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Grand Committee

Volume 735: debated on Tuesday 14 February 2012

Grand Committee

Tuesday, 14 February 2012.

Arrangement of Business


My Lords, before the first Motion is considered, I remind noble Lords that in respect of each item of business today, the Motion before the Committee will be that the Committee do consider the statutory instrument in question. The Motions to approve the instruments will subsequently be moved in the Chamber in the usual way. If there is a Division in the House, the Committee will adjourn for 10 minutes.

Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) Regulations 2012

Considered in Grand Committee

Moved by

That the Grand Committee do report to the House that it has considered the Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) Regulations 2012.

Relevant documents: 37th Report from the Joint Committee on Statutory Instruments.

My Lords, the purpose of these regulations is to set out the rules for the conduct of referendums in relation to excessive council tax increases set by authorities in England. Noble Lords will know that the coalition programme for government included a commitment to abolish the centralised capping regime and give council tax payers the final say on excessive increases through a referendum. We have delivered that commitment. The Localism Act means that from 2012-13 onwards, when an authority sets an increase in excess of principles proposed by the Secretary of State and approved by the other place, a referendum will have to be held. The 2012-13 principles were approved by the other place on 8 February.

These regulations largely replicate the Local Authorities (Conduct of Referendums) (England) Regulations 2007, which the Committee has recently considered in updated form. Council election officers are familiar with those. However, these regulations reflect the specific subject matter of council tax referendums.

Where a council tax referendum is to be held, the authority triggering the referendum must pay for it. It must also notify voters that a referendum will be held and inform them of the potential impact on their bill, and the cost of the referendum. The authority cannot campaign in relation to the question to be asked, but it can publish a statement setting out the reasons for its excessive increase and the consequences if the increase is not approved.

Organising the referendum will be the responsibility of billing authorities. These are the authorities that have the expertise and experience in organising polls. Where a major precepting authority has triggered a referendum, separate polls will be organised by each of the billing authorities in its area. The major precepting authority will appoint a chief counting officer to determine the overall result, with powers to ensure that the poll is run effectively.

Referendums will generally be held by the first Thursday in May to coincide with local elections. At the discretion of counting and returning officers, these can be held in combination with other polls, if appropriate. The referendum could also be held up to 28 days later to coincide with another poll.

The regulations make special provision for the particular circumstances of the Greater London Authority, which calculates two different amounts of council tax that are potentially subject to a referendum.

There will be a restriction on the amount individuals or bodies can spend on a referendum campaign. This is £2,362 plus 5.9 pence for each entry in the relevant electoral registers. Breach of the limit in certain circumstances will be a criminal offence.

Consistent with existing electoral practice, a referendum may be questioned by petition to the court. Until a court hears a petition from four of more voters, the result of the referendum will stand. A court may uphold the result, declare it void or reverse it on the grounds that the result was not in accordance with the votes cast. In the event of a void result the authority’s substitute calculations will take effect. To avoid uncertainty for bill payers, there is no authorisation for a referendum to be rerun.

The Government have looked carefully at the question to be asked at the council tax referendum. As noble Lords will see from briefing provided by the Electoral Commission, we have to date, unfortunately, not been able to reach agreement with the commission on the precise form of words to be used. However, recognising the important role which the commission has in commenting on referendum questions and the need to ensure that questions are neutral and comprehensible, we will continue to work with the commission in the coming weeks and intend to come forward with updated proposals in due course.

For this year, we need to make progress to deliver the council tax freeze and to ensure that council tax payers have the right to decide on any excessive increases. The Government’s offer of grant to support a council tax freeze in 2012-13 makes it unlikely that a council tax referendum will be held this year. However, if authorities choose to ignore the freeze and go on to set an excessive increase, we need these regulations to be in place. I commend the regulations to the Committee.

My Lords, I am grateful to my noble friend for her careful explanation. Of course, as she will be aware, this is a very substantial volume of regulations. It runs to over 120 pages. It contains a huge mass of detail and therein lies my reason for rising to my feet. Let me say straight away that I am totally convinced about the Government’s policy of getting rid of rate-capping—and no one did more rate-capping than I did between the years of 1983 and 1985—and substituting for that the right of the public to decide whether a rate is excessive or not. I have made no secret that I totally support that. It is exactly the right procedure, which we need to do. It is in line with the devolution of power to local communities and giving the people the right to have their say.

However, I find the detail—the mass of prescriptive detail—in these regulations extremely difficult to accept. One must ask why it has to be set out in such minute detail. After all, the regulations try to prescribe the question to be asked. That may be quite reasonable and I heard what my noble friend said about that. There has been a considerable correspondence with the Electoral Commission on that and it has a good deal of wisdom on this. I think that it is right that it should be listened to. It is not wholly satisfied with the question that appears in the regulations, but I will not pursue that question.

My question relates to the rest of the prescriptive detail, which has to be asked. For instance, why do the regulations have to set detailed limits on the amount that may be spent in the course of the referendum? Why does it set a limit on campaign expenses? Why are these things necessary? We are supposed to be devolving power to local authorities and to local communities. Why does it need to set the time when a referendum has to be held? Why does it put in place procedures for challenging and questioning results and so on? It seems that these are all details which local authorities should be perfectly capable—with their local communities —to decide. Of course, there are the massive detailed rules on the conduct of referendums when there is already procedure in existence under earlier legislation and, indeed, the regulations are based on this

I appreciate what the Minister said about the matter having been approved by another place, although the exceedingly short debate, which was held on this in the other place on 2 February, began at 8.55 am and finished at 9.08 am. According to my calculation, that was about 13 minutes, and that was for a matter that is right at the heart of the Government's devolution policy. They want to ensure that local authorities and local communities have a say and I am astonished that, at the other end, they felt it necessary to devote so little time to what I see as a substantial issue.

