I begin by reassuring the noble Earl, Lord Lytton, that he may be in a minority of two. I share his concerns and would ask the Minister aquestion for clarification. Is it the case that, if a referendum on what is deemed to be an excessive levy is lost, that so-called excessive levy will still apply but the local council will have to cut its own budget in order to levy an appropriate council tax to meet the levy demand? Noble Lords opposite are saying yes; that is clearly the answer I am going to get and I want it to be clear and specific on the record. If so, we need to understand the implications of what we are doing. I can pick many examples, but flood defences might be appropriate. One can well understand where a drainage board wishes to put in a so-called excessive levy for particular work in a particular area and the public at large, who pay the council tax, may well feel that they do not want to contribute to that. As others have said, it can lead to unforeseen and undesirable consequences.
In addition to supporting the noble Earl, I also rise because my noble friend Lady Eaton is unable to be here today; she is at the Council of Europe. She has asked me to raise an issue in respect of the West Yorkshire transport fund. I will read into the record the contents of an e-mail she has received from the director of finance of the City of Bradford:
“You asked about the implications of the proposal that rises in levies, as well as Council Tax levels, could trigger a referendum.
The most significant implication for Bradford relates to current plans across the Leeds City Region to create a West Yorkshire Transport Fund. This fund is planned to grow to a total of £1bn by 2025/26 to pay for investment in the transport infrastructure. It will comprise, roughly, £150m from Dept for Transport, £100m from Local Transport Plan, £750m from the participating Councils, each of whom will contribute a increasing amount each year, by way of a levy. The current plan means that Bradford Council would put in £1.2m in Year 1, £2.4m in Year 2, £3.6m in Year 3 etc. The total investment over the period to 2025/26 from Bradford would be £161m.
It’s worth pointing out that the Transport Fund is a central plan in the Leeds City Deal, a key part of the Government's regional policy. While the Transport Fund is not the only element, it provides the underpinning infrastructure investment on which other investment activity builds.
Now, before the proposal to treat the levy by the same referendum rules as Council Tax, this plan held good. For citizens, the plan did of course mean that, while the Council Tax element of their bill would be restrained at below 2%, they would pay an increasing amount for transport investment. (And leaving aside the referendum issue, the decision to create and sustain the Fund ranks among the most significant decisions in the next budgeting rounds for participating Councils.)
The Bill’s proposal means that the Transport Fund can only be afforded in its current form if offsetting reductions are made across other services in the Council. So, by Year 3, for example, savings in other services would need to be roughly £2.4m higher than otherwise, for Bradford to afford its currently planned contribution of £3.6m in that year.
From a financial perspective, the proposal means … If investment in transport remains a priority, and the planned regional-level investment makes sense, there is now much sharper trade-off between transport and other choices. … If investment in transport has to be significantly reined in to satisfy the ‘below 2% rise’ rule, the investment returns will be significantly curtailed, with the reduced economic impact (which in turn would expect to feed through to a weaker taxation base of citizens in work and firms in business paying rates) ... For individual citizens/households, a lower aggregate taxation burden than they otherwise would face”.
That ends the quote from the director of finance at the City of Bradford, which I undertook to raise today. I hope the Minister is able to respond, if not today then later, particularly to the noble Baroness, Lady Eaton, on whose behalf I have raised this.