Wednesday 9 March 2022
Arrangement of Business
My Lords, Members are encouraged to leave some distance between themselves and others and to wear face coverings when not speaking. If there is a Division in the Chamber, which I am not expecting, the Committee will adjourn when the Division Bells are rung, and resume after 10 minutes.
Social Security Benefits Up-rating Order 2022
Considered in Grand Committee
My Lords, I am required to confirm that the draft Social Security Benefits Up-rating Order 2022 and the draft Guaranteed Minimum Pensions Increase Order 2022 are compatible with the European Convention on Human Rights and I am happy so to do.
The Social Security Benefits Up-rating Order increases state pensions and benefits by 3.1% from April 2022, in line with the increase in the consumer prices index in the year to September 2021. This represents an additional £4 billion of expenditure on benefits for pensioners and £2.6 billion on benefits for people below state pension age in 2022-23. In November 2021, Parliament passed the Social Security (Up-rating of Benefits) Act, which made amendments to the Social Security Administration Act 1992, setting aside the earnings link in the state pension triple lock for the year 2022-23. This was in response to exceptional circumstances caused by the distorting effects of the pandemic on the earnings statistics used in the triple lock formula. Setting aside the earnings element is temporary, only for one year. We are committed to reapplying the triple lock in the usual way from next year and for the remainder of the Parliament.
From April 2022, the basic state pension will rise to £141.85 a week for a single person. This means that the basic state pension will be over £2,300 per year higher in cash terms than in April 2010. The full rate of the new state pension will increase to £185.15 a week and additional state pensions and protected payments in the new state pension will also increase by 3.1%. The pension credit standard minimum guarantee for a single pensioner will rise to £182.60 a week and the rate for a couple will rise to £278.70 a week. The personal and standard allowances in jobseeker’s allowance, employment and support allowance, income support and universal credit will increase by 3.1%. Certain elements linked to tax credits and child benefit will be increased in line with those payments. The monthly amounts of universal credit work allowances will also increase in April to £344 and £573.
Benefits for unpaid carers and those who have additional costs as a result of a disability or health condition will increase by 3.1%. These benefits include disability living allowance; attendance allowance; carer’s allowance; incapacity benefit; personal independence payment; the carer and disability-related amounts in pension credit and other means-tested benefits; the employment and support allowance support group component; and the limited capability for work and work-related activity element of universal credit.
I am aware that the noble Lord, Lord Davies of Brixton, has tabled a regret Motion against the uprating order and I respect his position on the matter. The regret Motion will be debated at a later date, but today we must agree the uprating order to ensure that my department can introduce the new rates of benefits and pensions from 11 April.
The Guaranteed Minimum Pensions Increase Order provides a degree of inflation protection for members of formerly contracted-out defined benefit occupational pension schemes. It requires schemes to increase guaranteed minimum pensions built up from April 1988 to April 1997. As set out in primary legislation, a guaranteed minimum pension in payment must be increased in line with the increase in the general level of prices as at September 2021, which was 3.1%, or 3%, whichever is less.
To conclude, with the Social Security Benefits Up-rating Order, the Government propose to spend an extra £6.6 million in 2022-23 on increasing benefit and pension rates. Furthermore, the Guaranteed Minimum Pensions Increase Order increases the guaranteed minimum pension by 3% in line with primary legislation. I beg to move.
My Lords, it was tempting to do no more than recite the contributions from the Conservative MPs who spoke on the social security order in the Commons, as they said much of what needs saying about this shamefully low increase in social security benefits in the face of forecast inflation of 6% to 7.25% this April, which will go even higher later this year following the horrifying assault on Ukraine. It does not take a mathematician to work out how a 3.1% increase will mean a significant cut in benefits’ real value, without even taking account of the differential impact of inflation on people on low incomes, who spend a disproportionate amount of their income on the basics of fuel and food.
The Government’s answer to the cost-of-living crisis has been widely criticised as inadequate and poorly targeted towards those who will suffer most, including by the Conservative MP Peter Aldous in the Commons debate on the order. A huge increase in fuel poverty is now predicted, despite the measures taken. Why have the Government ignored the calls from a wide range of organisations, including the Institute for Fiscal Studies, the Resolution Foundation, Citizens Advice and the Joseph Rowntree Foundation, to raise benefits by 6%, 7% or even 8% in line with the anticipated inflation rate? At the relaunch of the book by the noble Lord, Lord Freud, Neil Couling of the DWP said that it would be technically feasible to do so for universal credit. Even if it is not possible to do this for other benefits immediately, recipients could presumably be given a delayed uprating or a lump sum grant in lieu.