Matters do not stop there. The Government have sought to prescribe in some detail what is to be regarded as an excessive rate proposal. Of course, it is complicated if you try to set out all the details and if you set them out centrally, which is what my noble friends seem to have decided to do. Even the departmental officials have recognised that there are some very peculiar anomalies in the way in which the system will work.

I have here an annexe which was attached to a letter from the Local Government Association, but I also have an annexe which was attached to a letter to chief executives and a number of others from an official, Mark Rickard, in the Department for Communities. That letter sets out the situation, without any apparent apology or understanding of the unreasonableness of it. To put it very briefly, a local authority can determine, in an extreme case, a nil increase in its own rates and yet still, as a result of the levies, be subject to a referendum. Why? No doubt my noble friend will want to answer that. Others may have a substantial increase which ought to be the subject of a referendum but, because various adjustments are made, lo and behold, it is not.

When one looks at the list of authorities, based on a calculation made by the Local Government Association of some 31 authorities, where there will be an effective tax increase by the local authority of below 3 per cent, it ranges from 2.05 per cent for Manchester to 2.99 per cent for Wolverhampton; 31 authorities could set a rate below the 3.5 per cent limit which the Government have prescribed in the order and yet still be liable to face a referendum. Why should that be so?

I have tried to get to the bottom of this. I have tried to look through various papers and so on to get to grips with this to see what has happened and why it has to be like that and I confess to my noble friend that I have not found an explanation that would seem to justify these extraordinary figures. I think it stems from the fact that the Government are trying to spell this out in a mass of prescriptive detail; but this is a Government who, as we debated at some length during the passage of what is now the Localism Act, are supposed to be devolving authority to local authorities and to local communities.

It is to my noble friend's great credit that she and her colleagues in the department accepted a good many of those arguments and the result was that we sent back to the other place 100 pages of amendments. When I met the Secretary of State, I said to him, “I am sorry that we are sending you back a great many amendments”. He said, “I know, they’re absolutely splendid”. I said, “But Eric, it was your Bill”. That is extraordinary. They went through the other place without any opposition at all and nothing came back, but here we are at it again.

During the debates on the Bill, a great deal was said about dealing with a very deep-rooted attitude of mind which certainly is to be found in departments and also, as my noble friend Lord Tope said, within local authorities themselves. Many of them expect to be told what to do. It may take a generation before we grow out of this excessive dependence on detailed central government regulation. It is probably too late to think of changing this order now. I do not know what the noble Lords opposite may want to do when this order has to be taken on the Floor of the House. I certainly would not think there was any point in trying to vote it down or anything. I simply mark a note of protest. Why does it have to be like this, producing such extraordinarily anomalous results? It is largely because everything is being prescribed centrally.

The Local Government Association has made its own view very clear. I should declare an interest as one of its many vice-presidents. It said it believes,

“that referendums are useful exercises when required, but, in keeping with localism, the decision whether or not to hold a referendum should either be up to local people, on the basis of a petition, or up to the council itself. Thus it should be up to local people to petition on … whether a referendum should be held, and—if so—what principles should be used, and not based on a centrally prescribed level of council tax increase over which a referendum must be held”.

It went on to say that it is very disappointed by the form in which this regulation has been made.

Yet when the rate support grant settlement was debated in the other place on 8 February, my honourable friend Grant Shapps said very clearly:

“In most cases in which a council wants to increase council tax by more than 3.5%, local people will have the chance to vote. Let the people decide—that is what localism is all about”.—[Official Report, Commons, 8/2/12; col. 368.].

There is precious little left for the local people to decide; on the basis of this, it has all been prescribed by central government. I really must make a protest on this and I hope that when Ministers are confronted with these detailed proposals from their officials about how the policy should be implemented, they will send them away and say, “Look, we are in favour of localism. We want local people to decide and to make up their minds, and we want local authorities to run these things. They do not have to be told every single detail”. I am sorry if I appear a bit cross on this, but it is not a new song. I sang it all the way through the proceedings on the Localism Act, and I find it disappointing that this still persists.

I finish on one more note. I attended a very interesting meeting last week, convened by Sir Merrick Cockell, the chairman of the Local Government Association, and Graham Allen MP, the chairman of the relevant Select Committee in another place. What was it about? It was about trying to establish a new concordat between central government and local government, so that there is far more recognition of the right of local authorities to make their own decisions, accountable as they are to their local electorates. Since then I have heard one or two gloomy words of prognostication, saying, “Well, it has all been tried before and nothing has ever happened”. I hope that my noble friends, with their commitment to localism—to letting local communities and local authorities decide—might be able to buck the trend and try to make something of this.

I commend what is being said by the group chaired jointly by Graham Allen MP, and Sir Merrick Cockell to see whether they can offer something positive in this regard, so that one can see that this process really has been taken on board and is being carried forward. We do not divide on things in here and I certainly would not want to divide on this on the Floor the House, but I hope that my protest is not out of place.

My Lords, I, too, am a vice-president of the Local Government Association and I very much share the reservations and concerns just expressed by my noble friend Lord Jenkin in relation to these measures. Some of the particular difficulties with these regulations highlight some of the general difficulties with referendums. On 12 October 2010, the House debated the report of the Select Committee on the Constitution on the subject of referendums. There was clear agreement in that committee and no dissent in that debate that referendums are generally appropriate only for issues of major constitutional significance. In my contribution to that debate, reported at col. 428, I expressed my unhappiness at the idea of referendums being considered appropriate for much more widespread use.

One of the areas of difficulty with referendums is the potential level of disagreement about the wording of any question, which is the matter that I particularly wish to address in the Committee this afternoon. The Political Parties, Elections and Referendums Act 2000 established the Electoral Commission and gave it a role in considering questions to be put in referendums so that they are considered to be fair and intelligible. The Government followed the Electoral Commission’s advice in relation to the referendum about the AV voting system last year. They changed the proposed question when the commission put forward a clearer and simpler alternative wording.

