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Cities and Local Government Devolution Bill [HL]

Volume 762: debated on Wednesday 24 June 2015

Committee (2nd Day)

Relevant document: 1st Report from the Delegated Powers Committee

Clause 2: Deputy mayors etc

Amendment 18

Moved by

18: Clause 2, page 3, line 4, at end insert “, with the consent of the combined authority”

My Lords, the amendments in this group relate to the delegation of functions to the deputy mayor who under Clause 2 would be appointed from the members of the authority by the mayor. They relate more generally to the sweeping powers contained in Clause 3 for the Secretary of State to render any function of the authority to be exercised only by the mayor or, even more remarkably, the deputy mayor or any other member or officer of the combined authority whom the mayor might choose. That represents a massive concentration of power in the hands of an elected mayor. It is an unacceptable vesting of power, which he can delegate to anybody, in effect, whom he chooses.

The very authorities that have blazed the trail of innovation that led to this Bill in the Greater Manchester area did so without this effectively unfettered power. The great local government leaders of the past—from Joseph Chamberlain to Herbert Morrison and others, some of whom adorn the Benches to this day—did not have such power. It is unnecessary for the Bill to include that measure.

Amendment 18 would require the consent of the combined authority to the appointment of the deputy mayor and Amendment 20 would require the consent of the authority to the delegation by the Secretary of State of the functions exercisable only by the mayor. Amendment 21 would require the mayor to consult the combined authority on the further delegation of general functions by the mayor to a deputy. Amendment 22 deals with the provision of Section 107D(5) under which:

“Any general function exercisable by the mayor”,

may be exercised,

“by the mayor individually, or … by a person acting under arrangements with the mayor”,

only with the consent of the combined authority. The purpose of this group of amendments is to ensure that the combined authority has some influence over the delegation of hugely important powers otherwise left in the hands entirely of the elected mayor. I beg to move.

My Lords, I support the main aim of Amendment 18, and will speak in particular to Amendments 19 and 37 in this group. As the noble Lord, Lord Beecham, said, the Bill proposes a massive concentration of power in the hands of the mayor. In the context of the appointment of a deputy mayor, there has to be an appointments process that is understood publicly and has public consent. We cannot have a decision just emerging from a set of private decisions. Our Amendment 19 is designed to make the process more transparent. We do that by saying that the appointment by a mayor of a deputy mayor should be,

“subject to approval by the overview and scrutiny committee”,

and that approval can be secured,

“by a simple majority of members of the oversight and scrutiny committee”,

agreeing that the appointment should be made. We also say in proposed new subsection 1(D):

“An overview and scrutiny committee may”—

at its discretion—

“in pursuit of making a determination … hold a confirmation hearing for the deputy mayor”.

That is clearly defined in proposed new subsection 1(E) as meaning,

“a public meeting at which members of the overview and scrutiny committee may question witnesses and where the committee can compel—

(a) the mayor;

(b) the proposed deputy mayor; and

(c) any other persons that the committee considers relevant to attend”.

This is a much better way of proceeding. There are a number of examples around the world where such confirmation hearings are held, and it seems to me that it would be justifiable in this case, given the dangers that we addressed on Monday during our first day in Committee about the creation of a one-party state. So Amendment 37 would require the approval of the appointment of the deputy mayor by the overview and scrutiny committee.

This is an important issue of principle for us, and I hope that the Government will give due weight to the need to ensure that in a Bill which is proposing such a massive concentration of power, some protection of the public interest can be secured by means of our amendment.

Perhaps I may ask the noble Lord to reflect on the clear problem that could arise, which is that you might well have a mayor and a deputy mayor who do not get on. The mayor of course is elected with a popular mandate and so has a clear mandate to take office under the provisions of the Bill. It is important that the executive of the combined authority should operate smoothly, efficiently and with a sense of common purpose. Given the limited number of members of a combined authority, how does the noble Lord propose that a mayor should seek to build relations with a deputy with whom they may have little in common?

It is possible that the mayor would not get on with the deputy mayor, but what the amendments are trying to secure is the approval of an overview and scrutiny committee of the mayor’s nomination. If the members of the committee refused, other people could be nominated by the mayor. It does not say much for local government if, among all the leaders of the councils which are members of the combined authority, there is not one who can get on with the elected mayor.

My Lords, I want to support the view which has just been expressed by my noble friend Lord Shipley and to make a particular point about the process that we are now engaged in. This is an important issue of principle; in this Bill we are being asked to support a very novel procedure for which there is no precedent. I do not have a problem with major reforms, and indeed sometimes I feel that your Lordships’ House is not sufficiently radical, as other Members may be aware. But on this occasion we should pause and think carefully about what we are doing. I draw the attention of noble Lords to the recommendations made by the Constitution Committee, which says at paragraph 15 of its report:

“Although these proposals are the development of an on-going process started in the Local Democracy, Economic Development and Construction Act 2009, we note that they are being taken forward very quickly. There has been no green paper, white paper or draft bill for pre-legislative scrutiny”.

That lays upon us particular responsibilities. When, in the normal course of events, we have had a Green Paper, White Paper and even discussions between the two Houses in a Joint Committee of a draft Bill, obviously such important and valuable proposals that we have before us could be examined in considerable detail.

However, it is an unfortunate fact that shortly after a general election when there is a change of Administration, they want to get going on new legislation very quickly. That is understandable, but it lays upon this House a special responsibility, particularly when a Bill comes to us first. Again, these are new procedures and the Constitution Committee is echoing concerns that we dealt with on Monday when we were looking at the report of the Delegated Powers and Regulatory Reform Committee.

Paragraph 14 of the Constitution Committee says:

“One result is that local government in England is likely to become more complicated, as different combined authorities receive different packages of powers. This is a significant departure from past practice which has operated on the basis of a finite number of different council models. The Bill, by contrast, creates the possibility of bespoke arrangements for each combined authority. It might be argued that the proposed system is a paradigm example of demand-and-supply devolution, responsive to local needs. On the other hand there are real concerns about the complexity of the system that may result, and the degree of asymmetry which these changes may bring about. In particular, there is a potential for a significant divergence between urban and rural local government arrangements”.

We on these Benches very much welcome the statement constantly made by the Minister that these are bespoke arrangements, but there are potential dangers of confusion, not least in terms of the way in which the people of the areas concerned will view these new authorities. How precisely the relationship between the combined authority and the mayor will work out in practice is critical to that confidence in the new system. It is extremely important that the deputy mayor should at least be seen to be representing the confidence of choice of the wider group in that area, which is currently represented by the constituent authorities.

I entirely endorse the general concern expressed by the noble Lord, Lord Beecham, and hope that the Government will think very carefully indeed about these arrangements before Report.

My Lords, I hope that the Government will in fact do exactly the opposite. That last speech explains why I am so much in favour of what is being proposed. One of the problems with Britain is that we mistake neatness for civilisation. We constantly think that if we get everything in the same sort of box we can then defend it. I want to compliment the Government on producing something that is designed to meet the needs of particular places and which will, in fact, be different from one place to another. There is an idea that it will cause confusion—but confusion for whom, and between what? It will not concern people in one place that, if they stood outside these shores, there would be a difference between their position and some other people’s position. Inside, there need be no confusion whatever. It seems perfectly reasonable to say that this is a good answer for a particular place. The Government may have the answer wrong but one cannot argue that the reason they have got it wrong is that it is different from the answer somewhere else. I believe very strongly that it is sensible to do what we are doing.

On the issue of the deputy mayor, the idea that you elect a mayor and then have a situation that makes it difficult for him to have a deputy mayor with whom he or she works is rather odd. I would much prefer to have the system that is being proposed, and if it is argued that we have not done this before, thank God, because we have not been very successful with what we have done before—so let us not be too pusillanimous about doing something new.

We should look at any of the successful cities in the rest of Europe—it is about time that we learnt from the rest of Europe instead of constantly telling them that they should listen to us. The British seem to have a very interesting one-way system: we know it all and tell them, and if they happen to have something that is more successful we complain about it. I want to learn from the rest of Europe because I think there is a great deal to learn. One thing is the way they organise cities. The urban success of most of the countries of Europe compared with us is very notable. Part of that is because we have been foolish enough to remove the local powers of finance and the rest. I accept that; I fought against it and lost, but that is one of those things.

Another part of it is that we have lost the historic position of quite distinguished individuals becoming, in a real sense, representative of their cities. It is suggested that they did that without all these powers; the noble Lord opposite made that point. But we live in a different world. I think that they did it by having those powers, whatever the law said. It is remarkable: if you look at some of the powers that these individuals used, they were very much closer to what is being presented now.

I hope that we will give this a fair wind because we need to give real expression to the feeling of place that, I am happy to see, is growing in our great cities. There has been a gap and I want that gap filled. The way to do that is to let people feel that this is their place. Let us do it differently, so that it fits each of them. Let us not be afraid of real experiment. In particular, let us not muck it all up by insisting that the elected mayor has somebody that they do not want as deputy mayor because that happens to fit some particular view of how you should run a democracy.

My Lords, I hope that I am not misrepresenting the noble Lord, Lord Deben. I think that he said the British have an obsession with constitutional neatness, or words to that effect. That is rather odd coming from a Member of this House. The one thing that this House does not have is constitutional neatness; none the less it works pretty well most of the time. Certainly most of our dealings on constitutional matters show exactly the opposite, if that is an accurate reflection of what he said; we certainly are not obsessed with constitutional neatness. For example, we have accepted for a long time that the government of Scotland is different from other parts of the United Kingdom; this long predates the strong movement that exists at present for independence. But that is not the main point that I wanted to make.

I have great sympathy with these amendments, but only because they are trying to make a silk purse out of a sow’s ear, if I can put it like that. They all derive from a kind of fear or anxiety of this potential authoritarian figure without qualification or checks and balances that we are creating in the form of a directly elected mayor. As I have said several times, I infinitely prefer parliamentary systems to directly elected, presidential systems. These amendments express a recognition of what I have always feared about such systems: you elect someone and they can pretty well act in an untrammelled way for the next four, five or six years, or however long it happens to be. These amendments are designed to say, “Let’s be a bit worried about this now. Let’s write in a number of qualifications that ensure that the mayor is not in a position to do that”.

To that extent, I support amendments along the lines being proposed. But—and it is a colossal but—we must recognise that the system we have at present, both in Parliament in the House of Commons and in local authorities up and down the length of the United Kingdom, is one in which the Executive are subject to genuine, democratic checks and balances in the form of a council, or a House of Commons, that checks the Prime Minister or the leader of the local authority to make sure that they do not get too big for their boots, if I can put it in those terms. That is the joy of that kind of system. If, for some reason or another or for some ideological principle, we decide that it works well in the United States and we ought to do it here—or whatever the motivating factors are behind the obsession that all three parties seem to have with directly elected mayors—we certainly need to make sure that a directly elected mayor is subject to some kind of ongoing scrutiny, and checks and balances on the powers that he or she decides to exercise. So I support the drift of the amendments.

My Lords, I would have sympathy with my noble friend Lord Grocott if the mayor were able to act in an untrammelled way. Coming back to the reality of the Bill rather than grand constitutional fears about what might happen if circumstances took a different course, new Section 107C says:

“The mayor for the area of a combined authority must appoint one of the members of the authority to be the mayor’s deputy”.

In fact, the choice of deputy is very severely constrained. The deputy must be a member of the combined authority, which will limit the choice to a small number of people.

The issue before us is not a great constitutional principle of whether the choice of deputy should be constrained in a way that acknowledges the representative credentials of the combined authority—it is so constrained under the Bill—but whether there should be a further process, as proposed by the noble Lord, Lord Shipley, of consent by the scrutiny committee to the choice of one of those members as deputy. This is a practical issue, in my view, not a constitutional issue. The practical issue is that it is important that the mayor, who comes with a mandate, appoints a deputy with whom he or she gets on.

Those of us who have been engaged in these relationships all know that in practice a deputy mayor will not be appointed who significantly constrains the authority of the mayor, because the mayor is sitting there with a large mandate. There are checks and balances. The combined authority has significant powers to constrain the mayor and to agree the mayor’s actions. If the mayor does not get on with or have confidence in the deputy, what will happen in practice is that the mayor will rely on advisers rather than the deputy mayor. That is not a healthy state of affairs. The mayor has a mandate. The mayor is constrained in the choice of deputy to appoint only a member of the combined authority. It seems a constraint too far to require that choice to be agreed by the scrutiny committee. Of course, in the nature of the political relationship between the mayor and the scrutiny committee, the scrutiny committee itself may well be fairly hostile to the mayor. It is perfectly possible that that will be the position that the scrutiny committee takes.

My Lords, the noble Lord is referring to Amendment 19 but what does he think about his own party’s Amendment 18, which requires the combined authority to agree the appointment of the deputy?

I would have more sympathy with that because of course that will be the colleagues from the executive of the combined authority agreeing. But there will still be an issue if it is not possible to appoint a member of the combined authority in whom the mayor has confidence. There are some practical issues here. The choice is already constrained. If you constrain it still further, that will not enhance accountability and democracy but may just oblige the mayor to rely on informal rather than formal officeholders.

My Lords, I will deal first with Amendments 18, 20, 21 and 22.

Amendment 18 would require the mayor to obtain the consent of the combined authority before appointing the deputy mayor. As the Bill stands, the deputy mayor is appointed by the mayor from the members of the combined authority, as the noble Lord, Lord Adonis, said. The mayor may, if she or he thinks fit, remove the deputy mayor from office and appoint a new deputy mayor. The Bill’s provisions align with a local authority mayor’s current powers to appoint a deputy mayor. In practice, a mayor will consult some or all of the members of a combined authority about a deputy mayor appointment. At the very least, the mayor will consult the person she or he is minded to appoint, and may well take the views of other members of the authority about this.

For mayoral governance to be effective the mayor and the deputy mayor must be able to work together and the mayor must have confidence in her or his deputy, as again the noble Lord, Lord Adonis, said. More significantly, the mayor has been directly elected by the people of the combined authority area and has a clear mandate, a mandate which the deputy mayor will have a role in helping the mayor to fulfil. It would be wrong in both principle and practice for the members of the combined authority to have an ultimate say over who is the deputy mayor, which would be the case if this amendment were made. It is wrong in principle since the mayor, with his or her mandate, needs to be able to have a say over who is the deputy who will assist the mayor to deliver what he or she has promised the voters. It is wrong in practice, since giving the members of a combined authority the ultimate say as to whether a person can or cannot be deputy opens up the possibility of appointments being made which would frustrate or hinder the mayor and create division almost from the outset, as the noble Lord, Lord Adonis, said.

We need to remember the purpose of all this. It is not about forms of governance for their own sake. It is about putting in place the governance needed to support that devolution of powers which is now so urgently needed, as my noble friend Lord Deben said, if this country is to achieve the economic competitiveness and productivity on which the prosperity of all depends. Requiring the combined authority to consent to the deputy mayor’s appointment is not a sensible check or balance on the exercise of executive functions. It risks creating arrangements which frustrate the exercise of these powers, and hence I invite noble Lords not to press this amendment.