Had the Government listened to us in the autumn when we debated the triple lock Bill, this would of course have been less of an issue, though at that point we had not anticipated inflation going quite so high. It is clear that the current uprating mechanism, based on inflation around half a year earlier, is not fit for purpose, as the Resolution Foundation, the IFS and Nigel Mills MP, in the Commons debate, have argued. Will the Minister undertake to take back the message that there needs to be a review of the uprating procedure?
To return to the immediate crisis, in order to understand just how damaging this uprating will be, we need to put it into context, as the noble Lord, Lord Freud, made clear in the debates on the triple lock Bill. It is a context in which benefits have been cut or frozen for much of the period since 2010. Families with children have been particularly badly hit, thanks to the two-child limit and benefit cap, described by the noble Lord as “excrescences” that should be got rid of. It is worth noting here that, according to the Child Poverty Action Group, of which I am honorary president, 180,000 families will see no benefit increase next month because of the cap, which has not been uprated at all since it was set in 2016.
Moreover, the withdrawal of the welcome £20 uplift means that the Government will have been responsible for two cuts in the real value of benefits in under six months, as pointed out by the JRF. It estimates that 400,000 people could be pulled into poverty by the April cut. However, the underlying issue is the inadequacy of benefits to meet people’s needs. I quote the Tory MP, Nigel Mills, who is a member of the Work and Pensions Committee:
“I genuinely fear that many of the benefits we have are now lower than people need, so a lower than inflation rise for benefits that are already too low leaves people in an impossible position … It should not be a big challenge or a contentious point of debate to want to ensure that the benefits we are giving the poorest in society are enough for them to live on”.—[Official Report, Commons, 7/2/22; cols. 723-24.]
There is plenty of research that shows that all too often they are not. It was a recurrent theme in the Covid Realities research, conducted by a number of universities in association with the CPAG. It underlined that inadequate benefits contribute to the insecurity that many people living on benefits feel. One participant, when asked how she felt about the withdrawal of the £20, answered that she was “terrified”. She explained:
“We only started to claim universal credit in the middle of the pandemic due to my husband being made redundant, so up until recently I had no idea we were in receipt of any ‘uplift’ … To be told that now all of a sudden £86 per month will be taken is horrifying.”
Another participant commented:
“I’d like people to think about why it was necessary to introduce a £20 uplift … Surely this is an acknowledgement in itself that the support given to low-income households just isn’t enough for them to live on.”
Evidence about the inadequacy of the benefits received by disabled people can be found in the NatCen report on the uses of health and disability benefits that the DWP tried to suppress but which was eventually published in an unprecedented move by an exasperated Work and Pensions Committee, although a whistleblower revealed that some references to “unmet need” had already been excised following pressure from the department. While overall the ability to meet needs depended on the extent to which recipients had other sources of income, those of limited financial resources reported often not being able to meet not only health-related needs but also essential day-to-day living needs such as heating their house or buying food.
The Minister in the Commons, Chloe Smith, disputed such a reading of the research, arguing that it showed that
“health and disability benefits … help to meet almost all identified areas of additional need.”—[Official Report, Commons, 7/2/22; col. 666.]
But helping to meet needs is not the same as being sufficient to meet them. The health and disability Green Paper made no mention of the question of benefits adequacy. As Minister with responsibility for research in the DWP, will the noble Baroness give us an assurance that the White Paper will do so, taking account of this research which was commissioned by the DWP? Will she take back the message that we need a proper review of the adequacy of social security benefits more generally?