Who sets a referendum question is currently a matter of major contention in relation to Scotland and the referendum on independence or an alternative form of further devolution. The Westminster Government have adopted the position that it is only proper legally for the Electoral Commission to be involved in framing that question, with the implication that the commission’s view may prevail over that of the Scottish First Minister, who may want what many people consider to be a less clear, less fair and potentially loaded question. However, in relation to questions on this issue, the Government have not yet agreed that the view of the Electoral Commission on the question to be put should prevail. Indeed, they may defy the views of the Electoral Commission on this matter.

I think that that is probably why your Lordships’ Select Committee on the Constitution recommended that the Electoral Commission should be given statutory responsibility to formulate referendum questions, which should then be presented to Parliament for approval. The Government did not accept that position and perhaps these regulations and the arguments over the wording of the questions illustrate why. The Government have accepted only that the commission’s view should be taken into account in framing the question included in regulations such as those being considered today, so I hope that the Minister will give us a clear account of the process that will be involved in agreeing the final wording of the questions. We would like to know how it might be agreed what the role of the Electoral Commission will be. In particular, I would like to know that the specific wording of the questions will be tested properly with voters and with plain language experts, as was the case with the referendum question last year when the Government insisted that the question to be put to people should be properly tested in that way. We would like to know that the questions proposed will be clear, simple and neutral, as the Electoral Commission insists.

My Lords, I am the first person to speak who is not an honorary vice-president of the Local Government Association, but I find myself in complete agreement—it is a new coalition—with the noble Lords, Lord Jenkin and Lord Rennard. I come to this entirely fresh because I did not take part in the Localism Bill; I was completely exhausted after taking part in the Parliamentary Voting System and Constituencies Bill, in which much of the time was spent trying to persuade the Government not to spend £100 million on a referendum on the alternative vote system. I am not sorry now that we had the referendum because I was very pleased with the result, but that does not justify the expenditure.

To pick up on the point made by the noble Lord, Lord Rennard, although we argued about pretty well everything else, there was no argument, so far as I can recall, about the decision that it should be the Electoral Commission that decided the language of the referendum. You have to have a neutral body deciding what question is going to be put.

As I said, I have come to this absolutely clean, but with a certain scepticism about new-fangled constitutional arrangements. When I started reading the detail of this—and, in particular, when I saw this document priced at £18.50—my reaction was, “What a spectacular waste of money, time and energy”. I would love to know how many hundreds if not thousands of hours of Civil Service time were spent producing this—they are looking weary behind the Minister, though no doubt they are 100 per cent loyal—not to mention the cost of the referendum. I would like the Minister to tell us, should there be a referendum, what the estimated cost would be for the average local authority to carry it out. We are all strapped for cash at the moment.

I hear a great deal about the need to consult the local electorate. I can only say that my experience of local government, not only as a councillor but also as someone who took a tremendous interest in local government in my area in all the time I was a Member of Parliament, has been that councillors of all parties spend inordinate amounts of time angst-ing—if that is a word—about the level of council tax, about whether it would be acceptable to the electorate and about what would be the likely outcome of a future election if they did not listen to what the electorate were saying. Councillors are usually in a pretty good position to make that assessment. Why we need this other, elaborate structure grafted on top of the established principles of local accountability I really do not know, particularly when it is likely to be at considerable expense—and then when I read the details, this almost defies satirical comment.

“It is possible for multiple council tax referendums”,

we are told in the advisory note,

“to be held within the same area … a billing authority could have to hold a referendum on its own excessive increase as well as that of a Police Authority, Fire and Rescue Authority, County Council and a number of local precepting authorities in its area”.

I cannot believe that I am reading that. Is it actually possible that there could be six, seven or eight referendums in the same area at the same time? I am coming to it fresh, so maybe there is a point that I have overlooked. I cannot believe that anyone is seriously advocating that as a sensible way of proceeding locally.

I cannot see what this is doing that cannot be done through the normal local electoral process. I am sure that it will cost money—perhaps the Minister can tell us. I am particularly concerned—I will not spell out again what the noble Lord, Lord Rennard, said, because he said it very effectively—about the fire that the Government are playing with, in the light of all that might be happening in Scotland, by saying that they will not accept what the Electoral Commission is saying about the wording of a referendum. That is a pretty risky route to follow. I do not know how they would explain to the Government in Scotland, let alone anyone else, why it is right for the Electoral Commission or other neutral body to determine the wording of the referendum there when they have blood on their hands by apparently disregarding the Electoral Commission’s advice here. It is a route that I would strongly advise them not to pursue.

I have not heard the Minister’s passionate advocacy of why this will transform life as we know it and bring happiness to local areas, which is usually what you hope for when you see new legislation coming along. This seems to me a waste of time and a waste of money.

My Lords, I have to confess that I am another honorary vice-president of the Local Government Association. I am also leader of a council. I declare those interests.

I agree entirely with what the previous three speakers have said. The noble Lord, Lord Jenkin, said that he approved of a new capping. We were one of the first authorities to be capped, in 1990-91, when we were cunningly capped by a Government who did not tell us the rules before we set a council tax and we suddenly found that we had done it outside the rules—but never mind, we got over that. We then had to set another, lower council tax, and of course the democratic influence came around and we got a much increased majority on the council as a result.

I have also been a passionate advocate for localism and I fought my Government on many occasions when I felt that they were being too centralist. I really welcomed the principle of the Localism Bill when it came through. Unfortunately I was not able to attend any of those debates, but with this measure the fundamental business of localism is undermined because it says that the Secretary of State will decide the council tax. As a practical local politician for many years—too many years, people may think—I would ask: which authority is actually going to go to its electorate and say, “We think that we should have a much bigger increase than the Government do”? Have we any evidence of anybody ever voting for an increase in taxes? They do not do that, but this will be on a specific item of tax and it is a question of the words.