Amendments 21 and 22 would likewise simply risk frustrating the exercise of the mayor’s executive functions, and hence frustrate the very purpose of a devolution deal. These amendments would require a mayor to consult the combined authority whenever the mayor wishes to delegate a general function to the deputy mayor, another member or, indeed, an officer. As the Bill stands, the provisions relating to delegation align with the policy for a local authority mayor or leader, who may arrange for the discharge of functions by members of the executive or officers of the authority. Although the mayor may delegate functions, the mayor remains accountable for any actions taken. The mayor is accountable directly to the electorate.

I understand the motivation behind these amendments, which is to ensure that a mayor is indeed effectively held to account, that the executive actions of the mayor are transparent and that people can have confidence that the mayor will properly exercise his or her functions; in short, that while there is the capacity and scope for strong executive action, there are equally the right checks and balances to give that confidence, to ensure accountability and to deliver transparency. However, confusing executive and non-executive actions by involving members of the combined authority in decisions such as how the mayor decides to do his or her job is not providing these checks and balances. These are provided by strong and effective scrutiny, as we will discuss.

I turn back to Amendment 20, which would require the Secretary of State to obtain the consent of the combined authority before making an order providing for a function to be exercisable only by the mayor. I must make clear again that a devolution deal will be agreed only where there is consent from the combined authority or, in the case where the deal also creates the combined authority, the constituent councils. The devolution deal would set out the functions to be exercised by the mayor—the mayoral functions—and those that are to be exercised by the combined authority. The details of the deal will be implemented through an affirmative order, so the arrangements regarding the scope of the mayoral functions will also be fully scrutinised and approved by each House of Parliament, and any order creating or modifying a combined authority is made with the consent of the constituent councils. Hence, we are very clear that the combined authority and/or its constituent councils must agree which functions are mayoral functions and which functions are to be exercised by the combined authority. I am ready to look to ensure that the Bill makes this clear in every circumstance that can arise.

I turn to Amendments 19 and 37. As the Bill stands, the mayor appoints a deputy mayor from the members of the combined authority. This is an action that properly belongs to the mayor and aligns with a local authority mayor’s power to appoint a deputy. The mayor has been directly appointed by the electors, with clear responsibilities and the accountability that goes along with them, and a deputy mayor will have a role in supporting the mayor to fulfil these responsibilities. For an effective partnership and the successful devolution of powers, the relationship between the mayor and deputy needs to work. The requirement for an overview and scrutiny committee to approve the appointment, and to have the power to void it, may frustrate and very much damage this relationship. In practice, a mayor will consult some or all of the members of a combined authority about a deputy mayor appointment, and may well take the views of other members of the authority about this. Adding an extra requirement of consent for a deputy mayor’s appointment is to add an extra layer of bureaucracy, which we are so keen to avoid, and may obstruct the successful devolution of powers that we are trying to achieve.

The noble Lord, Lord Shipley, asked about confirmatory hearings. Those hearings are used but their place is usually where the executive is making an appointment to a public office. The appointment of a deputy mayor is not in this process; rather, it is part of the process for creating the executive.

My noble friend Lord Deben made the point about the clarity of the Bill, on which I commend the Government, and the need for individual areas to do exactly what fits their area; hence the bespoke nature of each deal. With these assurances and the explanations that I have given, I hope that the noble Lord, Lord Beecham, will agree to withdraw the amendment.

My Lords, maybe I should know this, and I do not, but what provision is there without going via the courts for the public removal of a mayor who is regarded as underperforming in their duties? A lot of the Minister’s comments were about transparency, accountability and the authority and legitimacy that they get from direct election, and therefore that they must have a deputy who is aligned with their own views. I understand that argument, although I do not necessarily accept it. But at the moment, within Parliament and certainly within local government, most leaders—apart from having to win their elections every four years—may be required to stand for re-election annually for votes of confidence by their group. They can be removed if they are not regarded as performing appropriately.

On the assumption that a mayor may be elected only every four years or every five—we do not yet know, as we have not had that discussion—how is the accountability to the electorate to be exercised unless the Minister is willing to consider some sort of recall motion? It is clear that the combined authority does not appear to have any leverage over the mayor, in the way that a group would at the moment over the leader of their local authority. Maybe I should know this and it is in some subset of the briefing on the Bill but I cannot find out how, short of going through the courts, you could hold the mayor to account for their actions until that mayor stands for re-election, which may be four, five or six years down the line.

My Lords, the noble Baroness has answered the first part of that question herself because it is indeed through the ballot box that the mayor could be removed. I do not know whether she is aware that there is an assumption now in local government that leaders have four-year terms, unless they are indeed removed at the ballot box through election.

But does the Minister agree that the leaders would have four-year terms unless their group decided that they were not appropriately fulfilling the functions for which they were chosen, in which case there would be either quiet or less-quiet discussions, and that person would stand down?

My Lords, authorities which fail to fulfil the duty of best value go into statutory intervention. If things were that bad, that would be the process but there is now an in-built assumption in local authorities that a leader has a four-year term, unless removed by full resolution of the council. However, for the mayor it would be via the ballot box. On the recall mechanism, there is no such mechanism within local authorities and this provision multiplies the local authority provisions up. If a mayor is corrupt we are on to a different level, as I think the noble Baroness understands.

I understand absolutely that it is a different ball game when corruption is involved, as with some of the issues associated with Tower Hamlets. I am not talking about that. My experience of both district councils and county councils is that there may be a regular turnover of leaders within the four years if they are not driving through the agenda on which their group fought the election and they have failed to deliver the manifesto. Leaders on Norfolk County Council, in that case from the opposition party, have been overturned. In my city council, the leader has to be re-elected each and every year and there is occasionally, if not regularly, a change of leadership in the course of that because the leader has lost the confidence of their group. That is perfectly proper and usually happens because the ward councillors, one-third of whom may have had elections each year, are getting that feedback on the door-step from their constituents.

In other words, there are quite effective, if subtle, ways of ensuring that the current leaders of local authorities continue to deliver their manifesto and carry the consent of their group, who are also regularly standing for election. However, as far as I can see, once a mayor has been elected, he or she is free from any such scrutiny, let alone from recall, by his or her electorate. The leader of a group is indirectly elected, and can be recalled by that group; the mayor is directly elected but apparently cannot be recalled by the electorate. Could the Minister help me on this?

I certainly can. With other mayoral systems—for example, the Mayor of London and mayors elsewhere—accountability and the way to change the status quo is via the ballot box. There is no provision for recall within local authorities that I know of. Unless something has recently been introduced, there is no mechanism of recall. In the discussion that the noble Baroness is having with me—I am sure she will tell me if I am wrong—there is perhaps an additional suspicion around a mayor which there is not around local authority leaders. I take her point that local authority leaders are removed in subtle or not so subtle ways, depending on where you are, but for mayors the ultimate accountability is via the ballot box.

Can the Minister enlighten me on one point and agree with me on a second? First, when it is said that the deputy mayor must be a member of the combined authority, does that mean a councillor on one of the local authorities that comprise the combined authority rather than someone on the board, as it were, of the combined authority? Secondly, would she agree with me that, in practice, once one moves away from London, the number of local authorities that comprise the combined authorities is relatively small? We are not talking about 30 or more—in South Yorkshire it is four and in West Yorkshire five or six. It is inconceivable that an elected mayor could make an appointment without careful consultation and discussion with the leaders of that small number of constituent local authorities. In practical terms, the mayor would have to consult carefully, as he or she would consult carefully on any policy issues, because without that the mayor could not govern effectively. There is a degree, I think, of suspicion about the mayor. If a mayor is appointed, that person is not going to be dealing, in most parts of the country, with 30 or 40 local authorities. The proposal being put forward is unnecessarily cumbersome and flies in the face of the reality of how the mayor would have to work.

I thank the noble Lord for that very useful intervention. First, he asked whether choosing a deputy mayor from the combined authority would mean choosing a councillor. Yes, it would, and that councillor would in fact be a council leader. Could the mayor make an unpopular appointment? He could, but it would be a very foolish mayor who made an unpopular appointment or chose someone who did not resonate and engage with the other members of the combined authority.

I am grateful to the noble Baroness. Am I right in understanding that it must be not simply an elected councillor but a leader of one of the constituent authorities? In practical terms, that means that a mayor would look extremely foolish if he or she selected somebody as a deputy who was not accepted by the leaders of a small number of local authorities.

My Lords, I have a slight correction on this. In those cities with elected mayors—that is, Liverpool—those elected mayors are not councillors. They have to give up their local council position when they become the elected mayor.

My Lords, we must take into account and deal with the important point raised by the noble Baroness, Lady Hollis, which would mean that an elected mayor, whatever he or she does, cannot be dismissed. That could be a very serious problem. After all, the House of Commons in the last Parliament decided that Members of Parliament could be recalled if they do not produce the goods or do their jobs properly. Surely an elected mayor with enormous responsibilities ought to be able to be removed under certain circumstances in the same way as Members of Parliament.

My Lords, Members of Parliament can be dismissed via the ballot box. If Members of Parliament behave in a way that brings Parliament into disrepute by their actions, they can have the Whip withdrawn from them. In the same way, a mayor who behaved in a disreputable manner could see intervention by government and be dealt with in that way. There are checks and balances. We are talking about levels of unpopularity, bad behaviour or behaviour ill-fitting the position of mayor.

The point I was making was that in the last Parliament new legislation enabled electors to get rid of their MP by a certain process if they did not come up to scratch. That was something new and never done before. I cannot see why Members of Parliament should be able to be recalled but not a directly elected mayor.

My Lords, there is not a process for local authority councillors to be recalled—or for local authority leaders or any other local authority mayors. This would be an anomaly were it to be introduced.

I will stop pushing on this point, but I have one last question that I am still not clear on. That may be because we have not yet got to the point about the length of the mayor’s term of office and the co-terminosity or otherwise of other elections. However, one could easily see a combined authority with, say, five bodies where one or two might be NOC while the other three, because their elections do not occur at the same time as the mayoral elections, might have leaders of different political persuasions so that none of the leaders was of the same political persuasion as the directly elected mayor. I assure the Minister that, as I am sure she is aware, that will happen. We have seen it between elections for local government and elections for MPs where we get very different results. Indeed, some people quite deliberately cross-vote to get precisely that outcome. I have seen that in Norwich on many occasions. What then happens if the mayor has no leaders politically sympathetic to the views on which he was elected?

My Lords, the noble Baroness makes a very interesting point. Other points have been made at length in this House about single-party states, but in terms of election periods or cycles being out of kilter because of different types of elections, I would imagine—although I will confirm this with the noble Baroness—that they are the sorts of things that would need to be ironed out when a devolution deal was done on how that combined authority’s elections would pan out. I am thinking of the Greater Manchester situation, where we are in thirds and all synchronise nicely. But I can foresee that process.

My Lords, I am not sure whether I am going to be helpful to the Minister, but would it be possible that, between elections, the Secretary of State could remove all the functions from the mayor, so that they would stay with the combined authority members?

My Lords, if that were to happen, the Secretary of State would have to disband the combined authority and something in its place would have to be set up.

I would like to correct the comment that I have just made and come back to it in a future group, because I have clearly got it wrong.

That just illustrates the complexity of the matters that we are discussing. I refer to one matter that the Minister mentioned, when she said that the deputy mayor must be the leader of a council which is part of the combined authority. I am not sure whence that arises, as it is not in the Bill. It may or may not be the case that combined authorities consist purely of council leaders.

The noble Lord is correct, in fact—it would usually be a local authority leader, but would not necessarily always be. It has to be a member of the combined authority, but it would in usual circumstances be a leader.

That comes back to the clarification that we asked for—and we are getting a little lost in it. Is an elected councillor in one of the constituent authorities who is not a leader a member of the combined authority in the sense that it is being used? In other words, could a mayor choose somebody as a deputy who was a back-bencher in any of the local authorities, to put it simply, and not a decision-maker on the board of the combined authority? Would that be possible?

That is a good question—particularly if there were no leaders in political sympathy with the mayor and therefore he or she had to scrabble around to find a deputy and had to go to a minority party, which might be very minority indeed.

My Lords, the deputy mayor has to be a member of the combined authority, not just a councillor in one of the councils.

So the shape and construction of combined authorities may vary, but there will be a distinct membership, as the Minister has just confirmed, of the body defined in whatever way ultimately emerges as the combined authority. That much is clear to me —it may not be clear to others, but then so much of this debate is, I suspect, not going to be entirely clear to all of us. I think we can move on from that point, unless the Minister wants to come back.

Well, we have agreed on something. Whether there will be any more agreement before the afternoon is over remains to be seen.

Much of the discussion that has taken place has been about the appointment of deputies. The noble Lord, Lord Deben, and my noble friend Lord Adonis have spoken particularly about the question of the choice of deputies. That is an important issue, but by no means the only issue.

To me, the major concern is the question of the delegation of powers by the mayor to deputies or, as the Bill makes clear, to any other member or officer of the combined authority that the mayor might choose—not just a member of the combined authority but an officer, whether a council leader or otherwise. That is a significant power that raises significant questions of accountability. It is those matters in particular that the amendments that I have moved seek to rearrange, requiring, as they would, consent to the appointment of a deputy mayor from the combined authority and, more particularly in relation to the delegation of functions exercisable only by the mayor—a decision which would be made by the Secretary of State and limited to the Secretary of State—it seems to me that they ought to be matters on which the combined authority would agree. The issue goes further than that, though, because there may well be a further delegation of general functions by the mayor to a deputy. The amendment requires only that the mayor should at least consult the combined authority about those matters; at the moment, there is no requirement to do so under the Bill.

Amendment 22, as I said, deals with the provisions in new Section 107D(5), where any general function may be exercised by the mayor or any individuals appointed by the mayor. Again, the amendment seeks to ensure that there is a degree of consent to what could be a very extensive delegation of powers. The experience of the past few years is that not all mayors have been as responsible as one might have wished. There have been a number of cases in which mayoral powers have been exercised in a way that ultimately has led people in the locality, not just councillors, to reject the mayoral role. As I say, three councils have abandoned it. We are not necessarily dealing with people whose judgment can be relied on, and all that we are seeking here is that there should be a proper measure of consultation between members of the combined authority and the person who would be vested with these very wide powers by the Bill.

The noble Lord of course makes a very important point. One of our difficulties at the moment is that we have not yet reached the role and responsibility of the scrutiny committees. In addition to the point that he is making, consultation with the combined authority on these matters of delegated powers, which is absolutely valid, may well be something that we think in due course the scrutiny committee should have some sort of role in. At the moment, though, we have no idea what that role might be. I entirely endorse the point the noble Lord is making but reinforce it with my own point. As often happens in your Lordships’ House, we are trying to take carts and horses in the right order but they tend to get muddled up together.

I am grateful to the noble Lord. He will be less grateful to me when I say that I am afraid I do not agree with the amendment that his noble friend Lord Shipley moved in relation to the role of the overview and scrutiny committee in the appointment process; I do not think that that is a proper function for such a committee. We will come later, as the noble Lord has just said, to the functions of the overview and scrutiny committee, and it seems to me that its job should be to look at how the mayor and the combined authority are working, in terms of both looking at policy as it is made and looking forward to future policy. I do not think it appropriate for those committees to play a role in making the appointments, and we will not be supporting the noble Lord, Lord Shipley, in that respect.

Between us, the noble Lord, Lord Shipley, and I led Newcastle City Council for something like 20 years—with varying degrees of success over time, no doubt. There have been many distinguished local authority leaders. Right now I am looking at a distinguished local authority leader taking his place on the Benches behind the Minister, who was herself a distinguished council leader. My noble friend Lord Woolmer was a distinguished council leader, although I detect a slight difference of opinion between us on some of these matters today—but then nobody is perfect.

