My Lords, before I speak on this matter I shall declare my interests. I am a vice-president of the LGA and also, as my noble friend indicated, the chairman of the Greater Manchester Combined Authority. Greater Manchester is one of the areas where the Secretary of State was somewhat upset by the level of council tax rises which were entirely consistent with the law as it stood. Before I begin I would like to quote from a document published by DCLG on 12 January 2012 on council tax referendums.
“The definition of ‘relevant basic amount of council tax’ . . . is essentially an adjusted Band D amount which is derived from a calculation of the authority’s basic amount of council tax. This amount is modified by omitting local precepts issued to or anticipated by a local authority, and levies issued to or anticipated by an authority, from the calculation. This is to ensure that increases in levies, over which authorities have minimal or no control, are not a factor in triggering a council tax referendum”.
Those were the words of the department in issuing guidance on council tax. As my noble friend indicated, levies come in to local authorities in a number of different guises. In Greater Manchester last year, two particular things impacted on the levy situation. First, not quite like Leeds, we had an agreement between authorities on transport expenditure, which will put a 3% increase above the day-to-day spending needs of the transport authority to invest in transport infrastructure. That programme began in 2009 with the commitment of the 10 authorities in Greater Manchester—which took some getting, I assure you, but we got there—to put that money in for six years. When we went to the Government and negotiated our city deal—we were the first conurbation to get a city deal—this transport expenditure was seized upon by the Government as an innovative way forward for local authority spending. It has taken some time, but we have devised an earn-back model and have now agreed that the Treasury will reallocate some of the increased taxation back to Greater Manchester. We will be able to spend that money on future investment. It is a good deal, and I understand that it will be part of the announcement on the public spending review.
Last year, the increase for the Greater Manchester transport levy was 3.6%. In other words, it was 0.6% for day-to-day transport needs—the cost of fuel and other things; this meant that there were big impacts on costs. The other 3% was that commitment made back in 2009, which continues to roll forward in future years—a contribution to investment and transport. We can prove that the transport investment is taking place. If noble Lords go to Manchester, they will see that the new Metrolink system is up and running, and new bus ways beginning in my area. There are all sorts of things going on which meet our commitment, and government commitments, to reduce greenhouse gases and all sorts of things. We thought that we would agree that with the Government but, obviously, they pushed up the levy.
I step back slightly from the second impact because Wigan is not part of the Greater Manchester waste disposal authority. The waste disposal authority signed a new PFI deal a couple of years ago because it did not have the facilities to deal with modern waste and needed expenditure on a new facility. So often with PFI deals, the early years have a really high cost which inevitably falls over future years. The effect on the waste disposal levy was 4.5%; obviously a very big increase for those authorities. A number of authorities in Greater Manchester therefore raised their council tax by more than the 2%, which the Secretary of State said would trigger a referendum. This was entirely legitimate within the rules of council tax referendums as they then were. In fact, the ironic thing was that a number of authorities, including those which seemed to have the biggest increase, actually reduced the proportion of the council tax take for their own services to meet the needs of external levies. That means that if this clause goes through, then the threat of the Secretary of State—the revenge of Eric Pickles—will be that any authority which raised its council tax by, say, 3.5% while the guideline figure remained at 2% can only increase its council tax next year by 0.5%. The rules have changed.
Who knows what would have happened if the council had known that that was the situation last year? Different decisions might have been made. How can we predict the mind of the Secretary of State and the mind of the department when it wants to change the rules in this manner? It is grossly unfair that some authorities, in addition to the awful amount of cuts that they are taking on board, will have to make savage cutbacks in services to cope with this part of Clause 39. This is bad and retrospective legislation and the Committee should think very carefully before it commits to Clause 39.
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