What is surprising to me is the use here of “excessive” regarding a council tax rise, because “excessive” is pejorative. You are assuming that it is beyond what it ought to be. No local politician wants to set an excessive council tax but, looking at the local problems in their area, they will want to think, “What are the issues in the set of problems that we have to address?”. What worries me is that, in a sense, we are creating a problem of the democratic mandate. I have a democratic mandate; I am elected by people in my ward. Come next November, we will have police commissioners who will have their own mandate. Somebody may stand as a police commissioner in Greater Manchester on this platform: “There are not enough police on the beat, and we need to put more on the beat”. That will cost more money and therefore the increase in their precept next year may well exceed what the Government think is reasonable. As a billing authority, we will have to cope with that situation. The police commissioners probably will be not too worried if it costs us more money, because they will say that they have a mandate to do it. A referendum is a slightly different form of mandate.

The Minister mentioned that this year there will in most places be a council tax freeze—as there will be in my authority. However, we had to make sure that all the precepting authorities were also going to freeze their tax. There would be no point in me saying that there would be no increase in council tax if the precepting authority had not done that. As she said, the Government have given a grant for one year, but next year that grant drops out, so without anything being done at all the council tax in areas that have had a zero increase will increase simply to pay for the loss of the grant in year one. Is that going to be deemed excessive or not, as part of the principles? It does not matter what I think we need next year; in 2013-14, we will have to make an increase for what would have been there in 2012.

The noble Lord asked about the cost of the referendum. If we are having a referendum only on the first Thursday in May, when most billing authorities will have wanted to send out bills well before the end of March, so that the cash flow begins early in April, the serious cost will be that not of the referendum but of the loss of income if there is no determined council tax. There are so many different issues here. I know that the Minister understands from her own experience the intricacies of local government. However, despite having this wonderful set of regulations, if we think about them I cannot believe that they are ever going to be used. It will be an interesting historic document. We should hang on to it and say, “Here are the regulations for council tax referendums which were never used”. It is really not in anybody’s interest, particularly not that of local authorities, to have all the costs not just of the referendum but of the loss of income.

My Lords, whenever I speak in this Room, the pictures on the wall prompt me to make a connection with the subject we are discussing. Today, we have Moses bringing the tablets down—as I understand it, there was no referendum on the 10 commandments—but we also have Daniel, who I suppose could be described as a bit of a returning officer. Noble Lords will recall that “You have been weighed in the balance and found wanting” was the interpretation he gave Nebuchadnezzar. Such divine and semi-divine inspiration apart, we have today to deal with an important set of regulations.

This Government are addicted to referendums. We have had one, as my noble friend Lord Grocott has reminded us, on AV. They are compelling 11 councils to hold one on elected mayors. They are keen to have one in Scotland, perhaps rightly so, and the Localism Act provides for referendums in the context of local plans. Oddly, the Government have not yet indicated whether they plan one on House of Lords reform—precisely the kind of constitutional issue to which the noble Lord, Lord Rennard, referred when he spoke of the Constitution Committee’s thoughts and recommendations on what would be an appropriate subject for a referendum. Today, however, we debate council tax referendums.

There are, in fact, only two things wrong with council tax referendums and the regulations before us. The first is form; the second is substance and effect. Let me, in my perhaps typically perverse fashion, deal first with substance and effect. Rather than rely on their former powers to cap individual authorities, a power to which local government has always objected—and here I suppose that I ought to follow others in declaring an interest as an honorary vice-president of the Local Government Association—the Government are, in effect, capping every authority by stealth. The Government have determined an arbitrary figure for different classes of authority beyond which a council will be compelled to hold a binding referendum to coincide with the date of council elections in May. By this time, of course—as my noble friend Lord Smith has already reminded us—the bills will have gone out. If the referendum rejects the council's proposal, the council will have to re-bill. This in itself, combined with the cost of the referendum, will, as no doubt intended, deter many councils, especially small councils, from proceeding down that route. I recall an incident—I cannot remember which council it was—where the cost of re-billing exceeded the saving that would have been made in terms of the difference to council tax.

It should be noted that the definition of excessive increases—and, again, I concur with the scepticism of my noble friend Lord Smith about the use of the adjective there—is simple and crude. There is no scope to differentiate between authorities, or groups of authorities, with particularly challenging problems—financial or otherwise. There is no scope, as under the previous system, for any representations to be made to the Secretary of State or any accommodation reached. Instead, there is a flat target—a referendum irrespective of whether there is any local demand for one—and a plethora, as the noble Lord, Lord Jenkin, has rightly described it, of tightly prescribed rules and regulations about how to conduct a referendum. There is page upon page of precisely that kind of prescription. This is all before the so-called localisation of business rates impacts, as it will, differentially between councils and their council tax payers, with its own impact on the level of council tax to be levied.

Consider the background. As Professor Tony Travers pointed out recently, the Government's VAT increase of 2.5 per cent last year cost households 20 times as much as an equivalent percentage increase in council tax. Many council tax benefit recipients will find their council tax going up sharply in the wake of the cut that the Government are imposing on benefit just as council tenants have suffered rent increases of around 8 per cent. However, there is no thought of a referendum about any of those burdens on households. When the department wrote to council chief executives last week, it became apparent that the way the system will actually work is far from the simple, albeit misguided, impression that one would gain from the headlines, as the noble Lord, Lord Jenkin, has pointed out. The rubric looked as though an increase would be excessive if it exceeded 3.5 per cent. It now appears, however, that certain councils could, depending on circumstances, levy a 5 per cent increase without having to hold a referendum. As the noble Lord said, 31 others might find themselves required to hold a referendum if they increase council tax by less than 3.5 per cent; indeed, as he said rightly, if they increase it by less than 3 per cent. Manchester, to which he referred, would have to have a referendum with a 2.05 per cent increase, Sheffield with a 2.7 per cent increase and Newham with a 2.79 per cent increase. All this is after the council tax freeze that we have already had and which, at some point, will have to be made good. In case my noble friend Lord Smith does not know it, I should perhaps advise him that the effective referendum limit in Wigan will be 2.83 per cent.