It seems to me that those who see in the mayoral system something infinitely better than anything we have had before are making a great mistake. What worries many of us—certainly on the Labour Benches, I think on the Liberal Democrat Benches and perhaps in other parts of the House—is the enormous concentration of power which will be granted or withheld by the Secretary of State in a manner which diminishes accountability locally. For those reasons, we shall certainly wish to return to these matters.

Would I not be right to say that the noble Lord is going to have at least part of the privilege of deciding whether the north-east wants to have a system with a mayor and the devolved powers that will go with there being a mayor? If he does not like the system, I assume he is going to decide that the north-east should not have a mayor in its combined authority.

Much as I would like to be able to take decisions on behalf of the whole population of the north-east, I would not be able to do that. My view, which may be shared by others, is that we would much rather not have imposed upon us a requirement for an elected mayor for the combined authority which, as the noble Viscount well knows, would run from the Tweed virtually to the Tees and from the Cumbrian border to the North Sea coast—a very large area and somewhat different from some of those which have been mooted. Of course, the people will not be given a choice as matters at present stand. It will be a take-it-or-leave-it decision that councils or the combined authority will have to take on behalf of the people; otherwise, it is said, they will not receive the powers. That is part of the problem.

So far as the detailed arrangements are concerned, our amendments would deal with the situation where, by agreement or otherwise, a mayoral system is created within the combined authority area. We will need to return to some of these matters on Report. For the moment, I beg leave to withdraw the amendment.

Amendment 18 withdrawn.

Amendment 19 not moved.

Clause 2 agreed.

Clause 3: Functions

Amendments 20 to 23 not moved.

Amendment 24

Moved by

24: Clause 3, page 4, line 31, at end insert—

“( ) Where the geographical boundary of a combined authority does not correspond with the area of the police and crime commissioner in question, the Secretary of State shall bring forward proposals to make alternative arrangements.”

My Lords, this is a probing amendment in relation to the controversial proposal under new Section 107E to permit mayors to assume the role of police and crime commissioner. In fairness, this is not a case in which the Government are imposing that as a requirement—at this stage, at any rate—but it is an option on the table that the authorities in Greater Manchester have chosen to adopt, which is no doubt satisfactory at least to the police and crime commissioner in that area, since he has become the interim mayor of Greater Manchester. He is a very able person, and if we have to have somebody in that role I have no doubt he will do an excellent job.

However, the problem that may arise, and does arise in the case of the north-east, is that the boundaries of the combined authority include more than one police and crime commissioner area. In the north-east we have two police forces and two police and crime commissioners, one for Northumbria and one for Durham. The same difficulty may well arise in other areas, such as the West Midlands or the south-west. Not only may there be two or more distinct police forces with their own police and crime commissioners within the boundaries of a proposed combined authority; there may be police authorities and areas represented by police and crime commissioners which are only partially within a combined authority. There may be an overlap between the boundaries of a combined authority and police authority areas.

It seems that in that event, it would be inappropriate simply to consign all or part of an existing area to the responsibility of a combined authority mayor. Therefore, the amendment calls on the Secretary of State to propose alternative arrangements to meet these geographical difficulties, if I may put it in that way. I invite the Minister to explain how the Government intend to approach the issue and what kind of parliamentary approval would be sought. For example, would further amendment to the legislation which established the position of these police and crime commissioners be required? I hope the Minister can deal with that point today, but if not, perhaps it can be discussed before we reach Report. I beg to move.

My Lords, I agree with the concerns expressed by the noble Lord, Lord Beecham. I want to ask the Minister about the nature of a police and crime commissioner appointment. I recall that when we debated the terms of those appointments in your Lordships’ House not that long ago, these were clearly full-time appointments—substantial salaries were to be paid. Does the Minister agree with me that if a decision can be made that an elected mayor can undertake those functions along with all the other functions that may be devolved or delegated to them by the Secretary of State, it is very hard to see the basis on which a PCC appointment should be seen as full time? If it should not, what is the implication of that for other police and crime commissioners?

My Lords, Amendment 24 would insert a new provision within new Section 107E to require the Secretary of State to bring forward proposals to make alternative arrangements where the geographic boundary of a police and crime commissioner area does not correspond, as noble Lords have said, with the area of a combined authority.

New Section 107E would enable the Secretary of State to provide, by order, that the mayor of a combined authority area would exercise the functions of a police and crime commissioner, subject to the necessary consent from the appropriate authorities. If such an order were made, new Section 107E would also require the Secretary of State to provide that there is no separate police and crime commissioner for the area of the combined authority. The Bill also enables secondary legislation to be made which creates the position of mayor for the area of the combined authority, while retaining a separate position of the police and crime commissioner for the policing area.

The Bill does not prevent a mayor also being given police and crime commissioner functions where the relevant combined authority area does not correspond to a single police area. Should it be considered appropriate to transfer functions to a mayor in such a case, powers in existing legislation would enable police areas to be altered to facilitate such a scenario. On this basis, mechanisms are already available to enable alternative arrangements to be made. However, as we know, Greater Manchester’s devolution deal is the only one to date which will include a directly elected metro mayor also taking the police and crime commissioner function. We also know that in this area the police force boundary corresponds to that of the combined authority.

We will consider any future proposals to transfer police and crime commissioner functions to the mayor for a combined authority area on a case-by-case basis, and will transfer these functions where appropriate. Clearly, geographic issues will be an important consideration in this regard. With these explanations and assurances, I hope the noble Lord will feel content to withdraw the amendment.

My Lords, I do not know whether the noble Baroness has answered the question put by the noble Lord, Lord Shipley.

I am quite happy to have the question answered later. We will be going on to another set of amendments that deal with the nature of the appointment of a police and crime commissioner, and I would be very happy if the Minister wanted to reply at that point.

My Lords, as I indicated, we will not be pressing this matter at this stage. I therefore beg leave to withdraw the amendment.

Amendment 24 withdrawn.

Amendments 25 and 26 not moved.

Amendment 27

Moved by

27: Clause 3, page 4, line 42, at end insert “all”

My Lords, my noble friend Lord McKenzie is resting temporarily but will occupy centre stage shortly, which will give me some relief and perhaps your Lordships as well.

This group of amendments deals not so much with the boundaries of the proposed arrangements for police and crime but with the functions of the police and crime commissioner that would be taken over by an elected mayor if a combined authority and its mayor chose to take that particular route. The amendments clearly address the controversial concept of transferring powers and functions. PCCs were created, as we have heard, with a great fanfare three years ago and were met by a public response of virtually total indifference.

The Government’s proposals in new Section 107E at least have the virtue of requiring the consent of the appropriate authorities. Amendment 27 makes it clear that this consent must be unanimous. However, the section does not deal with the issue raised in the debate on the previous amendment of where the boundaries do not coincide. That is why Amendment 24—to which we will return—requires the Secretary of State to,

“bring forward proposals to make alternative arrangements”.

It will be recalled that the turnout in the PCC elections plumbed the very depths of political engagement, barely exceeding the total share of the vote achieved by the Liberal Democrats in the recent general election. However, the notion that the mayoral role should encompass that of the police and crime commissioner gives a whole new meaning to the hallowed phrase “one man, one vote”, given the more extensive powers vested in the so-called metro mayors. One man’s vote would, as the Bill stands, effectively be the only vote that would count over a huge range of budgets, services and policies, and, if the Bill’s permissive proposal were activated, over a huge area of public policy and administration in relation to police and crime. That becomes part of the mayoral function, possibly carried out by the mayor himself or herself, or possibly delegated—and we have talked a little about delegation.

The question is: what is the Government’s long-term vision for the police service? Do they see a mix of mayoral and PCC models, and how sustainable would such a binary system be, especially in the light of hugely difficult financial pressures across all public services? Already the police service is suffering significant cuts, with more apparently to come as the Home Secretary airily dismisses concerns about what is happening to our police service.

Amendments 29 to 32 deal with a range of issues. Amendment 29 establishes the need for a proper appointment process where the PCC functions are to be exercised other than by the mayor himself. Apparently it will be for the mayor to choose whether that will be the case or not. Amendment 31 gives the Secretary of State power to allow the equivalent of the police and crime panel, which currently exists, to suspend any relevant person exercising PCC functions on behalf of the mayor. Amendment 32 applies the same disqualification procedure for a mayor’s appointee to a PCC function. There needs to be some mechanism to deal with that situation, which does not on the face of it appear to be dealt with in the Bill.

Finally—and, it might be thought, crucially—Amendment 30 requires the Secretary of State to provide for the protection of police budgets transferred to the mayor, should the mayor opt to take the police and crime commissioner functions into his functions and those of the combined authority. That would be an important safeguard, should that take place. It would effectively ring-fence the expenditure which hitherto had been the responsibility of police and crime commissioners and, before that, of the police authorities. I trust that the Minister will be able to give some assurances about that crucial financial issue. I beg to move.

My Lords, a number of issues arise from this group of amendments. I look forward to the Minister’s response to the point that I raised in the debate on Amendment 24. I am getting very confused about the Government’s proposals for the election or appointment of police and crime commissioners. The noble Lord, Lord Beecham, raised a set of points that need to be very carefully examined and responded to. Therefore, in addition to the question that I have already posed about whether or not these are full-time appointments, I am really very concerned about the public interest. For example, will the general public know when a mayoral election is taking place that the person elected as mayor may, in due course, also become the police and crime commissioner? If there is a set of elections for these full-time posts now, what are the implications and how will it work for someone standing as elected mayor who may then become the police and crime commissioner?

Interestingly, in the Bill, the Government have proposals to suspend or disqualify a PCC, but, as I understand it, the Bill does not provide similar powers for the suspension or disqualification of the elected mayor. We have to tidy this up. At the moment, we have elections for a police and crime commissioner. Will the election of a mayor include clarity in advance of the ballot that they are also a candidate to become the police and crime commissioner? We seem to be giving the Secretary of State enormous power to change the terms under which an elected mayor has been elected, to enable them to do something else—become the PCC, which is, by its nature, a full-time post.

I am absolutely at one with the noble Lord, Lord Beecham, and the amendments that ask for an appointments process. If we do not have an electoral process for the PCC, surely there should be an appointments process if the person elected mayor is also to become the police and crime commissioner.

My Lords, I entirely agree with the noble Lord. I apologise for omitting reference to two amendments in my name, which partially deal with the points that he has made—Amendments 31 and 32. The Bill permits the suspension of a mayor’s PCC role, and Amendment 31 would allow for any person who has had a PCC function delegated to them by the elected mayor to be suspended also. Similarly, where there is a disqualification of a mayor’s PCC role, the amendment would allow for the disqualification of any person who has had that function delegated to them. I apologise to your Lordships for not having referred to those points in my relatively brief opening remarks. I hope the Minister will be able to deal with them in due course.

My Lords, I hesitate to disagree with my noble friend Lord Beecham, for whom I have enormous respect. However, my recollection of the police and crime commissioner thing is that, when it came to this House a few years ago, on this side of the House we all thought that it was a pretty bad idea. We were rather confirmed in that view by the fact that the percentage polled by these people in the elections was pathetic and they really have very little democratic legitimacy.

Certainly in my own area, the commissioner is seen to regard himself as a very big noise, to be driven around in chauffeur-driven cars at public expense, employing advisers on his behalf. Surely we want to get rid of all this. Surely, being able to transfer those functions into the functions of an elected mayor is something we should welcome. The whole point of an elected mayor is to bring a breath of fresh air into the democratic politics of local government. I have devoted not nearly as long a part of my life to local government as the noble Lord, Lord Beecham, but I have done about 15 years of service one way or another on local authorities and I think the elected mayor idea has the potential to bring democratic life to big cities and to introduce a new style of politics. If we are to have elected mayors, the police and crime function naturally fits in.

There are obviously boundary issues that someone has got to sort to out, but that must be the Secretary of State—no one else can do it. The idea that everything has to be done by the agreement of existing authorities is a recipe for the status quo, and I feel that we are somehow on the wrong track.

My Lords, it has to be about more than swapping the police and crime commissioner’s police car for the mayoral car; the appointments process is hugely important. However, I want to speak to Amendment 28 in the name of the noble Earl, Lord Listowel. Unfortunately, he cannot be here at the moment, so I volunteered to say a few words on it. It makes perfect sense—

I wonder whether the noble Lord might withhold his comments. A very important issue is raised by that amendment, but perhaps we could continue to explore the issue that we are on and then move on to the new amendment.

I am awfully sorry, my Lords. As I sat down, I squeezed my mobile phone and suddenly a voice was saying something into my ear, so I did not hear a word that the noble Baroness said. I mean that as no disrespect.

I shall try to continue. Amendment 28 is quite clear. If an elected mayor takes on the position of police and crime commissioner, we should be clear as to what those functions and roles are. I have, and had, grave reservations about the whole notion of police and crime commissioners, but we have them. If we look throughout the land, we see that they have interpreted and developed their powers in all sorts of interesting ways. Not only did the Select Committee’s report show that there have been significant variations in the interests and approaches taken across the country; it criticised the weak accountability of the police and crime commissioners. The noble Earl, Lord Listowel, suggests in his amendment that we might have an opportunity to develop the policing and crime functions should they be taken up by an elected mayor.

My Lords, having listened to the debate so far on the various amendments, I am mightily glad that I am not the Minister. I hope that this does not sound patronising, but she has handled this Committee with good humour and has attempted to answer all the questions. However, my word, if she can square this particular circle of fitting the police and crime commissioners into directly elected mayors, that would be an achievement worthy of note and a chapter in Erskine May.

We have to have a history lesson for a moment. I do not know where the idea for police and crime commissioners came from— whether from the Liberal Democrat part or the Conservative part of the coalition.

It is always interesting to unravel these bits and pieces. We might test a few more policies on that basis. So it was a Conservative policy to have police and crime commissioners, but I think I am right in saying that it was Liberal Democrat policy to have the first election in November. I do not think we can remember that particular contribution with great affection and admiration, or wish to repeat it. But the system was set up with grand language surrounding its inception, stating that in this crucial area of policing there should be a democratically elected leader accountable to the public, so that the public know whom to go to for this defined area of public life—all police and crime activity and policy in a particular part of the country. At least that was a clear objective. It fell at the first hurdle, as some of us predicted it would, because of the appalling turnout of 15% overall—in an area I know very well, Stoke, it was 9%. But at least there was clarity about the objective and the function that was being addressed.

This is where there is complete confusion. I am sure the Minister will try to square this circle, but I fear she will find it extremely difficult. We have police and crime commissioners, which for all their faults and criticisms were about a defined, agreed policy and pattern common across England. However, the virtue, almost, of the devolution pattern that we have discussed at such length is that it will be in different areas, with different functions and different managerial styles, and arranged differently between groups of leaders and the Secretary of State. If it is not completely random, its whole strength and legitimacy is that it is enabling and there will be no common pattern.

Now an attempt is being made to graft an agreed common pattern about a specific and very important service on to the myriad different structures that are planned for devolution, largely regarding directly elected mayors. It simply cannot work for all the reasons that have already been spelled out. How on earth will people know when they are electing a directly elected mayor what pattern will be established as to when the elections will take place? I will not repeat all the questions that have already been asked, but I can at least spell this fundamental problem out. We are trying to graft a common pattern on to a randomly different pattern across Great Britain.