In conclusion, the Minister in the Commons tried to reassure MPs that there was nothing to worry about because of the smoothing effect, which meant that this April’s inflation rate would be reflected in next year’s uprating. However, Torsten Bell of the Resolution Foundation dubbed it more of a “rollercoaster” on yesterday’s “Today” programme—anything but smooth. The Minister demonstrated his complete lack of understanding of what it is like to struggle on a low income. If you are already facing difficulties feeding your children adequately and keeping your home warm, it is no help or comfort to know that today’s rocketing inflation rate will be smoothed out in benefit rates in a year’s time. Indeed, some of those affected might not even be claiming some of those benefits in a year’s time, so they will, in effect, have been cheated of what is arguably rightfully theirs. I urge the Minister not to use the smoothing argument in her response because, frankly, it is cruel when parents and others on benefits are worried sick about how they are going to manage and she is not a cruel woman.
My Lords, it is good to follow an informed speech. The uninitiated may find, as I do, these many details in so many pages difficult to follow. One finds on page 34 of the order, in Schedule 5, that Regulation 20(9)(c) refers to an enhanced disability premium of £25.35 concerning polygamous marriage. My reference is not an objection but an instance of facts buried in the necessary but challenging minutiae. But it is heartening to read of increases, for example, in adoption, maternity, bereavement and disability benefits. The late Lord McKenzie—Bill—is surely watching over this Committee. All this was made for the late, lamented Bill. He always mastered regulatory detail.
I hope that that wretched, bullying, cruel Kremlin gangster does not launch true cyberwarfare, which might immobilise the great department that the Minister represents, because that department delivers these vital benefit payments. They are so welcome, so necessary and so important to personal well-being for tens of thousands—perhaps many millions—of people. Millions of our hard-pressed fellow citizens are in need of these benefits. Soon they will be engulfed in a great wave of price increases: the supermarket food, the gas and electric heating bill, the diesel motor tank to fill. In this respect, for example, I paraphrase Charles Dickens’s iconic Oliver: Minister, I want some more.
I refer to the levelling-up document and the Prime Minister’s foreword—sincerely meant, I am sure. He says that we are
“one of the most unbalanced”
economies. He goes on to say:
“I am determined to break that link between geography and destiny, so that it makes good business sense for the private sector to invest in areas that have for too long felt left behind.”
On the next page, there is a foreword by the Secretary of State, Mr Gove. He says:
“There are stark geographical inequalities between and within our cities, towns and villages. For every local success, there is a story of scarring and stagnation elsewhere.”
I thank the Minister for her introduction. Professionally, outside your Lordships’ House, she was always for those in need of help, and is always sincere at the Dispatch Box; that goes without saying. I also acknowledge my noble friend who leads for us, from whom one always learns, and her expertise and commitment. My regret is that this debate is not on the Floor of your Lordships’ Chamber, where it should be, given the supreme importance of these benefits to so many people who are hard pressed.
It is noticeable that in Part 1, the introduction, some provisions are extended to England and Wales only; Scotland is excepted. In the helpful Explanatory Memorandum, at paragraph 6.11, we are told of benefit payments devolved to the Scottish Parliament, although they are the same benefits. Inevitably, one asks—as I do, concerning my homeland, the lovely land of Wales—why not devolve to Wales also? There is a very able and competent Government in Cardiff. Did the excellent Welsh Government ask or did they presume that the challenge of a new executive agency infrastructure was not for this time—or did Her Majesty’s Government refuse a Welsh request? It is an excellent Welsh Government and I would be grateful, whether this is by letter or in response, for the Minister’s insight: to devolve or not to devolve? Always now, when governance is the issue, the question, the issue, the very matter—the future of devolved government—crops up, as it has in the memorandum’s reasoned, informative page 5.
This debate is about benefits and pensions, but devolution de facto is in the order’s spirit, as it is in its pagination. The crisis of Covid-19 stretched British governance to the limit. It was clear that there were unforeseen consequences of devolution. That stared Her Majesty’s Government, the Prime Minister and the Cabinet in the face frequently. It came from several First Ministers—and, indeed, paragraphs 6.11 and 6.12 of the Explanatory Memorandum refer to the Scotland Act. It was clear during Covid-19 that the First Ministers took different views from the Prime Minister’s. What are the assessments by the Minister’s department as to future consequences to the task of distributing and assessing benefits? The Minister might give a reply by letter, if not in the debate.