As usual, the authorities worst affected are those most heavily dependent on formula grant, particularly in the north, the Midlands and in some London boroughs. It is a measure of the problems that they face that the cut in formula grant as a percentage of council tax is as high 18.8 per cent in Manchester and 22.7 per cent in Newham, while their permitted increase will be around an eighth of that amount, not that those councils would be envisaging increases big enough to close the gap fully as that would be a very high council tax increase indeed.

However, there is an even more startling potentially perverse outcome, referred to by the noble Lord, Lord Jenkin, for it is possible that, due to the arcane working of the system, a council might have to hold a referendum even if it freezes its council tax. So it would go to the public with the question: “Do you agree that the excessive council tax increase of nil should be supported or not?” What a ludicrous procedure that would be.

As my noble friend Lord Smith has said, no council enjoys increasing council tax or does so willingly. It is noticeable that, this year, even a number of Conservative councils have felt compelled not to observe the freeze that the Government have called for, paid incidentally for those councils that accept it, from money which would have gone to local government anyway in the distribution of formula grant. Those Conservative councils have, no doubt, taken this course because freezing the base will make future financing more difficult. Alas, they have incurred the wrath of Mr Pickles accordingly.

Making a council budget is a difficult and protracted process at the best of times. Making it at a time when demand for services is growing, partly as a function of the state of the economy and the fact that people's capacity to pay is shrinking, is even more difficult, despite local government's outstanding record in increasing efficiency, which is much the best across the whole of the public sector. Extremely hard choices between competing demands have to be made by every council. These are not easily mediated by a simplistic choice between different levels of council tax. The proper way to come to a decision locally is for councils to consult widely on a range of options and then to determine the budget and set the tax. The Government’s covert capping undermines representative local democracy by proposing the veneer of democratic engagement in the form of a single question about the level of an increase. The proper occasion for judgment about a council’s policy and record is at local elections, not in the form of ad hoc referendums.

That brings me to the question of form. The Electoral Commission which, as we have heard, has responsibility for these matters, consulted widely last year and commissioned research on, in particular, the question to be asked. Instead of accepting the commission’s proposed question, the Government produced an alternative, embodied in the regulations, on which they neither consulted nor conducted research. The commission states that it is not possible properly to assess whether the question is clear, simple and neutral. The commission concludes that the question,

“risks introducing an unknown level of complexity and potential bias”,

to these referendums. I note, parenthetically, that the whole problem is caused by reducing complex choices and deliberations to the form of a simple question in the first place. Somewhat disingenuously—of course this is not the responsibility of the Minister—the Explanatory Notes for the regulations refer to the Electoral Commission’s position, saying, that the Government consider that,

“the alternative question proposed by the Commission did not make it sufficiently clear that voters are voting on a council tax increase that has already been set”.

The next paragraph says:

“The commission also offered views on the draft regulations and raised a number of points of detail which informed the drafting of the regulations”.

I find that an extraordinary assertion in the light of the explicit recommendation that the Electoral Commission made in a document circulated recently, in which it says,

“The Government should withdraw these draft Regulations and lay new draft Regulations specifying a revised referendum question which more fully reflects the recommendations”,

which it made in December. It is quite extraordinary that the Explanatory Notes should be published with no reference at all, either in the original or, if the response of the Electoral Commission came in later, by way of a supplementary note.

The noble Lord, Lord Rennard, is quite right to emphasise the importance of respecting the views and recommendations of the Electoral Commission. I concur with him that the setting of questions should be entirely a matter for the Electoral Commission, and that is not the position at present. The Government are within their rights to ask about the question posed. Sticking to those rights does not answer the problem that we are facing and that is posed by the Electoral Commission.

I therefore call on the Government to do precisely what the Electoral Commission suggested—to withdraw these regulations and to come back with a revised set, if they proceed with the policy at all. Frankly, I also call on them to rethink their whole approach to council tax capping, which is what this is by another name, which is compounded by the enormous difficulties faced by councils of all political persuasions and none in the light of the unprecedented, front-loaded cuts volunteered by Mr Pickles, which of course bear most heavily on the most disadvantaged communities. At the very least, if they insist on retaining some kind of capping, in whatever guise, it should be capable of reflecting different local circumstances, which these regulations do not, and allowing an element of ministerial discretion. I urge them to abandon this process. As I understand it, the noble Lord, Lord Jenkin, with his long experience of these matters, also urges them to abandon it.

The Minister said that the Government will consider this question again. I am assuming that it will not be necessary to do that very quickly because it is anticipated that there will be no call for a council tax referendum this year. In my judgment and that of my noble friend Lord Smith, it is extremely unlikely that it will ever be the case. We have capping under a different name, but that is what it amounts to. It is much cruder than when the noble Lord was dealing with it because then there was discretion and a capacity to look at different situations. Here, perversely, the notion is that there is a single rule for all, but in practice, as we have heard and have learnt from the Local Government Association, there is a differential. It does not really discriminate on the basis of a conscious decision by an authority but is an accident in the way that the system works. It makes it more difficult for a council to deal with its financial problems and remain outside the capping procedure.

This is a very sorry saga, and I hope that in the light of what has been said here today and, more importantly, by the Electoral Commission and others outside, the Government will take the opportunity to rethink their position completely. I hope that the Government will withdraw the regulations at this stage and, preferably, not bring them back; but if they are brought back, I hope that they are brought back along the lines of the Electoral Commission’s suggestion.