It is almost beyond the power of parliamentary counsel to answer all the questions that are being raised in this debate. I wish the Minister well, if just for the sheer fun of watching someone try to square this circle. But surely the time has come to acknowledge that, worthy though some of the objectives may be in having police and crime commissioners directly elected, somehow or other this needs to be started from scratch. If we are to have devolution, police and crime must be part of that devolution package and there must be some consistency in the service across the country as to the type of devolution structure that will be applied in different areas.

My Lords, I support my noble friend Lord Grocott, who is absolutely right. Let me give an example. In many of the shire counties there may well be a combined authority around the leading city of the county, together with its neighbours. There may or may not be, as part of the individual bespoke package, an elected mayor. Let us assume that the authority agrees and negotiates an elected mayor for the city and the adjacent authorities. That would mean that the rest of the county is not in such a system, although there will still be the county council, of course. In the mayoral authority the police powers would come to the mayor, but unfortunately for the rest of, say, Norfolk, the police headquarters and all the resources are in the city, along with all the senior superintendents. All of the police functions spill out from the city, but the heart and the head of the police service has just been moved out of the territory of the police and crime commissioner, who will be left to look after a scattering of marginal, rural districts with no resources, no buildings and no senior staff. I simply do not see how this is even faintly possible.

My Lords, having not spoken on the Bill before, I must declare a few interests as a former president of the National Association of Local Councils, a vice-president of the LGA and a practising chartered surveyor with urban interests of all sorts. Apart from apologising for my lack of involvement in the earlier stages through a clash of diaries, my reason for intervening is to remind noble Lords that the Committee on Standards in Public Life will shortly produce a report on the subject of police accountability. I suspect that part of it will look at the role and efficacy of police and crime commissioners. Before the Minister responds, she might like to bear in mind that that particular issue is in play.

Your Lordships would not expect a comment from these Benches that is unequivocally in favour of the normal democratic processes for deciding the best way of governing accountability. I always think of my late father’s nostrum that vox populi is not necessarily vox Dei—he was a man of great religious conviction—and I think that the saying may possibly apply here. I am not convinced that mixing these two functions together is necessarily a great idea. It may be, but I do not see that it is guaranteed to be so.

At the moment, I suspect that we have a growing problem that boils down to the question of who has oversight of the regulator. That is an issue where powers are extensive and largely not subject to any sort of external oversight. They gradually accrue to themselves things that perhaps should not be accrued. There is a natural tendency—it is a tendency in human nature and I do not apportion blame for that—to try to exclude those who might loosely be termed the prying eyes of external forces. The question is one of accountability: how it sits with elected mayors, who are elected on a rather different template, and how it actually keeps the two functions separate. I would hesitate to suggest that it would be appropriate for the hard-nosed commercial thrust used by the elected mayor of one of these great metropolitan combined authorities to be applied to dealing with the police. I do not think the two are quite at one.

I thought that I should flag up those points—particularly the Committee on Standards in Public Life which, as your Lordships will know, is under the chairmanship of the noble Lord, Lord Bew. I think that its deliberations and its report will throw some light on this whole question of accountability.

My Lords, I had concluded, perhaps wrongly, that we would not see very many combined authority mayors in any great hurry. Since the deal that will be negotiated in order for there to be a mayor of a combined authority and a transfer of powers is a complicated matter, and since this is an enabling Bill to enable those deals to take place, the question of whether the commissioner’s authority is passed to the mayor will be one of the subjects of negotiation when the deal is being struck. If a combined authority—let me take the north-east—decided that it would like to see whether it could negotiate “yes” to become a mayoral combined authority but “no” to taking over the powers of the police commissioner, it would not be outside the bounds of negotiation. Some of what we are discussing comes to the point at which one would say, “Surely if a mayor is to take over the powers of the police and crime commissioner, it should happen from the start”. It should not be something which, as the noble Lord, Lord Shipley, suggested, could be done at any time in the future; it should be part of the deal.

One problem we have in debating the Bill in Committee is that from our point of view it is starting from the wrong end. It is starting from local authorities putting up their suggestions as to how their area of the country might be better governed as a matter of local government. This is not where we usually find ourselves. We are usually in the position of saying, “This is what will happen and you will obey the rules”. That is not the situation here, for better or for worse. Certainly for my part I am trying to think through as carefully as I can the implications of this change in direction. They are very complicated but I hope that we will find a way of supporting the endeavour for the devolution of much more power to local authorities.

It has been said several times in our proceedings that the problem may then become a fiscal one: where is the money coming from? I am certainly very conscious of the fact that he who pays the piper calls the tune. Perhaps I could suggest that if this whole system becomes successful in one or two places, maybe some fiscal changes will follow upon that success.

My Lords, I, too, start with an apology, having not answered the point of the noble Lord, Lord Shipley, earlier. The noble Lord, Lord Riddle—Liddle, sorry—brought up the same point, which was about how police areas would be changed. Power to change police force boundaries exist in Section 32 of the Police Act 1996. I referred to that mechanism in answer to the noble Lord, Lord Shipley, a moment ago.

The noble Lord, Lord Shipley, also asked a question, which I shall answer now because he asked it previously as well, about the full-time nature of the PCC role and how we will ensure capacity to cover PCC matters. It will be for the mayor to ensure that there are sufficient resources to fulfil all PCC functions and we have included the ability for a mayor to delegate these functions to a deputy PCC mayor. We anticipate that there will also be a wider police governance administration structure taking over the role of the PCC’s office.

If it is convenient, could the Minister indicate whether there is any intention to make arrangements equivalent to that of the police and crime panel, as well as the two points that she has already made?

If the noble Lord will indulge me, I will get on to that a bit later.

Amendment 27 seeks to amend new Section 107E, which enables the Secretary of State to provide by order that the mayor for an area of a combined authority may exercise the functions of a police and crime commissioner. Subsection (4) of this new section sets out that such an order can be made only with the consent of the appropriate authorities, as defined in new Section 107B(6). Noble Lords have asked that new subsection (4) be amended to make clear that all the appropriate authorities defined by new Section 107B(6) must consent before such an order can be made.

I reassure noble Lords that, under the current draft, all the appropriate authorities in the area would, indeed, have to give consent before an order to transfer police and crime commissioner functions could be made. As my noble friend Lord Eccles neatly said, it is part of the deal. Therefore, I do not believe that such an amendment is necessary. I would be concerned that, if adopted, the amendment might suggest that consent would be required from all the different kinds of authorities set out in new Section 107B(6), not all of which would necessarily be relevant in a given area.

Amendment 28 seeks to amend new Section 107E to place a requirement on the Secretary of State to outline, in a report to be laid before both Houses of Parliament, plans to develop policing and crime functions for mayors who take on the functions of a police and crime commissioner. The principle behind the Bill is to ensure broad consistency between existing police and crime commissioners and mayors who take on police and crime commissioner functions. On this basis, we have set out in the Bill specific functions that will be applied to every mayor for a combined authority area who takes on police and crime commissioner functions. We envisage that, generally, all remaining functions will transfer across. That is the point that the noble Lord, Lord Liddle—not “Lord Riddle”—made.

However, the Bill maintains a degree of flexibility at this stage, as there may be functions that would not be relevant in the context of a mayor exercising PCC functions, to enable transfer arrangements to be appropriately tailored to the local circumstances of the area concerned. I reassure noble Lords that there are no plans to develop the PCC functions transferred to mayors separately from the wider functions of PCCs. We will ensure that the level of accountability, transparency and service applied to a mayor taking on a PCC function will be the same as is the case for PCCs across the rest of England and Wales.

At this point, I will answer the question asked by the noble Lord, Lord Beecham, on scrutiny. The mayor will be required to establish a scrutiny panel, which will perform the same task as the existing police and crime panels. The scrutiny panel will support the effective delivery of the mayor’s PCC functions, assess the police and crime plan, monitor the budgets and retain the ability to suspend a mayor from the policing functions in certain circumstances.

For the mayor of a combined authority area to take on PCC functions, the Secretary of State will be required to lay an order setting out the detail of how PCC functions will be transferred to the mayor. Parliament will have the opportunity to fully consider that.

Amendments 29, 31 and 32 would place a requirement on the mayor to implement an appointment process for any person exercising PCC functions on their behalf, and to extend the disqualification and suspension criteria to such persons. It is our policy that the arrangements for mayors with PCC functions mirror as closely as possible the arrangements for police and crime commissioners and those to whom a PCC delegates their functions, and that is what the Bill does. It ensures that the process for delegation of responsibilities from the mayor and any appointed deputy is consistent with that for the delegation of functions from a PCC and a deputy PCC.

Schedule 1 to the Police Reform and Social Responsibility Act 2011 sets out the process of scrutiny for senior appointments made by a PCC. This scrutiny process, which covers the appointment of deputy PCCs, provides the relevant police and crime panel with an opportunity to scrutinise senior appointments and to make reports to the PCC. We consider that the current arrangements work well, and it is our intention to apply them by order in areas where the mayor for a combined authority is taking on PCC functions.

The noble Lord, Lord Shipley, asked about mayoral elections. It is not the case that a person will have two roles—both mayor and police and crime commissioner. The position is that a mayor can be given the policing powers so that among his other functions he exercises the functions of a police and crime commissioner. When people vote, they will know what the mayor’s functions are. They will vote for the mayor on this basis. Orders setting out the arrangements will be made so that this is clear before the mayoral election, and we will consider how, if necessary, to ensure that this is always the case.

On the issue of disqualification and suspension, I am aware that there are additional restrictions on deputy PCCs that are not set out in the Bill. However, I assure your Lordships that it is our intention to apply these provisions by order.

Finally, Amendment 30 would insert a new provision into new Schedule 5C to require the Secretary of State to make provision by order for the protection of police budgets where this responsibility is transferred to the mayor. To be clear, the transfer of functions from a PCC to a mayor will not directly change the way in which central government funding for the police is calculated. This will continue to be done in line with existing policies, with the funding transferred to the mayor rather than the PCC. It is also our intention that the mayor will set the level of the policing element of the precept, and we have ensured that, in line with PCCs, the Home Secretary retains the power to intervene if the police budget is set at a level that would put the safety of people in the area at risk. Additionally, the mayor will be required to set up and maintain a separate fund in relation to receipts arising and liabilities incurred in the exercise of their PCC functions, and to prepare a separate annual budget in relation to the exercise of such functions.

The noble Baroness, Lady Hollis, asked about the continuity of areas and what would happen if, say, there was a combined authority with a mayor for part of a police force area and that mayor was given police and crime commissioner powers to exercise. The essential point is that if this were to happen, there would need to be an adjustment of force areas as necessary so that the mayor’s area and the surrounding force area made sense in policing terms. There would not be a messy arrangement in the way that she suggested. If a mayor’s area did not make sense in policing terms, the mayor would not be given policing powers.

On the basis of those explanations, I hope the noble Lord will feel content to withdraw his amendment.

My Lords, perhaps I might pursue the Minister’s answer on the right of the general public to know in advance of a ballot for a mayor exactly what it is that they are voting for. I think she said that the public will know in advance of polling day what the duties of a mayor would be. Will she confirm that no responsibilities of a police and crime commissioner will be transferred following an election—in other words, a decision will not be made after an election by the Secretary of State, working with the combined authority—and that it will always be clear to the general public which responsibilities of the PCC will be part of the obligations of the mayor, and that they will not be changed afterwards?

My Lords, will the noble Baroness clear up one other point for me? She referred to the panel in new Schedule 5C. The panel has one extremely important role. Under paragraph 6—headed “Suspension”—of new Schedule 5C:

“The Secretary of State must by order provide for the panel mentioned in paragraph 4 to have power to suspend the mayor, so far as acting in the exercise of PCC functions, in circumstances corresponding to those mentioned in section 30(1) of the 2011 Act in relation to a police and crime commissioner”.

This relates back to the question raised by the noble Baroness, Lady Hollis, because, of course, there is a very interesting discrepancy here. As far as the police functions are concerned, there is a body that has the right to suspend the mayor. However, will the Minister confirm that that is not, of course, the case in relation to all the other functions that the elected mayor may have? Perhaps she could clarify that at this stage as it will affect later amendments.

My Lords, I can confirm what the noble Lord says. I go back to a previous question that relates to this issue which was asked by the noble Lord, Lord McKenzie, and which I did not answer, about the powers that the mayor has being prescribed by order made by the Secretary of State. We have said we will ensure that in all circumstances such an order will be made only with the consent of the local authorities. What can be done—I was not clear on this earlier—is for such an order to be revoked or amended, changing or withdrawing the functions that a mayor has. What cannot be done without abolishing the combined authority is to end the authority’s having a mayor. Abolishing a combined authority requires the consent of the councils concerned. I think that the noble Lord made that point earlier.

My Lords, I begin by taking up the penultimate point that the noble Baroness made in relation to the question asked by the noble Lord, Lord Shipley, about the mandate, as it were, for police functions being transferred. She said that the electorate in a mayoral election for a combined authority area would know whether or not the police powers were to be transferred. However, I do not see how that fits with new subsection (1) of new Section 107E in the Bill, which states:

“The Secretary of State may by order provide for the mayor for the area of a combined authority to exercise functions of a police and crime commissioner in relation to that area”.

That looks as though the Secretary of State will take that decision before a mayoral election. If that is the position, it does not become an optional matter at all on the face of it, does it? The mayoral candidates will be stuck with a decision that has already been made and will have no choice over whether they wish to take on that role. Therefore, I am puzzled by the position which the noble Baroness described.

I am also still not entirely clear about the police and crime panel position. Is it intended that within a mayoral authority which, one way or another, ends up with the police and crime commissioner role, there should be a separate police and crime panel, as is now the case, or will that role be exercised by members of the combined authority, which is a rather different scenario? Perhaps we need that to be elucidated but, again, if the noble Baroness cannot do that tonight there will no doubt be time before Report to determine the issue.

The real problem here is the one that has run through all our debates, which is about the degree of powers to be exercised by an individual. My noble friend Lord Liddle is comfortable with the concept of these powers being transferred to a mayor but many of us in your Lordships’ House are not, for the reasons very effectively given by the noble Lord, Lord Shipley. These are two huge jobs. Certainly, the police commissioner job was designed to be huge and the mayoral job will be huge. In any event, it is of course a matter for the mayor whether he delegates that job—and if he does, the virtues of the combination that are lauded by my noble friend are, I submit, somewhat diminished. In effect the job would be being done by an appointee of one individual—the mayor—as opposed to what we have now, which is an elected position, or what the position was before with the police authorities. I am afraid I do not find that I can share my noble friend’s enthusiasm for this proposition. This matter seems fraught with potential difficulty and, again, I think we will have to return to it at a later stage.

There is just one other matter. The noble Baroness indicated that the boundaries might be tailored, as it were, to suit the existence of a combined authority. If there was an overlap, she appeared to suggest that the additional area would be separated out. What then happens to the policing in those areas? Will they have to have a separate police and crime commissioner or will they be consigned to an adjoining non-mayoral police authority? What will be the process for determining the policing for that area which will not be included within the combined authority area? Again, the Minister may need some time to reflect on this—or more particularly, to get others to reflect on it— and perhaps we can have that discussion before we get to Report. In the mean time, I beg leave to withdraw my amendment.