To conclude, soon a great wave of price increases across the board will engulf the most vulnerable of our fellow citizens. Already inflation stalks the land—and I refer to those of our fellow citizens who are not “just getting by”. We had those noble and thoughtful words from Prime Minister Mrs May outside No. 10, at her lectern, on being elected. She said that she was concerned for those just getting by. I am asking the question also for those who are not getting by—and millions of our fellow citizens now are not getting by. The Minister can be proud that her department is offering help, and more help, but the predicament for so many is massive and the challenge thundering up is even bigger. It is going to happen and it is not necessarily the fault of a given Government. It is going to happen and so I say, like the iconic Oliver: I would like some more. Are these welcome increases to benefits enough? I think that there is an important answer to give.
My Lords, I thank the Minister for introducing this uprating order. The problem is that the combination of rising inflation and tax rises is creating a cost-of-living crisis that will affect practically every household in the UK but will be especially difficult for those on low incomes who make use of welfare payments.
Before the crisis in Ukraine, the Resolution Foundation reported that an average family will see household budgets reduced by £1,200 a year through a combination of soaring energy prices, the freezing of the income tax personal allowance and the rises in national insurance and council tax. Those on low incomes will find it hardest to make ends meet, because the major benefits are due to go up in line with a lagged measure of inflation. The September CPI rate had it at 3.1%, whereas the Bank of England expects inflation to peak at 7.25% in April and to average around 6.2% in the course of 2022—and all that is before the impact of the crisis in Ukraine is taken into account. Many commentators are forecasting an inflation rate for the UK of more than 10% later this year.
The Government really must not allow a situation to develop that means a deep cut in benefits year on year for people less able to withstand the impact of the rising cost of living. For example, those who must use meters to pay for their gas and electricity will be put under even greater financial strain because of their high cost compared with other methods of payment.
Even before the impact of the Ukraine crisis on the cost of living, this policy would have led to a £290 real fall in benefit income year on year for the 10 million households in receipt of these benefits. That would be an unacceptable cut in the incomes of millions of people who are already among the most vulnerable. The Spring Statement later this month provides an opportunity for the Chancellor to do something about this crisis, which was unnecessarily deepened by the removal of the £20 per week boost to universal credit.
Paragraph 12.1 of the Explanatory Memorandum on impact is hopelessly out of date. The assertion that the
“impact on business, charities or voluntary bodies is negligible”
is flawed. The impact will be very great, particularly on charities and voluntary bodies, which will see a huge increase in demand for their help as prices rise steeply and real incomes decline for millions of households.
I hope that the Minister will agree that this uprating order is out of date and that the Spring Statement needs to bring proper solutions to the deepening crisis in our cost of living and its impact on those with low incomes.
My Lords, I thank the Minister for introducing these orders and all noble Lords who have spoken. I agree with my noble friend Lord Jones that it would have been preferable had the uprating order been taken in the Chamber. Many of the orders that we deal with are technical; this one affects the incomes of some 20 million people at a time when we have never seen a cost-of-living crisis like this. Had it been taken in the Chamber, we perhaps would not have had a regret Motion, but here we are.
I thank my noble friend for mentioning my late and much-lamented noble friend Lord McKenzie. Every time we gather here, we miss him very much. I just wanted to read his name into the record.
First, a word on the guaranteed minimum pensions order, which is rather more technical. I have raised the question of equalisation in most previous years, but we have had a new development. A new Private Member’s Bill has just arrived in the Lords from the other place that aims to address the legal uncertainty that the current legislative situation can pose when a pension scheme tries to adopt a process for addressing GMP equalisation. The Government smiled on it at the other end. At Second Reading in the Commons, the Pensions Minister, Guy Opperman, accepted that what the Bill does is key because it
“gives the Government the ability to set out in regulations the details of how survivor benefits will work for surviving spouses or civil partners of people with guaranteed minimum pensions.”
He also made the point that the Bill
“gives the Government the ability to set out in regulations details about who must consent to the conversion of guaranteed minimum benefits.”—[Official Report, Commons, 26/11/21; col. 627.]
The Minister confirmed, at col. 628, that the Government backed the Bill. However, when the Commons got to Third Reading on 25 February—a long gap—he said:
“The reality is that there is no real way for my hon. Friend’s Bill to get through this House and the House of Lords in the time allowed”.—[Official Report, Commons, 25/2/22; col. 659.]
The Government have accepted that there are problems to be addressed on the matter of GMP equalisation, so can the Minister assure the Committee that if that Private Member’s Bill fails to get through, the Government will none the less speedily moved to address the outstanding issues?