My Lords, I thank everybody who has taken part in this short debate. I am asking for approval of these orders today, but equally, as I made clear in my opening remarks, we understand and recognise the important role the commission has in commenting on the referendum questions and the need to ensure that the questions are neutral and comprehensible. We will therefore go back and work with the commission over the coming weeks, and we intend to come forward with updated proposals in due course. However, as the noble Lord said, we need the regulations to go ahead as they are in case any council is moving to have an excess council tax this year. We think that that is probably unlikely, but the Government have made a commitment to discuss further with the Electoral Commission what the question should be. I hope that that is helpful.

I thank noble Lords for all the criticisms. I am not sure that I can say anything other than that. I can still hear my noble friend Lord Jenkin saying all that when we were debating this subject during the passage of the Localism Act. The concern there was over heavy regulation. I think everybody heard that. I understand that the regulations are not welcome, but I think that they are good guidance about how things should be run and managed. If anybody is in any doubt, they are there in print so that they can be used.

It is correct that capping was not a well-loved system. I do not think that it was well loved by anyone, but there is a way that we need to limit—for local people apart from anything else—any council that thinks it will go on a Swanee and raise its tax above a certain extra amount each year. That is why the Secretary of State has taken powers to limit any access and then put it into the hands of local people to decide whether that excess is accepted or not. It is excess as well as excessive—it is over and above what is considered a reasonable amount extra for people to have to spend. They are then asked whether or not they agree with that.

The noble Lord, Lord Smith of Leigh, raised the question of council tax freeze. This comes up pretty regularly, and I should like to explain that this is the second year of a grant for the freeze. Last year the money went into the base. So the base is already there, and it has been raised because of that freeze. It has always been made clear that from this year the freeze money would not go into the base. Local authorities have known that all along. They might think that the concerns that have been raised are justified, but they are justified only because they wanted to say them and not because they did not know. That has been the case right from the start.

The noble Lord, Lord Grocott, asked me how much local authorities would have to spend on the referendum. I did have that information on a piece of paper. The amount varies, but I think that it is around £850,000. I should not have so many bits of paper. It would have been so helpful not to have them. I know that I have that information—I will find it as I go through what I am saying.

On the question of the amount that will trigger a referendum and why local authorities should not have the right to put tax up to any amount without having that tested, Governments always have to have some control over expenditure and over the amount that will be raised from council tax and the general grant. No Government, including the previous one, can be in the position of allowing councils to let rip with what they want to raise. There has always been concern about how much council tax will have to be raised at any one time. As I say, if local authorities do that, they will then have to test it out with their local electorates; and if the local electorate thinks that it is a good idea, then it can go ahead.

The other question was about whether a council tax freeze might trigger a referendum. I do not think that that is the case. I do not think that a freeze in council tax can generate one. What would generate a referendum —and I must put this carefully because I had to work at it very hard all morning—is where a levying authority lowered its council tax demand and a local authority had not reached freeze level but decided to take up the slack. So it would be a situation in which the levying authority had lowered its rate and the local authority then had a gap of the difference between the previous rate and the new rate. If it decided that it would still not be in breach of the 3.5 per cent and it would put in extra expenditure that then tipped it over 3.5 per cent, there would have to be a referendum. But that is not a freeze that would trigger a referendum. If that is still wrong, somebody will come back to me, but I think I am reliably informed that that is the situation.

I heard what my noble friend Lord Jenkin said about the excess of regulations. I am afraid that, at this stage, that is what they are. I am asking the Committee to approve the regulations so that we can go ahead.

I think that I have picked up all the points raised. If I have not, I will make sure that I let noble Lords know. In answer to the noble Lord, Lord Grocott, I was right that the likely cost of holding a council tax referendum will be between £85,000 and £300,000 depending on the size of the authority.

Motion agreed.

St Albans and Welwyn Hatfield (Boundary Change) Order 2012

Considered in Grand Committee

Moved by

That the Grand Committee do report to the House that it has considered the St Albans and Welwyn Hatfield (Boundary Change) Order 2012.

Relevant documents: 38th Report from the Joint Committee on Statutory Instruments.

My Lords, I beg to move that the Grand Committee consider the draft St Albans and Welwyn Hatfield (Boundary Change) Order 2012. This is a very straightforward matter. The order transfers a small area of land, part of a cul-de-sac and a few houses, from one local authority, Welwyn Hatfield, to another, St Albans.

Before addressing the particulars of the order, it might help if I explain, as briefly as I can, the statutory framework that allows the change and the context within which the boundary change is now being considered. This is the first use of the powers in the Local Government and Public Involvement in Health Act 2007 for boundary change and the first principal area boundary review undertaken by the Local Government Boundary Commission for England since it was established on 1 April 2010 as an entirely independent parliamentary body under the Local Democracy, Economic Development and Construction Act 2010.

Under the legislation, a boundary change between two local authorities can take place only upon the recommendation of the Boundary Commission. The Boundary Commission's responsibility is to advise the Secretary of State. In doing so, it gathers evidence, for example, from the councils involved and local people, publishes and consults on draft recommendations based on this evidence and, once it has considered the representations, makes final recommendations to the Secretary of State. When considering whether a change is desirable, the Boundary Commission must bear in mind the statutory criteria that change should lead to effective and convenient local government and reflect the local community’s views. Before deciding whether to accept its recommendations, the Secretary of State must consider any further representations he may receive on the recommendations.

The context within which boundary change is being considered includes ensuring that local government boundaries reflect communities and that councils can deliver effective and efficient services. However, apart from changes brought about by structural change, the boundaries of our local authorities have not been looked at for some 20 years. In that time, there have been many changes with new developments and the extension of urban areas. It is inevitable that some boundaries will need changing. A boundary that cuts through a property or an estate is unlikely to be convenient to the property owners who may have to have dealings with two separate local authorities. Perhaps more importantly, out-of-date boundaries can affect perceptions of community identity. People who do not feel, for whatever reason, part of an area are potentially less likely to take an interest in the work of the local authority or to want to play their part in civic life.