Amendment 27 withdrawn.

Amendment 28 not moved.

Clause 3 agreed.

Schedule 2 : Mayors for combined authority areas: police and crime commissioner functions

Amendments 29 to 32 not moved.

Schedule 2 agreed.

Clause 4: Financial matters

Amendment 33

Moved by

33: Clause 4, page 6, line 18, at end insert—

“( ) enabling the mayor to raise funds for the carrying out of specified development projects by the issue of bonds to be made available only to those resident within the combined authority area.”

My Lords, this is a broad enabling Bill. Amendment 33 is a narrow amendment, intended to enable mayors to build their local communities and enhance local democracy. The Bill, according to the Prime Minister, is intended to widen civic engagement in the UK. This amendment is geared to help in that endeavour.

The Victorians left a wonderful legacy of public assets, built with the funds of local people. In Blackheath, where I lived for a long time, the 600-seat concert hall that was opened in 1895 is a tremendous and very well-used local facility, built by public subscription. The Holywell Music Room in Oxford, built even earlier, in 1748, is believed to be the first building geared entirely to the performance of live music, and concert performances are still played there regularly. It was funded by public subscription. Elsewhere, hospitals, village halls and sports fields have all been funded by local people and helped to build thriving local communities.

This amendment would give mayors of combined authorities the power to continue in that vein by issuing municipal bonds to fund specific schemes, thus involving local people directly in funding the developments that they want in their communities. Only local residents would be eligible to buy the bonds. This is all about local democracy. It is not a charter for extravagant mayors to rack up vast debts, imperilling the finances of city hall in order to fund their grandiose schemes. This is a way of allowing mayors to do what the local people want them to do.

It is right to be wary about a tendency to be extravagant that might exhibit itself among some mayors. Allowing mayors free rein to borrow would perhaps be dangerous, and in its extension of the Local Democracy, Economic Development and Construction Act 2009, the Bill does not include the power to borrow. In extending the Local Government Act 2003 in order to provide financing for this restructuring of local government, the Bill does provide for new authorities to have borrowing powers, but in order for the mayor to issue the municipal bonds that this amendment envisages, he or she would have to have the agreement of the new combined authority. That of course would depend on public opinion. As I say, this is all about giving local people what they want and what they are prepared to fund.

I know the Government wish to avoid putting specifics in the Bill, but sometimes there is merit in spelling out just what might be possible rather than leaving too much entirely to the discretion of the Secretary of State. Merely putting the ability to issue municipal bonds in the Bill does not in any way put a duty on mayors to issue them—but just think what might be achieved with such an option available. Your Lordships will hear from my rather sportier colleague about the sports facilities that could be provided with municipal bonds, but I like to think about the concert halls and the community centres—the buildings that might put life back into the heart of those estates and villages where there is no longer a real sense of community.

The bonds would provide the capital to enable such projects to be built. The coupon would not need to be high—certainly not with interest rates at their current level. In fact, in some cases, it may well be sufficient to say that those who subscribed would be entitled to a number of free entries or tickets every year. However, those subscribing to these bonds would be looking for far more than a meagre couple of percentage points on their investment: they would be investing in their community, which is surely what this Bill is all about. Of course, they would want to be assured that the project was workable, and those issuing the bonds would have to be able to demonstrate that the income generated from the new facility would cover the running costs and be sufficient, in the end, to pay back the capital.

Municipal bonds are not by any means a new idea, nor are they entirely in abeyance. For example, the Local Government Association is planning a new generation of municipal bonds. However, these are a very different category: the plan is that the LGA, in the guise of a new financial corporation, will pool the demands of local authorities and issue big bonds to the usual suspects—the major institutions that will be able to take a large chunk of them. That is very different to the sort of thing that this amendment proposes, and any link between the LGA’s version of municipal bonds and the actual municipality would be purely coincidental.

If we are serious about empowering local communities, devolving power away from the centre and building up mayors, surely the ability to issue bonds to build what people want to see and what they need in their local communities is something that we ought to at least be considering. Putting it in the Bill would be an encouragement to our new generation of mayors to think about what amounts to a new variation of crowdfunding. When I mentioned this at Second Reading, my noble friend said that she was “open” to all suggestions about the financing of the new structure. I hope that this is still the case—I trust that it is—and that we will therefore be able to pursue this idea. It is certainly in the spirit of the Bill.

My Lords, I support my noble friend Lady Wheatcroft’s excellent amendment. If you go to America, you will find that cities have retained the right to finance infrastructure projects with municipal bonds. Indeed, income from bonds even enjoys the advantage of being tax-free. However, as she pointed out, much of the heritage of our great cities of the last century and much of their infrastructure investment were financed by municipal bond issues. That came to an end, sadly, during the Attlee Government after the Second World War. The argument was that the Government could borrow more cheaply via gilts and thus dosh out the money. What actually happened was that the money never got doshed out and the municipalities were unable to have their own bond issues.

For me, this subject is absolutely central to the reality of devolution to cities. It is about their ability to raise money and to invest in their own infrastructure. I, too, look forward to hearing of the opportunities in the sports world, but there is masses of scope for infrastructure investment. I raised this issue at Question Time in the House earlier this year I think, and got a response which seemed to be saying that, yes, the Government agreed with this and would include it in future legislation. Over a year ago, when I discussed the territory with the Mayor of London, he absolutely supported the idea that it should be a fundamental part of devolution to our cities.

I very much hope that the Government will accept my noble friend Lady Wheatcroft’s amendment, which, quite rightly, is designed to be cautious and not to allow the ability to go overboard. It would make a start and a crucially important contribution to real devolution.

My Lords, I express support for the principle of the amendment moved by the noble Baroness, Lady Wheatcroft. The combined authorities need more independent power to raise money for good local projects and I accept that we have to break away from the kind of Treasury stranglehold, as it were, that operates in this area. I would be interested to see how far the DCLG and its excellent Ministers, who are very committed to devolution, are getting on with the Treasury on this question. We look forward to the response on that. However, there are two problems, which I know the noble Baroness, Lady Wheatcroft, will have thought of. The question is what the answers are—they may be in the response to the proposal.

First, there is the question of risk if something goes badly wrong. Not only would that be a failure for the combined authority that had sponsored the proposal but it would result in severe losses for local savers. Is there any way of spreading the risk and/or any form of insurance that could maybe bring the big institutions in to bear some of the risk? I am not a finance person, but the noble Baroness is and I am sure she will have thought about this.

Secondly, with a proposal of this kind you need to ask how the market in these bonds would operate. After all, people might have enough money to invest £10,000 or something in the future of their city—I could imagine people being very happy to do that—but their personal circumstances can change. They might want to be able to dispose of that bond. How would a secondary market operate in something that had initially been limited to residents of the area? However, in principle, this is exactly the kind of radical thinking that we need to revive municipalism.

To answer the noble Lord, insurance is always available for anything—at a price, of course—and I have no doubt that insurance could be provided for these bonds. As for a market in the bonds, there is always someone prepared to make a market.

My Lords, I, too, welcome this amendment. As a former leader of Bristol City Council I tried to look into this possibility. As the noble Baroness said, there is always a great deal of local ambition to achieve projects within the area for which, in straitened times, it is often difficult to raise funding. At the moment, I can think of the completion of the Colston Hall building—a concert hall in Bristol—for which we are trying to raise money. That would also be a project that local people would be very proud to see achieved.

When I made investigations, I found that local finance institutions welcomed this idea. I also found that local charities felt that it would be a really good way to invest funds within the local area rather than have local funds benefit central institutions. I welcome the idea as well because, as the noble Lord, Lord Liddle, said, this is a little bit more radical than a lot of the debate, which has been about concentrations of power. I welcome the idea of world-class cities and would like to see our cities at the heart of vibrant local economies. I hope that later in the Bill we can talk a bit more about some of the powers that might be made available to the combined authorities so that they can be at the centre of their local economies and exploit the potential that we have seen, as shown through various institutions such as Core Cities and Centre for Cities. There is great potential for economic growth.

I welcome this amendment and hope that the Government accept it. I hope that the idea may be explored further in due course.

My Lords, I support the amendment in the name of my noble friend Lady Wheatcroft and to which I added my name for reasons anticipated by a number of my noble friends already in this debate.

As stated at Second Reading, I support the Bill but with an element of caution. Memories of the 1980s are still strong in the minds of some of your Lordships, as was the need at that time to address the profligacy of some local politicians by bringing powers and—with them—spending decisions back to Westminster and Whitehall. Now, some 30 years on, we consider providing potentially increased responsibilities to new combined authorities and designating their chairs as mayors. Today, we seek to provide them with a platform—a very public one—for potentially wide-ranging yet still unspecified powers. There is always a danger, not least evident recently in Scotland, that with devolved powers but without some element of financial accountability the finger will be pointed at Westminster for failing to recognise the financial consequences of a devolution of functions by the same electorates we seek to empower. The politics of such a potent mix can be far-reaching.

One way the Minister can benefit from the lessons of history is to consider ways of meeting the challenge whereby our determination to empower elected communities must be met by trusting those same electorates and their representatives with at least some additional responsibilities for raising the finances required to exercise the powers with which they are entrusted. I hope that today the Minister will be able to address this issue and in so doing agree that one of the potential functions that could benefit from municipal bonds, as in the United States, could be the populist and much-needed sport and recreation facilities.

Since the Government in their legislative programme rely heavily on key manifesto commitments, the Minister would simultaneously earn acclamation and plaudits from her colleagues by implementing the sports legacy from London 2012, which was in the Conservative Party manifesto. That legacy called for: new facilities outside London; a youth and community sports strategy designed to inspire a generation to develop a sporting habit for life, and not just in London, the city that hosted the Olympic Games, but throughout the United Kingdom; increased participation at all levels; and state-of-the-art sport and recreation facilities. This area has been very London-centric and investment in our great cities to achieve these objectives can be accomplished by providing a real voice for the proposed combined authorities over the current, centrally controlled spend on sport and recreation, including the decisions currently made for the whole country by Sport England in London.

This is where the amendment of my noble friend Lady Wheatcroft could add an important and very clearly defined financing vehicle to the current precept mechanism already enshrined in legislation. If the Minister felt that the powers in the proposed amendment go too far, municipal bonds could even be restricted specifically for this purpose as a sort of test case for the combined authorities. Whichever route is taken, we need to create the nexus between the management oversight for functions and financial responsibility and accountability to the local electorates who will be the principal beneficiaries. It is that objective that ultimately will be delivered. I predict that the Bill before us is a stepping stone on that journey. This proposal by my noble friend Lady Wheatcroft for municipal bonds is a key and important step in that direction.

My Lords, I, too, support this amendment. I listened carefully to some of the ideas about what such a bond might be used for and hope that there would not be a narrow set of functions and services for which this kind of fundraising could be used. To some extent I am following up on the point made by the noble Lord, Lord Moynihan. In particular, some of the needs of children and young people in many of these areas require a lot more support than they currently get. Even some health facilities might be the kind of thing, particularly on the preventative health side, that these bonds could be used for. It is very important that the Government give serious attention to this and also to using these bonds to leverage other funding sources for some of the projects that might be available. I hope that, if we go down this path, the uses to which these bonds might be put would be not drawn narrowly but spread over all the functions devolved to a combined authority.

My Lords, I have not so far participated in this Committee and apologise to the House for that. I have just not been able to be here either for Second Reading or the first day of Committee. I declare an interest as leader of a London borough. Actually, I am rather pleased that London does not feature in the Bill in respect of the potential ideas for centralising power in London away from the boroughs. I hope we will not see any of that stuff come forward in another place at a later stage without any opportunity for debating it in your Lordships’ House. I am not going to go into the broader subjects, but I have read the debates very carefully and I find it dangerously easy to restrain my enthusiasm for imposing models on people. Very important points have been raised so far in this Committee.

I shall confine myself to this amendment, as is proper. I am not part of the little posse that came in to support my noble friend’s amendment, but I am glad to see that they are here. My own authority has been involved in discussions with the LGA proposals to look towards wider bond issues. But there are practical issues that need to be addressed, particularly in the difficult areas of things we all love and are potentially enthusiastic about, whether it is music or sport. It can be easy sometimes for that enthusiasm to run away a little. I can think of a number of local authorities not too far distant from my own where enthusiasm for the theatre has ended up with them having to underwrite substantial costs. So we need to proceed in this area with caution, but I hope that my noble friend will be able to respond positively, because caution is one thing and “no” is another. It should be possible to unleash the enthusiasm of local people. Do we not all believe in localism, as my noble friends have argued? Perhaps when she replies, my noble friend might offer to have discussions with my noble friend Lady Wheatcroft and others and representatives of local authorities and see whether, in the course of the passage of the legislation, she will give a positive commitment to considering this creative and interesting idea, albeit with corners that need to be probed—although perhaps not as many as some other aspects of the Bill. It is a very good and welcome thing that my noble friend has brought this forward.

In one sense, one very much welcomes the proposal of powers that we used to have rather more freely, in recourse to raising bonds through the municipal public works board. I myself used to buy bonds from Derby and all the rest of it, and people put them to appropriate use for their savings. I am certainly not opposed to the principle at all, but I am not clear on something—and perhaps the noble Baroness, Lady Wheatcroft, can help me on this point. The mayor will have a levy over and beyond, presumably, the council tax precept run by the combined authority. What powers the mayor will have vis-à-vis the combined authority may differ with each bespoke arrangement. What does the noble Baroness expect to be funded by a bond as opposed to a levy? The levy clearly falls on all, and all have access to those services, whereas a bond would be a voluntary subscription for an additional service which, none the less, would be enjoyed by all but possibly at a fee to fund the additional interest rate over and beyond the levy. I am slightly confused about how those two things would run in parallel. Clearly, in the past what would happen is that Derby would decide to seek £10 million through a loan on capital expenditure and fund it through the interest payments through the levy on it. In other words, part of the revenue expenditure would go to fund that bond. How does the noble Baroness envisage that working in this new financial structure?

On a similar point, what has been lacking in recent years with regard to capital funding and borrowing is the difficulty for local authorities to have the freedom to borrow and, because of that, a disconnect between identifying what it is they want to invest in, enthusing people for that and saying that they will back it with the capability of borrowing. That is the kind of thing that local authorities are examining. The question is whether this proposal would be more likely to generate enthusiasm and how it would fit in to the financing and the cost of the borrowing.

The amendment relates to specific projects, and it is highly likely, to judge from the enthusiastic speeches, that most of those projects will not cover their costs. There will be deficits; the only way in which the bonds will be sellable is if they are underwritten by the local authorities, which means the taxpayers. If one sets aside the initial enthusiasm, this can be a reality only if the taxpayer underwrites the bond. I hope that that is fair to say; it may not be the case, and the noble Baroness, Lady Wheatcroft, may say so. If the bond was tied to a specific project whose finances meant that the bond stood or fell on those financial outcomes, it is highly likely that a number of those would fail. If they did not fail, that means it would have been perfectly easy to fund them, because they are profit making, and they did not need to go for this scheme. It would help me in understanding not the appeal but the practicality of this proposal, if I could understand the practicality of persuading the Treasury—among other things—that this would not ultimately rest on underwriting by the mayor. It would be the mayor, not the combined authority, who would be saying, “I’m going to guarantee that these bonds will be repaid however the projects perform”. It would be helpful to me to understand that, should the House in due course be moved to consider this issue.