I turn to the Social Security Benefits Up-rating Order, which we gather to debate every year, except of course during the years of shame, when the Government refused to update social security benefits as they should have done. I cannot remember a year when the context was so worrying for so many people. The cost of living is rising so fast that even those on middle incomes are struggling and it is a catastrophe for those on lower incomes. People are genuinely frightened about how they are going to manage. Demand for help from food banks is already skyrocketing, as it is for financial advice and debt support. The noble Lord, Lord Shipley, made a good point that the Explanatory Memorandum had not taken account of the impact on those organisations.
On 25 November, the Secretary of State announced her decision to raise pensions and most benefits by prices—3.1%, as the CPI 12-month rate was in September—but that inflation was already out of date as she made the statement. CPI had hit 4.2% in October. By January it was 5.5%. A year earlier, it was 0.7%. As noble Lords have said, the Bank of England’s latest Monetary Policy Report suggests that it will hit 7.25% in April, but that was before the war in Ukraine, so goodness knows how high it will go. We have not seen a cost of living rise of this scale for more than 30 years. As a result, pensions and benefits will be uprated by less than half the rate of inflation.
My noble friend Lady Lister is quite right that it is worse again for poor families, who spend more of their income on basics such as food and fuel. During the debate on the Social Security (Up-rating of Benefits) Bill, the Minister said that
“we are not currently expecting widespread, significant and sustained increases in consumer food prices in the coming months.”—[Official Report, 26/10/21; col. 740.]
Does the Minister still think that? Grocery prices rose in February at their fastest rate for more than eight years, and market analysts predict that that is not going to get better any time soon. In three weeks’ time, the energy price cap rises to almost £2,000, and it will go further. Consumers have this week been quoted £3,500 a year to fix their tariff. That is £67 a week. A single person’s JSA is only £74 a week. How are people supposed to manage?
Noble Lords have commented on the lag between the release of the inflation data used as a reference point and the uprating taking effect. As my noble friend Lady Lister mentioned, Ministers tend to argue that it all comes out in the wash because if inflation were, say, 6% next September, benefits would go up by that much in April even if inflation had come down again, but she is quite right that when inflation is this high, people on benefits cannot afford to wait a year. They simply do not have that kind of money lying around to subsidise them in the meantime. What if inflation were to come down in September, or just happened to dip at that point? People would then have had a whole year of spiralling prices while their benefits lost value.
The other argument that is made is that it is technically impossible to use inflation data from later than the previous September because it takes a long time to programme the computers. I would love to hear the answer to the universal credit question. We are always told how flexible, dynamic and instantly responsive universal credit is, so surely it can spring into action and change things at a moment’s notice. We were told during the passage of the Social Security (Up-rating of Benefits) Bill that there was a hard deadline on that Bill because the computer had to be changed. I twice asked what would happen if the computers were changed and subsequently one or other House were to reject an uprating order. I did not get an answer, so I shall try again. First, can the Minister tell the Committee whether the computers that set the levels of benefits covered by these orders have already been adjusted to reflect the price increases contained in them? If so, what happens if either House were to reject the order? Secondly, would it be technically possible for the Secretary of State, if she chose, to raise any of these benefits by an amount greater than 3.1%?
In responding, the Minister may tell us of the various steps the Government have taken, but the truth is that they do not come close to addressing the scale of our cost of living crisis. The energy scheme they have produced actually means that customers will face higher bills for the next four years, and the council tax rebate will be welcomed by those who get it, but it is based on an unfair and out-of-date system and it goes only to those who pay their council tax bills directly, and those who do, but do not pay by direct debit, will have to make a claim for it. I thought that the chief executive of Citizens Advice put it very well. She said:
“Energy rebates are a buy now pay later solution which only provide temporary relief later this year. And linking financial assistance to Council Tax will result in a complicated lottery that means support is not targeted at people who really need it”—
The context of this uprating is a decade of terrible cuts. Remember that in 2011 uprating switched from RPI to CPI, which switched billions of pounds from the poor to the Treasury. In 2013-15, uprating was capped at 1% and most working-age benefits were frozen in cash terms for the next four years. The result of that is that between April 2010 and April 2021 the value of JSA and ESA fell by 8% and that of child benefit by 16%. It is astonishing that in real terms the value of the basic unemployment benefit is now 10% less than it was in 1965. This matters because the choices the Government made have left families today in a very weak position to deal with the kind of rapidly rising inflation we are now facing because we came into this crisis with child and pensioner poverty rising and many families already in fuel stress. This cost of living crisis did not start last autumn; it has been building for years.
