee, about the outcome possibly being fragmentary. There will be one statutory order to create an EPB to set out its working arrangements and functions. This will be designed to put into law the scheme prepared by the local authorities. All local authorities will agree the functions that their EPB will have through the preparation of the scheme. As part of this process they can, if they wish, decide that certain conditions should apply to the exercise of those functions. They may also decide that functions should be made exercisable by the EPB instead of by the authorities, or concurrently with them. They will be able to decide to take part of those functions—perhaps the strategic functions—or leave the remaining functions in that policy area with the local authorities. It is entirely up to the local authorities and they should have as much flexibility as possible. The noble Lord, Lord Greaves, raised a similar point in Amendment 190B. It would create a presumption that certain functions could not be passed to an EPB unless individual authorities agreed otherwise. Exactly; there must be a collective agreement whereby the EPB and its objectives, as defined by the local authority, focus on certain activities, programmes and policies. Therefore there will be agreement that the respective and necessary functions be transferred. The noble Lord asked about powers. It does not make sense for each local authority to make separate decisions without reference to the other authorities involved. It simply would not work. It would serve neither the form nor the functions of the EPB. Amendments 190, 191 and 191A are concerned with ensuring that functions passed to EPBs are the right ones, as is absolutely correct—for example, that an EPB’s functions relate to economic development. Amendments 190 and 191 would make this explicit in Clause 86(1). We have had correspondence with the Delegated Powers and Regulatory Reform Committee about that, so I hope that I can reassure the Committee on this point. It is precisely our intention that this should happen. I set out in my letter to the DPRRC that Clauses 86(2) and (5), 94(1) and 97(1) should all be read together. When they are, they make it clear that any functions conferred on an EPB will have to relate to economic development and regeneration. Amendment 191 asks the Secretary of State to consider not only that a function can be appropriately exercised by the EPB but that it can best be exercised by an EPB. The noble Baroness has pressed me on the definition of "appropriateness", which I will come to. There is also concern that the clause may be designed to protect local authorities from having functions taken from them that are indeed better exercised at local level. However, the amendment would give the Secretary of State rather more power. It is perfectly reasonable for the Secretary of State to talk about the appropriateness of who exercises what functions, but it is absolutely right for the local authorities to decide whether a particular function is best passed to the EPB. On the question of appropriateness, it will be entirely up to the local authority concerned to decide what its functions should be in the EPB in order to achieve economic prosperity within the objectives that it has set itself. One thinks immediately of investment functions, business development skills training, and possibly joblessness and worklessness issues. A local authority may feel that it cannot realistically plan for the proper expansion of jobs and employment without having more affordable housing, key worker housing or whatever. It will be up to the local authorities that are working through the EPB to decide what is necessary; we are placing no conditions on that. "Appropriate" relates to economic development and regeneration, and it is entirely up to local authorities to decide what is appropriate. Noble Lords will know that the RDAs do not have clearly defined legal functions, so Amendment 190A would mean any activity carried out by an RDA. We had a lively debate on RDA delegation last week, so I will not repeat those arguments, but our objection is the same. By doing what the amendment suggests, we would cut across existing arrangements and these tiers of government working together organically. It would certainly also undermine parts of the regional arrangements that we are putting in place. The amendments on taxes, charges and the levy are very important, and I am very grateful to have the opportunity to put my remarks about them on the record. I reassure noble Lords, although they do not need to be told this, that it is a fundamental tenet of our law that no tax can be raised without express provision being made in primary legislation. No such provision is included in the Bill. The local authority functions that can be exercised by an EPB by virtue of an order made under Clause 87 could not include the power to tax. The same principle applies to a combined authority. As the noble Lord, Lord Greaves, said, under Clause 87 the costs of an EPB will need to be met by its constituent councils, and he described the process that will be followed. It will be a matter of agreement and negotiation in the light of a local authority’s commitment and the sort of EPB that it might want. The basis on which the amount payable will be determined is entirely a matter for its agreement, and it will be set out in the scheme. No provision in the Bill would enable an EPB to raise a levy from its constituent councils. It could not require them to make particular payments to the EPB, which would in turn have to be taken into account by the councils when they set council tax. Again, this would not be possible without express provision in the Bill, and there is no such provision in the Bill because we do not want it. I hope that the noble Lord is reassured about that. We also had a question from the noble Baroness, Lady Warsi, and the noble Lord, Lord Hanningfield, in Amendment 196 about whether combined authorities should be able to raise a levy. I have already said that the Bill does not provide for EPBs to have precepting or levying powers. But, as a combined authority would take on functions that would otherwise be exercised by an integrated transport authority—a later group of amendments deals with that—it is necessary for the former to adopt the levying powers which Passenger Transport Authorities, which date back to the 1960s, and their successor bodies, ITAs, already hold and have held for many years. The PTAs were levying bodies for many years in order to allow them to deliver and invest in public transport in their area. The Local Transport Act 2008 provides for ITAs also to be levying bodies, a principle which was agreed by this House last year. I should make it clear, however, that paragraph 75 of Schedule 6 to this Bill limits any levy for a combined authority to expenses that are attributable to transport functions. Moving further into Schedule 6, paragraph 83 would apply the Local Government (Overseas Assistance) Act 1993 to EPBs and combined authorities, which is the subject of an amendment by the noble Baroness, Lady Warsi, and the noble Lord, Lord Hanningfield. I hope that I can provide an assurance that this provision is not a means by which EPBs or combined authorities would be able to open overseas offices or spend council taxpayers’ money on overseas projects. It is simply a means by which they can provide advice and non-financial assistance to overseas bodies that carry out similar functions, which may in turn be reciprocated. The noble Baroness also opposes the whole of Schedule 6 standing part of the Bill. The consequential amendments contained in this schedule are essential to allow EPBs and combined authorities to operate effectively. Schedule 6 applies various aspects of local government law to EPBs and combined authorities. As these bodies are made up of local government representatives and will be able to exercise certain local authority powers, as decided by the councils involved, it is clearly appropriate that they should be subject to many of the same rules and procedures that govern the local authorities themselves. In applying this law to EPBs and combined authorities, we are again following the precedent established by the Local Transport Act 2008 in relation to ITAs. The consequential amendments in Schedule 6 will ensure that EPBs and combined authorities are accountable in the ways that we want, which we shall cover in a later amendment—for example, by applying rules on open meetings to them and rules on political representation. We have applied only those aspects of local government law that are relevant and appropriate to the functions which EPBs and combined authorities will have and have not applied anything that will unduly restrict their freedom to structure themselves as the constituent local authorities wish. I hope that that reassures the noble Baroness. Indeed, I hope that the Committee is reassured by those explanations and that noble Lords will not feel it necessary to press their amendments.