My Lords, before discussing Amendment 35, perhaps first I could speak briefly to Amendments 34 and 36 in the name of my noble friend Lord Smith of Leigh, who cannot speak to them himself. They are self-explanatory, in that Amendment 34 makes reference to a,

“local authority member of a combined authority”,


“responsibility for finance and resource management”.

Amendment 36 calls for the Bill to specify,

“the number of local authority members within a combined authority area who can veto the draft budget”.

We would happily support each of those amendments.

The Bill enables a power of veto over the mayor’s budget, and Amendment 35 would enable the combined authority also to change that budget in circumstances that would clearly need to be spelt out in the order. That opportunity seems to be provided for in the Manchester agreement. The Bill itself makes reference to changing the budget, but it implies that that is as a result of the initial scrutiny process, not following on from the combined authority’s approval or otherwise of the draft budget. Could the Minister confirm that?

Just to recap, the Bill talks about a mayor preparing a budget; a draft to be scrutinised by other members of the combined authority and the committee, dealt with in Schedule 5A; the making of changes to the draft as a result of the scrutiny—presumably with the approval of the mayor; and the approval of the draft by a combined authority, including a power to veto the draft circumstances specified in the order and the consequences of such a veto. Our amendment proposes simply that we have not only a right to veto but a right to change the budget. There would need to be a threshold of those supporting that proposition, which is again the case in Manchester. A veto is a power, and it can be quite a weak power in certain circumstances. You could simply end up with a ping-pong type arrangement between the mayor and the other members of the combined authority, which would be unfortunate and inconsistent with the effective operation of a combined authority.

We support the thrust of Amendment 33. As some noble Lords have touched on, it raises a number of issues that need clarification. In part, those of us who can remember municipal bonds support it with a sense of nostalgia. I am sorry to hear that my noble friend did not buy any Luton bonds in her previous investment, but perhaps next time. I am interested to understand quite how this will work when it will be available only to residents of an area. I think that that is easily dealt with at the point at which it is issued, but what happens thereafter? As my noble friend Lord Liddle said, whether that has an impact on marketability is an important issue.

As I understand the Bill as it stands, the Secretary of State can by order enable an authority to borrow for specified functions, provided that it has the consent of the constituent councils, but I do not think that that extends to mayoral functions. That could be changed, but we would like better to understand how this all fits together and how the total funding and borrowing opportunities of the combined authority sit with the existing position of those separate authorities. How does that impact on prudential borrowing and, therefore, the scope for the type of bond the Minister is talking about?

We can certainly see the benefit of raising funds for specific projects but, even if you can borrow for mayoral functions within a combined authority, it seems to me that you do not want that borrowing power to drive the functions the mayor gets; that is the wrong way round. You have to see what functions the mayor would have under these arrangements and see how they should be financed.

My understanding is that if there were associated costs—if my noble friend is right and this measure did not wash its face in all circumstances, particularly on infrastructure projects where there can be long lead times and not necessarily early returns—those would be picked up and met by a precept, not a levy, on the constituent authorities. Given the constraints that central government have hitherto imposed on increases in precepts, it could unwittingly impact on all that.

This measure needs to be unpicked so that we can better understand it. It seems to be a very helpful suggestion, and you can see the benefits that could flow from it, but it would need to sit together with the intended funding arrangements or the likely opportunities for the combined authority as a whole, quite apart from the wider issue of fiscal devolution, which we will come to in subsequent amendments, probably on Monday. We are on the side of those who would like to make this work, but it needs to fit with what we have before us.

My Lords, it is refreshing to hear innovative ideas coming from your Lordships’ House. I commend my noble friends Lady Wheatcroft and Lord Moynihan on some of the suggestions that they have put forward. Amendment 33 seeks to amend new Section 107F of the 2009 Act to allow the Secretary of State by order to enable the mayor to raise funds for the carrying out of specified development projects, by the issue of bonds to be made available only to those residents within the combined authority area. I was interested to hear about the experiences of the noble Baroness, Lady Janke, in Bristol. As I have said, the intentions behind the amendment are to be commended. The Secretary of State can by order confer a power on a mayoral combined authority to borrow. The mayor individually cannot borrow because, as the noble Lord, Lord McKenzie, said, he or she is not a corporate body. Borrowing by a combined authority where it is given the powers to borrow is secured on the revenue that that authority will receive, as the noble Lord, Lord Woolmer, pointed out. Accordingly, any borrowing by a combined authority will be under the same prudential borrowing regime that applies to local authorities. This means that the level of borrowing must reflect the level of its likely reserves.

The noble Baroness, Lady Hollis, asked what could be funded by bonds. In any case it would be a matter for the discussions leading to the bespoke devolution deal as to what might, in the art of the possible, be borrowed. As I have said, any borrowing must conform to the principles of prudential borrowing, which apply to all borrowing by local authorities.

My noble friend Lord Moynihan asked about the functions to benefit by municipal bonds. The functions that might be supported by investment and funded by prudential borrowing, which could be in the form of bonds, are a matter for the conversations with that area which lead to its bespoke devolution deal. As my noble friend Lady Wheatcroft said, this is an enabling Bill. Clause 8(3) allows the Secretary of State to specify which functions of a combined authority may come within the scope of borrowing powers given by the Local Government Act 2003. The sources of borrowing available to combined authorities include issuing bonds as well as taking out loans. The devolution deal will determine which functions the combined authority can borrow for. Decisions over whom an authority obtains their financing from are a matter for the authority.

Amendments 34 to 36 seek to alter the powers of the Secretary of State to provide for scrutiny of the mayor’s draft budget. Amendment 34 would insert a new Section 107F(3)(c), which would allow the Secretary of State by order to make provision to appoint a local authority member of a combined authority to have responsibility for finance and resource management. In effect, were such provision made, it would prescribe that there must be a member of the mayoral combined authority who had finance responsibilities, and that the member with these responsibilities would be a councillor from one of the constituent councils. It is rightly the mayor who should decide to whom he or she wishes to delegate his or her responsibilities, and this includes responsibilities for finance. To return to a point that I made earlier, it is consistent with local authorities operating their cabinet arrangements at present, with the mayor deciding which member of his cabinet should hold certain portfolios with certain responsibilities. We are clear that this should also be the case for metro mayors. For mayoral governance to be effective, the mayor must have discretion to assign portfolios and delegate responsibilities to enable the effective delivery of their promises to their electorate.

I understand that the intention of this amendment may be to place checks and balances on the mayor’s powers. There is of course a chief finance officer for the combined authority, also known as a Section 151 officer, whose role is to ensure compliance with all statutory requirements for accounting and internal audit and to manage the authority’s resources. The chief finance officer is under a duty to make a public report if they consider that there is, or is likely to be, any item of unlawful expenditure. An additional proscription on the creation and assigning of member portfolios is an unnecessary check or balance, and risks frustrating the exercise of the mayor’s functions.

Amendments 35 and 36 seek to provide additional checks and balances on the approval of the mayor’s draft budget. Amendment 36 would insert a power for the Secretary of State to provide for a specific number of local authority members within a combined authority area to be able to veto the mayor’s draft budget. The Bill as it stands allows for the Secretary of State by order to make provision about the preparation of the mayor’s annual budget which, in particular, may provide for the constituent council members of the combined authority to scrutinise the draft budget, to make changes to it and to have a power of veto. The circumstances in which a veto may be used, and the consequences of any such veto, would be proposed locally and provided for in the order creating the mayoral combined authority. The Bill also allows for the overview and scrutiny committee, a politically balanced committee made up of councillors from the constituent authorities, to scrutinise the draft budget and recommend changes to it.

To be clear, there is already provision to allow for the check of the constituent councils vetoing the draft budget. If the suggestion is that all the councillors of the constituent councils should have a role in setting the mayor’s budget, in addition to any role they may have on the overview and scrutiny committee, statute does not provide for a vote to be given in an order to anyone who is not a member of the combined authority.

Amendment 35 seeks to amend new Section 107F(4)(d) of the 2009 Act to allow the Secretary of State, by order, to give the members of the combined authority the power to change the mayor’s draft budget. I agree that it is entirely appropriate that the combined authority has a power to amend the draft budget, and I am happy to clarify that this is the Government’s intention in new Section 107F(4)(c). As the Bill stands, new Section 107F(4)(c) allows the Secretary of State by order to make provision for the members of the combined authority to change the draft mayoral budget, other than the police budget, as a result of their scrutiny.

It will be for each authority, in discussion with the Government, to decide what form of scrutiny of the mayor’s budget would be most appropriate. For example, in Greater Manchester—I cannot remember whether it was the noble Lord, Lord McKenzie, or the noble Lord, Lord Beecham, who asked about this—it was proposed by the area that the combined authority will examine the mayor’s spending plans and be able to amend the plans if two-thirds of the members agree to do so. This arrangement is included in the Greater Manchester devolution agreement.

I hope I have adequately explained that the intended effect of these amendments is already provided for in the Bill, and I ask the noble Baroness to withdraw the amendment.

My Lords, I thank the Minister for her detailed response, which was not entirely encouraging. I thank all those who spoke in support of my amendment. In answer to the questions asked by the noble Baroness, Lady Hollis—“Why not precept?” and “How would specific schemes be chosen?”—the point of the amendment is that the precept falls on all, no matter how able they are to afford it, whereas the bonds that I am mooting would enable those who have the money to invest in a local community to do so for the benefit of all.

As for the qualms voiced by the noble Lord, Lord Woolmer, about where the penny would drop if there were not enough pennies, every scheme would have to be looked at extremely carefully. They would all have to be budgeted. I am not as pessimistic as the noble Lord about how many such schemes would fail. The point about community building is that very often you can get the community involved, so one would anticipate—looking through those rose-tinted spectacles that I do not usually wear—plenty of volunteers to organise sports facilities, youth clubs and so on, and that running costs could be covered by letting out a hall or a sports field. I agree that the sums would have to be done carefully, and as a backdrop one would be looking at insurance.

Will the noble Baroness clarify whether we are talking about simply a positive mechanism to raise funding, or a mechanism to expand the total borrowing capacity that the combined authority might have?

I gather from the Minister that the capacity to expand borrowing would not be there, so this would just be a different way of raising money, but it would be a way of involving the local community far more. As I understand it, the Bill is aimed at building local communities and pushing power to the people. I accept that this is not without qualms. There are questions to be asked—noble Lords have raised them—but I was delighted with the support for the general direction of travel, which is after all in line with our wish to devolve more power to the community and to build those communities. I hope that there may be scope for the Minister to spend some time working with me and others who support the general drift of this amendment to try to come up with something that we might bring back at a later stage.

From the noble Baroness’s response to the Minister’s point about borrowing capacity, I am still not clear whether she expects this ability to raise what would otherwise be capital expenditure to add to the PSBR.

There are clearly issues to be worked out. I am very flexible about this. It is the principle of getting local people involved in funding local facilities that I really want to pursue, and I hope that I can have talks that will enable me to do that. I beg leave to withdraw the amendment.

Amendment 33 withdrawn.

Amendments 34 to 36 not moved.

Clause 4 agreed.

Clause 5 agreed.

Clause 6: Other public authority functions

Amendment 36ZA

Moved by

36ZA: Clause 6, page 8, line 2, after “property” insert “and”

My Lords, this is a small and narrow amendment. In fact, I contemplated whether I should move it at all, but as I have written it I might as well. It is intended as a probing amendment to understand the circumstances in which the schemes for transfer of property et cetera provided for in the Bill are contemplated and whether any are on the cards in the discussions that are taking place.

I was particularly prompted to think about this because of debates we had on the Localism Bill when some of its provisions were put in place, particularly Section 17, which is referred to and imported, in part, into the provisions of this Bill. Can the Minister tell us anything about experience to date on the operation of those provisions, which very much mirror what is in this Bill? There is a particular issue around the operation of the intent to comply with TUPE arrangements. Some of the provisions in Clause 17 touch upon this and refer to the fact that the order in relation to schemes can include circumstances where the same or similar effect as the TUPE regulations so far as those regulations do not apply in relation to the transfer are taken up. As a general point, is it the Government’s intention, in so far as they are a participant in this, that where TUPE regulations for some reason do not apply, they would seek to ensure that provisions with the same or similar effect as those regulations would be imported into any scheme of which they would be a party?

As an aside, when the Child Support Agency was being restructured, a key issue was not so much to do with entitlement to pensions, because there was access, but to do with loss of Civil Service status when somebody was going to go into an NDPB. That is an issue. I do not propose an amendment in relation to the Bill, but it was probably the big issue when we were talking about restructuring the Child Support Agency and it could rear its head in these circumstances. I beg to move.

My Lords, Amendments 36ZA and 36ZB seek to amend the provisions in the Bill that relate to the making of a scheme to transfer property, rights and liabilities from public authorities to combined authorities. The Bill specifies that where a function of a public authority is to be a function of a combined authority, the property, rights and liabilities of the public authority can be transferred to the combined authority. These amendments seek to change this by removing from the Bill the provisions that allow for the transfer of public authority liabilities.

These amendments would prevent liabilities from being transferred from a public authority to a combined authority. Clause 6 enables the Secretary of State, by order, to confer on a combined authority powers exercised by a public authority. If functions are transferred, there may be some instances where assets, property, rights and liabilities should also be transferred to the combined authority in order for it to be able to exercise these functions.

As we have discussed, the whole Bill is enabling legislation. No combined authority will be forced to take on powers it does not wish to have, nor will a combined authority be forced to take on a public authority’s property, rights or liabilities. An existing combined authority must consent before such transfer can take place, and in the case of a new combined authority, the appropriate local authorities seeking to take on public body functions must have consented to the transfer of the property, rights and liabilities of the public authority. However, there may be times where such a transfer is necessary to give full effect to devolution deals.

Similar transfers of property, rights and liabilities from a local authority to a combined authority are already possible under Section 115 of the Local Democracy, Economic Development and Construction Act 2009. Such transfers have already happened when establishing combined authorities; for example, when the West Yorkshire combined authority was established the integrated transport authority and the passenger transport executive were both closed, and their functions, assets, liabilities et cetera transferred to the combined authority. This provision purely mirrors the existing provisions by applying the same principles to transfers from public authorities.

The noble Lord asked about TUPE. The tradition and past practice is that when transferring functions within the public sector, TUPE applies, and it always has up to now. I hope that with this explanation the noble Lord will feel able to withdraw his amendment.

I am grateful to the Minister for that explanation. As I explained, the technical wording was simply to get a debate on this issue. I am grateful for that response, and I beg leave to withdraw the amendment.

Amendment 36ZA withdrawn.

Amendment 36ZB not moved.

Clause 6 agreed.

Amendment 36A

Moved by

36A: After Clause 6, insert the following new Clause—

“Homelessness and housing need: review

(1) Within six months of the passing of this Act, the Secretary of State shall order a review of the advantages and disadvantages of placing a duty on combined authorities to reduce the numbers of homeless children and families in housing need in their area.

(2) The Secretary of State shall lay the report of the review under subsection (1) before both Houses of Parliament.”

My Lords, I will speak also to my Amendment 36B.

Amendment 36A introduces a review on homelessness and housing need, which would be established by the Secretary of State, to determine whether there should be targets for local authorities to reduce the numbers of homeless children and families in housing need in their area. Similarly, Amendment 36B asks the Secretary of State to order a review to look at the advantage of setting some sort of target for affordable housing in these areas and associated borrowing powers to facilitate that housing. I am thinking in particular of affordable housing for key workers, such as teachers and child and family social workers, who will have such an important role in turning around the lives of vulnerable families in housing need and of homeless children.