My noble friend Lady Lister mentioned the bedroom tax, the two-child limit and the benefit cap, all of which hit people’s living standards in unpredictable ways. The rationale for the benefit cap was meant to be to limit benefits to the same amount as the average income of working families. That was always dubious but, if we take it at face value, can the Minister explain why that value has been frozen at its cash level since 2016? If it is meant to be set at the level of the average working family, why is it at the 2016 level?
Finally, pensioners were also badly let down by this Government, when they broke their manifesto promise by suspending the triple lock and severing the earnings link. Almost one-fifth of pensioners are living in poverty, more than a million are missing out on pension credit, there are unacceptable delays in reimbursing pensioners who were underpaid, and I keep hearing more and more cases of newly retired pensioners waiting months to get their state pension.
The Opposition will not oppose this order, of course, but the Government are offering no solution to the severity of our cost of living crisis. Many people are now desperate; I hope the Minister will tell us what more the Government will do to help them.
My Lords, I start with an apology. In my opening comments, I said the Government propose to spend an extra £6.6 million in the uprating order; it is actually £6.6 billion. Forgive me.
I thank all noble Lords who took part in today’s debate. I am not a bit surprised by the points that have been raised and completely agree with all noble Lords that we are in a difficult position. People are struggling and it is not nice to see.
The noble Baroness, Lady Lister, gave me my homework to take back to the department. I give her my word that I will take back every issue and make sure that people understand the sense of injustice that the noble Baroness and others feel. She and other noble Lords mentioned the cost of living. We have begun our recovery from the pandemic, but things have been exacerbated by the ongoing conflict in Ukraine, which is putting an additional strain on households. We are coming out of the pandemic and trying to work on that but have been further hammered by that position.
We have taken steps to ease financial pressures. The noble Baronesses, and the noble Lords, Lord Jones and Lord Shipley, will tell me that we have not done enough, but we have not done nothing. We have raised the national living wage, reduced the universal credit taper rate, increased work allowances and provided £140 million a year in discretionary housing payments and cold weather payments of £25 a week to up to 4 million people. These will have made a difference, but there is clearly more to do in the current situation.
The noble Baroness, Lady Lister, raised the point about the justification for using the September CPI figure. The Secretary of State undertakes an annual review of benefits and pensions, and the consumer prices index for the year to September is the latest figure the Secretary of State can use to allow sufficient time for the required legislative and operational changes before new rates can be introduced at the start of the next financial year. All benefit uprating since April 1987 has been based on the increase in the relevant price inflation index in the 12 months to the previous September.
As noble Lords have already said, uprating affects over 20 million customers and there are interdependencies across government. The DWP needs all benefit rates to be confirmed by the end of November, plus all the subcomponents of those benefits, so that the first IT system can be uprated in December. Any deviation will have significant implications for citizens, potentially resulting in underpayments or no payments being made. Given the volumes involved, the technical and legislative requirements and the interdependencies across government, it is not possible to undertake the uprating exercise any later than currently timetabled.
If that is the case, how come it was possible to add £20 to universal credit at such short notice? If such a long lead-in time is needed, and I recognise that a longer time is needed for legacy benefits—but not necessarily that long—how come it was possible to uprate universal credit by £20 in a matter of weeks during the pandemic? As I said, according to Mr Couling of the DWP, universal credit can be uprated at very short notice. As my noble friend said, that is supposed to be part of its agility. There is growing pressure on the department to look again. I quite understand that it has been like this for X number of years, but we now have more powerful computers and so forth. I really think that the DWP should look at it and see what might be possible, because we may well be going into a longer period of volatile inflation.
I think that the noble Baroness appreciates that the UC system is more modern and able to do things, but her point about the £20 uplift is already on my list to take back to the department. I will write to the noble Baroness and place a copy of the response in the Library.