In this particular boundary change, the current district boundary between St Albans and Welwyn Hatfield weaves between houses and across gardens in Franklin Close and Roestock Gardens so that some properties are in Welwyn Hatfield and others are in St Albans. While some residents of Franklin Close live in Welwyn Hatfield, they cannot access their homes without going through St Albans. This has been a bone of contention for some time. The Boundary Commission agreed to undertake a review and on 20 September 2011 published its final recommendations which are now being implemented by this order; namely, the transfer of numbers 2 to 24, even numbers only, of Franklin Close from Welwyn Hatfield and the gardens of 9 to 13 Roestock Gardens into St Albans. As a result, all the houses in Franklin Close and the entirety of their respective gardens will be in the same district council area: St Albans. This change also affects two parishes as the existing district boundary is also a parish boundary between North Mymms parish in Welwyn Hatfield and Colney Heath parish in St Albans.

St Albans and Welwyn Hatfield agree that the change is necessary. Both have actively sought and supported the boundary change on behalf of the residents concerned. Everyone who has made representations, including local Members of Parliament, residents and the parishes concerned, have been supportive, both those who responded to the Boundary Commission and those who wrote to the Secretary of State.

The Boundary Commission has confirmed that the change will provide for effective and convenient local government and that in its view, the change has no adverse impact on either local authority's ability to deliver value for money to local residents. Indeed, any impact is likely to be positive.

Article 3 transfers the relevant area from Welwyn Hatfield and North Mymms parish to St Albans and the parish of Colney Heath from 1 April 2012. This article also amends the boundaries between the relevant electoral areas. Article 4 ensures that the development plans that apply to the area continue to apply. Article 5 ensures that anything that applies to or is being done in relation to the transferred area can continue; for instance, any legal proceedings or appeals. Article 6 provides for the transfer of any property, while Article 7 provides that the sitting councillors will represent the revised areas until such time as they stand for election in the normal way. Article 8 allows the two local authorities to prepare for those elections.

In short, this order implements a small boundary change between St Albans and Welwyn Hatfield that is wanted by local people and recommended by the independent Boundary Commission. I commend this order to the Committee.

My Lords, I welcome this order and want to proclaim that at last common sense reigns. I come from Hertfordshire, although not this part, and know the councillors for the London Colney area, which will receive the houses that are being transferred. I am delighted that this anomaly has been corrected. I had personal experience of it when I went to help during a hotly contested by-election in the village of Welham Green over Christmas some five years ago. Finishing canvassing in the village, I offered to do the last few houses on the remaining canvass sheet. “Yes”, said our Welwyn Hatfield councillor, “but I would not walk if I were you”. The reason was because the journey to get from the village to these houses is across a number of fields and past the entrance to the M25, the dual carriageway and a whole string of new industrial estates. This whole area is a complete anomaly. Luckily, the Welwyn Hatfield councillor said that the local London Colney councillor would do the canvassing for us. It is bizarre how history manages to make a small number of houses in completely the wrong place for local government purposes. I suspect that the change will not be visible to the residents of the up to 14 properties, who probably feel as if they have always been in London Colney anyway. I urge the Committee to free the Welwyn Hatfield 14 and their occupants and let them move to their natural home of London Colney in the city of St Albans.

Well, my Lords, I begin as I began the last debate with a reference to where we are. I am pleased to say that we have moved from the 10 commandments to 14 houses being relocated in what must pass for something like the transposition of Clochemerle to rural Hertfordshire. We have gone through an extraordinarily convoluted process to accommodate the perfectly reasonable request of a handful of residents. They were supported, I understand, by the local Member of Parliament, Mr Grant Shapps, with whom I have occasional disagreements but whom I congratulate on his efforts on this particular occasion in meeting the needs of his constituents.

I cannot quibble with these changes, but I rather contrast the work of the whole machinery of state to produce this splendid result for the residents of this patch with what is going on in respect of other boundaries. Presumably, this boundary change will also shift these voters from one parliamentary constituency to another, unless of course these are two constituencies that may be combined. At the moment, we have some extraordinary propositions that make this look even more minuscule by comparison. We have boundary changes to which all political parties seem to have profound objections.

For example, there is to be a boundary change in Merseyside creating a Mersey Bank constituency with part of it in Wirral and part of it Liverpool divided by the River Mersey—with no crossing at that point. We have a parliamentary constituency in my part of world, which is a diagonal stripe across Northumberland down to Barnard Castle in Durham from Haltwhistle. We have constituencies in Cumbria divided by the Pennines. We have Gloucester city with the centre, town hall, markets and so forth transposed to another constituency whose name currently escapes me but is certainly outside the traditional city of Gloucester, and so on and so forth.

By comparison, this is a straightforward and simple matter. It is only a pity that the Government's decision to force a change of boundaries on a radical scale with limited discretion in terms of the size of constituencies will lead to much more of a problem for many more people up and down the country. But I appreciate that that is beyond the scope of the Minister, who I am sure would be only too willing to adjust the instructions given to the Boundary Commission had she the power to do so. In the circumstances, of course, I can only endorse these proposals and give them the blessing that we will not be conferring on the regulations that we discussed previously.

My Lords, I thank noble Lords for their support for this order. I guess that the local authority has to ask the Boundary Commission for a review. Since it has only just got this one done from 2010, it will take a little while to do the others.

Motion agreed

Sitting suspended.

Licensing Act 2003 (Diamond Jubilee Licensing Hours) Order 2012

Considered in Grand Committee

Moved By

That the Grand Committee do report to the House that it has considered the Licensing Act 2003 (Diamond Jubilee Licensing Hours) Order 2012.

Relevant documents: 38th Report from the Joint Committee on Statutory Instruments.