Before proceeding, I put on record my thanks to the noble Lord, Lord Storey, for moving my earlier amendment this afternoon. I was hosting a reception for a charity which is 250 years old this year, and it was very good to be there, so I am most grateful to him.

The Minister and many of your Lordships will be aware that in this country we have a chronic problem of child homelessness and families in housing need, particularly in London and the south-east but also in other parts of the nation. The statistics from Shelter showed that over 90,000 children in England, Scotland and Wales were homeless—that is to say, living in temporary accommodation—and over 2,000 families were living in bed and breakfast accommodation last summer in England. That figure was rising in England but falling in Wales and Scotland. Therefore, it is getting worse at the moment but it has been a problem for many years, and it has not been properly addressed. These are not just statistics. The children who experience homelessness experience insecurity; they do not know where they will be living from one week to the next. That uncertainty is so disruptive to their lives, and they are often from vulnerable, problematic families.

This morning I attended a conference in Canterbury on the education of looked-after children, and the main theme was the importance to such children and young people of a continuity of relationships. So often what our vulnerable families lack above all is that continuity of relationship, with a father or with a teacher: important figures in their life who can, over a period of time, take an interest in their welfare— and of course homelessness makes that much more difficult.

I understand also that to deal with this issue some authorities are having to uproot families and move them into other areas of England where there is more housing supply. Just when these families are getting the help they need to settle down, they can find that their support services are disrupted and they are placed in areas with many families like themselves. I hesitate to use the word “ghettos”, but it does not seem helpful to put these families with other families who are suffering similar problems. We want a much more mixed environment rather than concentrating troubled families in one place. Can the Minister therefore write to me to explain the policy of the Government around these issues of families in housing need and homeless children? What does she think the Bill might do to address those problems?

On affordable housing, briefly, I will say again how much I warmly welcome the Government’s promise of 275,000 new affordable houses—I hope I have the figure right—by the end of these five years. That is very important indeed. I am thinking in particular of the need, as I said earlier, to have housing for teachers, social workers, prison officers and nurses where it is needed most. When I speak to teachers I hear about their long commutes into central London to do what they have to do. So often the temptation must be to move away once they have some experience to somewhere that is less costly and set up a family home there. We are talking about new powerhouses outside London, but if these sorts of problems are not already there they will develop as those powerhouses come into economic well-being. Therefore we need to think about how we are to provide decent housing for our teachers and social workers that will keep them near where they are needed. I understand that in the past, some local authorities would give a social worker a house at the beginning of their career, which would be a big incentive for that social worker to stay around.

Last night I heard Michael Spurr, who is the chief executive for the National Offender Management Service, talking about his work managing the prisons of this country. He has faced many challenges such as an increasing number of prisoners and reduced funding, but he seems to be doing an extraordinarily good job in those circumstances. I think we would all agree that he is a very admirable man. However, he is having a problem in London and the south-east in recruiting officers and filling vacancies. He did not mention it, but I am sure that one of the issues must be affordable housing in London and the south-east. I would appreciate any insight from the Minister on how she thinks the Bill might help in this area of affordable housing, particularly for key workers. On that point, I beg to move.

My Lords, I support Amendments 36A and 36B, moved by the noble Earl, Lord Listowel, and I do so in particular because of new subsection (1)(b) proposed in Amendment 36B. This concerns the associated borrowing powers of local authorities, about which we had a broader debate a little while ago. It is part of the issue of the powers that combined authorities and local authorities in turn will have.

I hope that in replying to these two amendments the Minister will confirm that strategic housing policy will always be part of the remit of a combined authority. However, perhaps she would also be clear about what combined authorities will have responsibility for when there are existing statutory obligations upon a local authority—not least, for example, around homelessness. In urban regions, where a number of local authorities will combine under a single combined authority, there are areas where joint working can help and add value. In terms of housing policy, homelessness policy and affordable housing, there is absolutely no doubt that working across the boundaries of current local authorities will matter a great deal.

We need to be clear—either now or at a later date if the Minister writes to the noble Earl—whether there is any plan to amend the existing powers of local authorities in relation to housing and whether the powers of the combined authority will relate to co-ordination or to leadership and policy formulation for the whole of the combined authority area. We will touch upon this when we come to Amendment 36F in the name of the noble Lord, Lord McKenzie, but we are moving towards a need to be able to demonstrate clearly what the powers and responsibilities of combined authorities will be.

My Lords, I, too, support the amendment. As has been demonstrated by the noble Earl, it is really important that homeless children and their families have somewhere to live. If children are not able to have the safety and security of a home, they are not able to take advantage of education and therefore not able to make the best use of their lives. In terms of looked-after children and those in care, we have heard that a large proportion of these very disadvantaged children end up in the justice system in one way or another and are therefore doubly penalised for something which is not within their power to alter.

Therefore, I support the amendment on homelessness and housing need, and I obviously also support the supply of affordable housing, which is a real issue and not just in areas in the east and the north. While I am not expecting this Bill to solve all the ills of the housing market, I do not think that it should make them worse.

My Lords, I can well see the point of having housing strategy determined at the level of the combined authorities that will potentially emerge as a result of this legislation. Personally, I rather regret that the previous Government abandoned the concept of regional housing policy. That led to what we might call the “Stevenage situation”, where a borough with very tight limits on its land was unable to secure the agreement, notwithstanding the alleged duty to co-operate under other legislation, from an adjoining authority in terms of housing. One can see that a regional—or, in this case, sub-regional—strategy is certainly a matter for a combined authority.

However, I have two problems. One is that we must not disconnect the operational workings of local authority housing and its third sector partners. Often, these partners are arm’s-length management organisations from the locality. My noble friend may say a little more about that when he responds from the Front Bench.

I am also somewhat concerned about the term “affordable housing”. Affordability is capable of very elastic definitions. Under the Government’s terms as it relates to housing provision, I understand that affordable rent, for example, is 80% of the current market rent. Current market rents in the private rented sector have, as we learn daily, been soaring over the last few years. Indeed, the number of private landlords has been soaring. I read—today, I think—that the proportion of housing now owned by private landlords is 20% of the total housing stock, having more than doubled in the last few years. Of course, there are places in London where there are certainly a lot of them, but in many of the areas that we are talking about rents in the private sector have increased hugely.

To talk about 80% of the private rent level as being affordable is, to put it mildly, stretching a point where many people are concerned. Certainly the residents of the ward that I represent in the west end of Newcastle would find it very difficult to pay 80% of the rent in the private rented sector for the better housing that they would wish to occupy. All the talk about affordability in the recent election seemed to be about home ownership. Of course, we are all anxious to ensure that people have the opportunity to buy, if that is what they want, and to try to facilitate it in terms of making finance available. However, there are increasingly large numbers of people for whom that aspiration is at the moment—and, frankly, for the foreseeable future—unachievable.

The notion that here we might be looking at the provision of affordable housing on a combined authority level needs to be qualified. There needs to be an explanation of what we mean by that affordability. Of course, it is crucial that we refer to the provision of good-quality housing. I referred in previous debates to the space standards of the housing provided in this country. The space provided is much less than in most of the rest of Europe. Therefore, it may be affordable in financial terms but the new housing that is being built is not particularly good.

More particularly, my concern is with the people who will be unable to afford even well-designed, relatively modest premises on the basis of the current market and will need to rent. Unless we have a clearer definition, I cannot quite see how combined authorities will be able to influence that. If the noble Earl’s intentions are acknowledged by the Government and a review of the kind that he is asking for takes place, we may have some more realistic answers, but ultimately the delivery of affordable housing will vary even within a given area. By definition, we are talking about large populations. We are also talking about—I keep repeating this, I am afraid, but it is something that we have to deal with—an area in the north-east which has a lot of rural areas within it. There, again, the pressure is very high but it is rather different from that of the urban areas.

We must be careful not to exclude or substantially diminish the role of the local housing authorities, as they are currently constituted, in the context of a combined authority’s strategic plan. I acknowledge that there is a role there, but it should not be an exclusive role at the combined authority level. Local needs and what is affordable, for example, will vary significantly, not only within different parts of the housing sector but within geographical areas. It is a bit more complicated than at first sight might be thought to be the case. I am not saying that the noble Lord is not cognisant of that fact, but, necessarily, an amendment does not set out all the subtleties that one perhaps needs to get into.

I am interested to hear the Government’s thinking about affordable housing, their definitions and how that might relate to the concept of the combined authority and, in any event, to housing policy generally.

My Lords, although I am grateful to the noble Earl, Lord Listowel, for managing, with some finesse, to shoehorn housing into this debate on the cities Bill, I share some of the reservations of my noble friend Lord Beecham. In two-tier authorities and shire counties, one of the primary functions of district councils is the housing responsibility. Even if they have stock transferred their property to a housing association, as quite a high proportion has, the district council none the less remains responsible as the strategic authority, so to speak, in dealing with homelessness. That is complicated enough, and I think that the problem is going to get infinitely worse if the wretched housing association Bill progresses. That will fire an Exocet through our ability to meet housing need in localities, as we will lose not only the housing association stock but council housing stock to pay for the discounts—we will lose two rental properties to fund one discount and not one extra house will be built as a result. It will be completely disastrous, and I am sure that the noble Earl, Lord Listowel, will be fiercely engaged in that fight. I very much hope that he will be.

The problem is that, if this is the thinking of the noble Earl, I am not quite sure what distinction he is making between a combined authority and a unitary authority of three previous district councils. Housing is the main function. If this is where it is going, in alignment with the recommendations that will come with a combined authority for the development of the economy and so on, effectively, a unitary authority will be achieved in the name of adding more and more functions to the combined authorities, which are primarily about economic growth.

No one doubts that one responsibility of the combined authority will be to determine areas for housing growth, land development and land use. That is very different from taking on the responsibility for who gets what house due to local priorities. If that is taken away from the district council and given to the new combined authority, we will have effectively removed the responsibility for housing from a district council to a combined authority and would have to start inspecting houses of multiple occupation and all the rest of it to make it work. That would leave district councils virtually non-existent. That is my problem with Amendment 36A.

Although I am sure that Amendment 36B is well intentioned, my problem is with “affordable”. The research of my right honourable friend in the other place, John Healey, has shown that the two drivers of the housing benefit bill have been, frankly, the extension of the private rented sector, with its very high rents, and the displacement of social housing rents by affordable rents. Those two things alone are primarily responsible for the growth in housing benefit, neither of which adds a single property to the stock or houses a single additional person—they are displacement activities. All that is happening behind this amendment and may, I fear, be made worse by it. All the drivers will add to the welfare bill. The Government will then say that we must cut it by taking away the ability to make work pay and removing money from working tax credits because they are not willing to tackle the tax privileges of private landlords who are charging market rents or the issue of affordable rents, which is, in turn, driving up housing benefit bills in the social rented sector.

An infinitely more complicated set of problems has been opened up by the noble Earl’s amendments. None of us would dispute the outcomes that he is seeking, but I do not think that he can get there through this route.

My Lords, we have considerable sympathy with the thinking behind both amendments from the noble Earl, Lord Listowel. They touch upon one of the most serious issues that confront our society—our housing crisis— which must engage the action of central government and local authorities. It is also prescient, given concerns expressed in the press this morning about the figures for child poverty rising for the first time in a decade. We know that the lack of affordable housing is a key driver of homelessness and that homelessness inevitably sits at the centre of disadvantage and deprivation. The major influences on a child’s life—family income, effective parenting and a secure environment—are all directly or indirectly influenced by a family’s housing conditions.

The question posed by these two amendments is what the role of a combined authority should be in addressing our housing crisis and reducing homelessness. There certainly could and should be a role, and the Greater Manchester Combined Authority has shown the way. In its case, the elected mayor has control of a £300 million housing investment fund and powers over strategic planning, including the power to create a statutory spatial strategy for the CA area. There are somewhat convoluted arrangements for administration of the housing investment fund, but it has the prospect of delivering 10,000 to 15,000 homes over the period—a real contribution. Powers to create a spatial strategy for the area are particularly useful, given the demise, as my noble friend Lord Beecham said, of the former regional spatial strategies and the weakness of the duty to co-operate.

There are two issues, however, with the noble Earl’s amendments. Indeed, all noble Lords who have spoken today have, in one way or another, touched upon those issues. We should be mindful of the current requirement for local authorities to ensure that local plans meet the assessed needs for both affordable and market housing and that neighbourhood plans can supplement this. Further, important legislation is already in force that places a general duty on housing authorities to tackle homelessness, however difficult that is in the current circumstances. We would not wish to undermine these important responsibilities and local priorities, but it might well be appropriate to build on these requirements at an overarching strategic level. One way or another, those points were made by the noble Lord, Lord Shipley, and my noble friends Lord Beecham and Lady Hollis.

Certainly the prospect of a combined authority having spatial planning powers across an area could be a considerable advantage in creating a coherent housing framework. However—I am sure that the Minister will make this point—the approach suggested is prescriptive. Doubtless it will be said that there is nothing to prevent a combined authority seeking these powers by agreement, and I hope that the Minister will confirm that the Government would not be shy of agreeing such arrangements.

My Lords, Amendments 36A and 36B would insert two new clauses into the Bill that place statutory duties on the Secretary of State to undertake reviews of the advantages and disadvantages of placing a duty on combined authorities to reduce the numbers of homeless children and families in housing need, and give combined authorities responsibility for affordable housing in their area and associated borrowing powers. These amendments would also require the Secretary of State to lay the report of these reviews under the clauses before both Houses of Parliament.

At the outset, I must say that housing is a priority for this Government. In our manifesto, we committed to building 200,000 starter homes and more affordable housing. We are putting in place £38 billion of public and private sector investment to help ensure that 275,000 new affordable homes are provided between 2015 and 2020. This means that we will build more new affordable homes than during any equivalent period in the last twenty years.

A couple of noble Lords asked about the definition of “affordable”. The detail is set out in the national policy planning framework, and it is, broadly:

“social rented … and intermediate housing, provided to eligible households whose needs are not met by the market”.

However, within that, there is broad scope around what affordability means in different places to different people.

I am surprised that the Minister has adduced that definition of “affordable”, because for those of us involved in the sector—I declare an interest as chair of a housing association—affordable housing rents are very different from social housing rents. Social housing rents are running at about 40% to 50% of the market rent, while affordable rents are running at about 80%. We are required in any new building, whether funded by HCA grant or not, to charge affordable rents, which merely drives up the HB bill without any addition to the stock. It is therefore disingenuous, if I may say so, to suggest that social housing is a subset of affordable housing; it is a very different category.

My Lords, because I appreciate that I have not given an acceptable definition today, perhaps I may write to noble Lords before our next day in Committee. There are a number of definitions of “affordable”. I will do that in the next few days if that is okay.

We have a good track record on preventing homelessness. Since 2010, we have sustained our investment in homelessness prevention, resulting in local authorities preventing just over 730,000 households becoming homeless. Investment since 2010 has exceeded £500 million to help local authorities prevent and tackle homelessness. This has included an £8 million Help for Single Homeless Fund, which will improve council services for 22,000 single people facing the prospect of homelessness, and a £15 million Fair Chance Fund to provide accommodation, education, training and employment opportunities for around 1,600 of our most vulnerable young, homeless people.

The noble Lord, Lord Shipley, asked whether combined authorities would be under the same duties as local authorities in relation to functions such as homelessness. If the combined authorities wish to take on housing functions, the functions will be the same as they would have been had they remained within the constituent councils. He also asked whether strategic housing policy is always part of combined authority responsibilities. What responsibilities a combined authority will have depends on the individual deal agreed with an area. That deal may include the constituent councils agreeing that certain of their powers and duties will be undertaken by the combined authority either on their behalf or concurrently with them.

I turn to an example of a devolution deal in which housing is an important element: that in Greater Manchester. It includes Greater Manchester having a housing investment fund worth £300 million over 10 years, to be administered by the mayor. The fund will support the delivery of at least 10,000 houses, some of which will be affordable, and will be subject to stringent evaluation before, during and after the 10 years come to an end. I think that it was either the noble Lord, Lord Beecham, or the noble Lord, Lord McKenzie—in fact, it might have been the noble Lord, Lord Shipley; I did not write down the name of the noble Lord—who asked whether there were any plans to alter the powers of local authorities in the Bill. The answer is no.

This Bill is an enabling Bill, creating the primary legislative framework for implementing bespoke devolution deals. It is not for the Bill to assume what might be included in a deal. Indeed, it is not for the Government to assume what might be in a deal. We are ready to have conversations with any area about what it wishes to see included in a deal for it to be able to meet its needs, develop its economy and increase the competitiveness, productivity and prosperity of the place —be it a city, a county or a town.

Including the amendments in the Bill would imply that a particular view was being taken centrally about homelessness and housing and about how those issues might be addressed in any particular area. It is not for the Secretary of State to prejudge, in advance of any conversations with areas, whether homelessness or providing affordable housing in a particular area is best dealt with by combined authorities or by local authorities, either generally or of a particular class or category.

I suggest that reaching a general view on these issues is simply not practical. What might be right in one area may be far from the right approach in another—the noble Baroness, Lady Hollis, pointed out the particular circumstances of Norwich. In Greater Manchester, the mayor of the combined authority area will be responsible for the housing investment fund. In another place, the responsibility for that fund might appropriately be that of the combined authority, and in another that same responsibility might best be discharged, as the noble Baroness said, by one or more of the local authorities. This is the reality which underpins our approach of seeking to agree with individual areas bespoke devolution deals.

When any deal is implemented through the legislative framework established by the Bill, Parliament will have the opportunity to debate and approve the secondary legislation necessary to put that deal in place. When doing this, Parliament will need to have before it information about the deal and the outcomes which it will deliver. I recognise that the standard Explanatory Memorandums accompanying secondary legislation can include much of this material, and I am ready to consider whether this is sufficient in this unprecedented process of devolution. I therefore ask the noble Earl not to press his amendments.

My Lords, I thank the Minister for her careful reply and particularly for her last comment about how secondary legislation subsequent to the Bill might be helpful. I thank all noble Lords who have taken part in the debate and taken care to consider the detail of the amendment.

In writing to noble Lords following this debate, might the Minister include a little about the Government’s plans in respect of support that can be offered for social housing? That would be helpful in meeting concerns about family homelessness and housing need.

A question was asked about local authorities’ capacity for borrowing which perhaps the Minister did not answer, but I understand that there was an earlier debate in which she did. Perhaps she might like to comment again on that. Did I miss her comments on what borrowing capacity new groupings might have? While I do not want to put words in her mouth, she might say that it is a matter for discussion and negotiation.

I thank the noble Earl for that question because I did not pick up on that point. I spoke earlier on about prudential borrowing, but I will write to him about the Government’s general policy on the points that he raised—I meant to say that at the outset.

Amendment 36A withdrawn.

Amendment 36B not moved.

Amendment 36C

Moved by

36C: After Clause 6, insert the following new Clause—

“Public authority functions

Within one month of the passing of this Act, the Secretary of State must publish a list of public authority functions which may be the subject of a transfer of functions under the provisions of this Act.”

My Lords, I shall speak also to Amendment 36F. Let me say at the outset that the amendments are to an extent prescriptive. Amendment 36C would require the Secretary of State to publish a list of public authority functions which may be the subject of a transfer under the provisions of this Act. Amendment 36F goes further and would require the Secretary of State to consult combined authorities with a view to devolving certain functions and funding in certain areas. These are employment support, transport, housing, skills and business rates. We should be clear that the published list does not require any of the functions to be transferred in any particular situation; that will remain subject to whatever agreement, if any, is entered into in practice.

The amendment has been prompted in part by the first report of the Session of the Delegated Powers and Regulatory Reform Committee, which refers to the wide powers that new Section 105A would confer. It states at paragraph 10:

“But it says nothing about how in practice these powers might be used, or why it is not appropriate or practicable to include a description of the types of function covered by the power on the face of the Bill”.

We agree. If there are concerns about government at the centre trying to pull back the devolutionary process, putting down some markers must surely act as a counterweight. It might even help encourage and embolden some of those authorities that are not yet members of a combined authority and are not fully in the know.

Amendment 36F requires government to be proactive in the cause of devolution. In Committee on Monday, we got the line that the Government would wait to hear who comes knocking and then respond and engage in some fashion. The amendment requires the Government to themselves initiate consultation with combined authorities over areas of,

“employment support … transport … housing … skills … and … business rates”,

as matters that are important for driving growth and prosperity. It does not preclude consultation over other matters, and we have a separate amendment covering strategic planning.

It may well be that consultations are already going on in a number of areas with a number of combined authorities—indeed, we know that there are. That is fine, but adopting the requirements of the amendment would ensure that opportunities are being opened up for all combined authorities. From our debates in Committee on Monday, there was no indication from the Minister that there were any capacity constraints as far as the Government were concerned on moving forward on a wide front. This would force the pace of devolution—and on a broad front. I beg to move.

My Lords, I am pleased in principle to support Amendments 36C and 36F. However, in Amendment 36C, on publishing a list of public authority functions, why do we need to wait to within one month of the enacting of the Bill? Surely it is known now what the functions might be. Should the House not be informed what they are before the passing of the Bill? I would be grateful if the Minister could specifically explain why it is not possible to list the public authority functions before the Bill passes rather than afterwards.

Amendment 36F is fine as far as it goes—and of course we will have the opportunity in Amendment 36G to discuss strategic planning issues, as the noble Lord, Lord McKenzie of Luton, explained. But I have two points to make in relation to this amendment. First, this is not necessarily an exclusive list; other powers and funding could be thought about. One is careers advice. It may be seen to lie within the skills head, but probably it could be treated separately. There may well be others. We should have a discussion about whether there are other areas to add to the list of matters that the combined authorities should be consulted on.

My second point relates to the use of the word “powers”. At some point we need to think more in terms of responsibilities. Powers and funding are one thing, but what you do with them is another. There is now the prospect of a very large number of functions, powers and responsibilities coming into the remit of combined authorities. I am starting to get very worried about the capacity of the combined authorities to manage all of the things that they may be asked to undertake. As part of the consultation that is asked for in Amendment 36F, I hope that the issue of capacity and resources is also addressed.

My Lords, I support my noble friend’s Amendment 36C. It is particularly important in relation to NHS responsibilities, which we will come to a little later. There is a considerable number of laggards in the NHS who are really nervous about getting into this territory. It is important that they start to engage their brains with this, because there is a growing number of failing health economies. Too many of them are sitting waiting to see what happens in Greater Manchester rather than engaging with this issue. I hope that the Minister will address this point—the sooner the better—and not be afraid to make it clear to the outside world, particularly the NHS, that these functions could be transferred down to the combined authorities.

My Lords, these amendments go to the heart of one of the problems that we have talked about many times in this Bill—the principle of not quite open house but, “Tell us what you want and we’ll discuss it. We’re not going to reveal our hand, but we might be interested in discussing it and we will listen and talk”. I share the view of my colleagues on the opposition Front Bench that it makes a lot of sense to go further than that for many local authorities that are considering whether or not to become combined authorities—not the relatively small number of combined authorities that currently exist but those that are looking at what it might all mean.

I still think that it is a terrible waste of people’s time not to have a reasonable idea of the kinds of thing that the Government might be positively interested in. I have said this before but any local authority groups coming together will have to second-guess what the Government might be interested in devolving, which is a terrible waste of time. They have to have a dialogue and find things out while someone else has probably been through the same process already. The Government must have a view about the areas that they are prepared to see devolved. Devolution is a two-way process. It is what local government and people in local communities would like to have, but it must also be about what central government feels it makes sense in the current climate to give a lead to—so I welcome these amendments.

To pick out one area, skills, and all that is associated with it, fewer than 2 million people go to university—full-time or part-time—but almost 3 million people are in further education. A lot of people in your Lordships’ House have been to university but far fewer will have been through FE colleges. I see the noble Lord indicating that he did. It is easy to overlook the fact that far more people look to other routes into skills and education than universities. I am from a strong university background so my view of universities is not negative at all, but that is the reality. The skills of that group of people are very important to the economies of our combined authority areas. The people with low and medium-level skills are almost certainly the people who will work and live in those communities. A lot of people in universities go off elsewhere—we would like to keep more of them in West Yorkshire. These people are the key to skills and our economic development and growth. Having a strategic view on that is extremely important.

That leads me to two final points. First, my noble friend touched on health and social care, and I would like to see that on the list. Any list can be added to, and it is clearly the case in Manchester, so it ought to be on a list that is indicative of the kind of things that we would expect to be up for discussion.

Finally, it is important to bear in mind that the role of the authority’s mayor is largely and overwhelmingly strategic, and where there are interventions, they are to help secure the strategic objectives. There is some temptation for local authorities to think, as the discussions go on, that local authority powers will be taken away from them: that while there might be some devolution from central government, powers will be taken away from local councils. Putting that kind of message out and making clear the difference between strategic powers and detailed implementation powers is extremely important. I warmly welcome the thrust of these amendments.

My Lords, I wish to echo a concern expressed by the noble Lord, Lord Shipley, if I understood him correctly This brings to mind the Queen’s Speech of 2010 in which the Government said that their ambition was to move power back to doctors, teachers and front-line professionals and let whoever is closest to the patient, the pupil and so on, make the decisions. One has seen following on from that the academy schools programme, powers for head teachers, and changes in social work with more responsibility being given to social workers. The delegation of power is moving downwards to those who are closest to the particular client. I see a similarity here.

The big question that one needs to be reassured about is that, for instance, a social worker—this is of concern to me—is sufficiently experienced and supported to make the right decisions about children and families. Perhaps what the noble Lord, Lord Shipley, is saying is that in giving these responsibilities, we must make sure that the new authorities have the capacity to make the right judgments. We do not want to tie their hands and we want them to be free, as long as they have the capacity to make the right decisions. I realise that this is bit of a chicken-and-egg situation: the more freedom one gives, the more people of the right calibre one may attract to take up those posts. But given that these are such important decisions for the lives of families in our society, it is quite fair to ask that reasonable checks be made on the quality of what is produced. I hope that that makes sense.

My Lords, these amendments seek in one way or another to provide that in advance of the devolutions being implemented, some form of statement should be published by the Secretary of State or put in the Bill about the range of powers which might be devolved to areas. These are examples of the quite centralist and prescriptive approach so beloved of Governments over the last 150 years, and that is what this Bill precisely seeks to reverse. There will be no prescribed list for local authorities or combined authorities to follow. We want to hear from them; we do not want to tell them what they want or what their plans for growth are. Our approach has been to start a conversation with the areas if they want to talk to us about their aspirations and the powers and budgets they want to have devolved to them to improve their area’s economy, deliver better local public services and build sustainable prosperity.

We want areas to be as ambitious as possible and we want to hear what they want, not what they think we are looking for. That is the whole point of the Bill. We do not have some preordained list of powers which we might devolve, and we do not wish to have in advance any conversations that would set limits or parameters about what may or may not be devolved or what might be an initial priority for devolution.

Noble Lords will be aware of the Manchester deal, and we have talked at length about some of the powers that Manchester wishes to see devolved. Perhaps that provides ideas for other authorities to move forward and the plans might offer them some inspiration, but we do not wish to impose the Manchester plan for growth on the Cornwall plan for growth or, indeed, the one for Norwich. We are very clear about that.

I am afraid that these amendments are simply out of step with the whole approach that this Bill is designed to deliver: agreeing bespoke devolution deals which enable individual areas to realise their potential and make the greatest possible contribution to the success of the UK as it responds to global economic opportunities and the challenges we all face.

I want to make two points. The noble Lord, Lord Woolmer, or the noble Lord, Lord Warner, made a point about local authorities being frightened that services they deliver as local authorities could be taken away—the difference between the strategic direction and the local direction of a council. That is a very important point to make because when combined authorities are thinking about their ambitions and plans, they must be focused on the big strategic issues that will benefit from the opportunity of scale across a number of local authorities.

The other point I want to deal with is that of capacity, alluded to by the noble Lord, Lord Shipley, and by the noble Earl, Lord Listowel. In a sense we are already dealing with combined authorities because we are having conversations, and obviously the Greater Manchester devolution deal took place last November, so we will continue with that. But when consulting the combined authorities on powers, their capacity to take on functions will also need to be addressed. A critical issue in the conversation with combined authorities will be to ensure that they have the capacity to deal with the matters that they wish to take on. If they are ambitious for powers to be devolved to them, they will need to be clear in the proposal they bring to us on the governance arrangements for managing and handling the power they want and how they will have the capacity to do so. With that, I ask the noble Lord to withdraw his amendment.

My Lords, I thank all noble Lords who have spoken in this short debate. Every noble Lord has supported these amendments with the exception, unsurprisingly, of the Minister. I should say to the noble Lord, Lord Shipley, that there is no fix on the timing of Amendment 36C if there are benefits in being flexible, or indeed on expanding the list. I would be happy to talk about that when we return to this matter, as we certainly will.

My noble friend Lord Warner made an important point about engaging health economies where they are holding back at the moment—being proactive and prodding them into focusing and engaging. The amendments have had the strong support of my noble friend Lord Woolmer, who stressed the importance of skills and the need to be strategic in these things.

I should say to the Minister that I am not surprised at the response because it is what we have been given throughout our consideration of the Bill: “This is a broad framework and we are not going to tell anyone to do anything; we are happy to sit back and have conversations”. In a sense that is government by vacuum, with no lists, preconceptions or limits being set. That cannot be good enough. If the Government are not themselves now planning how to deal with the consequences of what might happen after devolution, it would seem that they are being derelict. None of this forces anyone to do any particular thing, apart from the Government saying, “Actually, get off your backsides and make this work. Do something proactive to engage with combined authorities so that they know what is on offer and encourage them into deals”. Otherwise, there will simply be cosy conversations on an unplanned basis, and a favoured few authorities may well get the nod of approval from the Government. But the general thrust of our position is that we want devolution to work across the board in England on a proactive basis. That is what our amendments are designed to help achieve.

I will withdraw the amendments today, but I have absolutely no doubt that we are going to return to this issue in one form or another because it is at the heart of whether we believe that devolution should work across the board and we should want it to happen, or whether we think that it is a question of waiting to see what washes over us in due course. I beg leave to withdraw the amendment.

Amendment 36C withdrawn.

House resumed. Committee to begin again not before 8.39 pm.