My Lords, the order proposes the relaxation of licensing hours to celebrate the Queen’s Diamond Jubilee. If made, it will allow licensed premises to stay open from 11 pm on Friday 1 June to 1 am on Saturday 2 June and from 11 pm on Saturday 2 June to 1 am on Sunday 3 June to sell alcohol for consumption on the premises, to put on regulated entertainment and to sell hot food and drink in venues where alcohol is also sold for consumption on the premises. The Government do not believe that the order should apply to takeaway establishments which in most cases already have authorisation to stay open late.

Section 172 of the Licensing Act 2003 gives the Secretary of State the power to make an order relaxing opening hours for licensed premises to mark occasions of,

“exceptional international, national or local significance’.

The licensing hours order would override existing opening hours in licensed premises and can be used for a period of up to four days. The order would apply to all licensed premises in England and Wales. Scotland and Northern Ireland are covered by different legislation.

The Queen’s Diamond Jubilee celebrations will be centred around the national events taking place over the extended weekend in June and, as such, the Government believe that a small relaxation of licensing hours in England and Wales is appropriate. It is likely that many premises will wish to open later over the Diamond Jubilee weekend to take advantage of the celebrations and the long weekend.

A survey commissioned as part of the 2008 Culture, Media and Sport Select Committee inquiry into the Licensing Act 2003 showed that 56 per cent of all premises in the survey still closed at 11 pm. Licensed premises may currently use a temporary event notice to extend their opening hours for a limited period at a cost of £21. However, temporary event notices are subject to certain annual limits. At present, only 12 may be given for a single premises in any calendar year, and they may be refused by the licensing authority if the police object on crime and disorder grounds. A small relaxation of licensing hours will benefit premises that would otherwise have used a temporary event notice to open late and will allow people to celebrate Her Majesty’s Diamond Jubilee in pubs, clubs and other licensed venues, such as community halls and restaurants.

The Government’s consultation on the relaxation of licensing hours for the Diamond Jubilee ran for seven weeks from 12 October to 1 December. There were 211 responses from a variety of interest groups and trade associations. A summary of the consultation can be found on the Home Office website. Around 85 per cent were in favour of the order being applied in England and Wales. The majority—some 80 per cent—also said that there were no effects in the usual level of crime and anti-social behaviour in their local area over the weekend of the royal wedding as a result of a similar licensing order. The off trade was excluded from the proposal on the basis that anyone wishing to celebrate at home could buy alcohol in advance or at any time during normal opening hours.

It was estimated that this small extension of licensing hours will save businesses in England and Wales between £280,000 and £480,000. The order will have no permanent effect on licensing hours and will mean venues opening for just one or two hours later on either or both of the specified days. We anticipate that any additional policing costs will be very limited because the majority of licensed premises that will take advantage of the order would have opened late anyway using a temporary event notice. We would expect any small extra costs to be met from existing police budgets.

I hope that the Committee will agree with the Government that this minor extension of the licensing hours to celebrate Her Majesty's Diamond Jubilee is an appropriate use of the powers conferred on the Home Secretary by Section 172 of the Licensing Act. I beg to move.

My Lords, I support the order. To do otherwise would amount to something like bah humbug. However, I have a couple of questions for the Minister.

First, why did the consultation ask for comments on the basis that the relaxation would cover only two nights? As the Minister explained, the relaxation period could be up to four days. It struck me as a little nannyish not to include Sunday and Monday, as if the state were telling people that they had better be fit for work on Tuesday.

I also wondered whether there was any indication of costs to local authorities that might be anticipated. The Minister has told the Committee of the police's response, but local authorities may have concerns about policing in the widest sense.

Thirdly, I do not know whether it is proper to ask for news about Royal Assent for a Bill. Certainly, I would like to know about the commencement following Royal Assent to the Live Music Bill. I suppose it is still a Bill until it receives Royal Assent. It would allow for live music in the circumstances set out in the Bill. I am sure that we would not want to stop patriotic songs being sung during these hours. Can the Minister give me any news on that? I know that my noble friend Lord Clement-Jones who piloted the Bill in this House and my right honourable friend Don Foster would be just two of those who would be glad to hear news of its impending effect.

My Lords, I am most grateful to the Committee for adjourning for a few minutes to allow me to speak on behalf of the Opposition on this order. The Opposition wholly support the order. I have no questions for the Minister and I very much commend the order to the Committee.

My Lords, I am very grateful indeed for the comments of the noble Lord, Lord Hunt, and particularly for his brevity. I will deal very quickly with what turned out to be three questions from my noble friend Lady Hamwee: she described them as two questions.

First, she asked why there were only two nights and whether we were being over-nannyish in not going for four nights or at least consulting on four nights. We thought that two nights would be more or less right. We thought that Friday and Saturday would be when people would be most likely to want to go out and socialise. We also thought that that would limit the burdens on the police. That is an important matter to take into account. That is why we consulted on just those two days.

My noble friend asked about the costs to local authorities. I am not aware that there will be any greater costs as a result of the order, although there might be as a result of Diamond Jubilee celebrations as a whole, but that is not a matter that we are discussing at the moment. Certainly, I am not aware of any objections from local authorities or the LGA as a result. If there are any, I will certainly write to my noble friend.

Thirdly, my noble friend asked about the Private Member’s Bill introduced in this House by my noble friend Lord Clement-Jones, the Live Music Bill. I think that it has gone through this House and the other place and is waiting for Royal Assent. It would be wrong for me to make any comment on when Royal Assent might come to that Bill, but I know my noble friend is aware of the constitutional proprieties in these matters and knows that normally when Bills have gone from both Houses they receive Royal Assent in due course. But that is a matter way beyond my pay grade.

I hope that I have answered all the questions. I am very grateful for the support of my noble friend and the noble Lord, Lord Hunt, and I look forward to all of us being able to celebrate Her Majesty's Diamond Jubilee, something that has happened only on the rarest occasions, in the appropriate manner in due course.

Motion agreed.

Committee adjourned at 4.55 pm.