The noble Baroness, Lady Lister, the noble Lord, Lord Shipley, and others raised the issue of inflation and anticipating peaks. Benefits are paid over the course of the year and looking at the peak alone is a little misleading. Any move to implement a mechanism to anticipate peaks would require a mechanism to do the same to account for troughs. DWP believes that this kind of complex adjustment mechanism is not appropriate. For shorter-term shocks such as the current energy price increases, the Government have other responses which do not permanently commit the taxpayer to fund higher benefits.
The noble Baroness, Lady Lister, mentioned disability benefits. The department is considering contributions to the Green Paper and it would not be right for me to prejudge now what might be in the White Paper later this year. I shall talk to the Minister for Disabled People, Chloe Smith, and pass on the points.
The noble Lord, Lord Jones, as ever, took us on focused journey to Wales. It is a wonderful country—I am sure that my noble friend Lady Bloomfield, who is no longer in her place, would agree. I would get myself into a lot of trouble, which I know the noble Lord would not want, if I started talking about devolution and what might happen.
I shall certainly write about the points raised by the noble Lord in relation to the uprating order, but I shall also try to do a little better and write to DLUHC and ask it to answer those points, if that is all right with him.
The noble Lord, Lord Jones, made a valid point about people not getting by. While I cannot promise anything—I can promise only to talk to colleagues—I am absolutely confident that the Secretary of State and others realise the difficulties that people are in. More than that I cannot say because I do not know, but the point will be made.
I say to the noble Lord, Lord Shipley, that the impact assessment refers to direct costs to charities and private sector organisations as employers. The order brings direct costs to the Exchequer but not to employers. The noble Lord spoke about people who use meters, the keys and how much more expensive that system is. I know that people are fully aware of that. It is not ideal.
The noble Baroness, Lady Sherlock, talked about GMP equalisation and the tax issue. I have an extensive response here; perhaps I may write to her and, again, copy it to everybody. She says that she has asked me twice and I have not responded. I am sorry about that; I really thought that I had. Let there be no doubt about the situation. The conclusion of the Secretary of State’s annual review is announced in a Written Statement ahead of the hard IT deadline at the end of November for all systems other than universal credit. DWP needs all benefit rates and subcomponents to be confirmed by the final week of November to enable the programming of the IT system in time for the new benefit rates to come into force in April. If we were to wait for final parliamentary approval, we would need either to make the IT changes in March, which would mean payment of uprated pensions and benefits delayed until October, or to have parliamentary approval in November, meaning that we would have to use an even earlier CPI than September’s. It is a question of balance.
If the order is voted down, the 3.1% increase will still go ahead in April, because the IT process cannot be changed at this stage. The increase will, however, have no legal underpin. That is why I urge the House to approve the order, so that there can be certainty of outcome for the 20 million people who receive state pensions and benefits from DWP.
Perhaps the Lord Chairman will allow me a little licence. I understand why the Minister said that, but I want to get to the bottom of what it is we think we are doing here. So the computers are changed in December and, if either House rejects this order, the increase goes ahead anyway; it just does not have any legal underpinning. Perhaps I have been spoiled, but I am accustomed to thinking that, when the House is asked to take a decision, that has a consequence: if we say yes, something happens; if we say no, something does not happen. This is the first time that I have been aware of being asked to take a decision and being told that, if we said no, it would not make any difference. Does the Minister not think that that is a little unusual?
Before the Minister sits down, she raised two matters in response to what I said. Perhaps she would arrange to write about the high cost of meters. That might be able to be adjusted in the interests of those who are paying higher costs. It is the kind of thing that would sit very nicely in the Spring Statement. Secondly, I take up the issue of the impact on businesses, charities and voluntary bodies. Paragraph 12.1 of the Explanatory Memorandum states that it is negligible, but of course all those organisations will have to employ more staff to deal with the huge rise in queries that they will get.
As I said, I fully appreciate the issue of people who use keys to pay their energy costs, which are higher. Let me take that back as a special project. I will speak to the Secretary of State, who I will see tomorrow, and she may well have a thought on that. When it comes to the Spring Statement, all noble Lords tell me to speak to the Treasury. I have nothing to tell your Lordships about the Spring Statement; we will have to wait to see what, if anything, comes out in relation to this. I take the point of the noble Lord, Lord Shipley, about charities, but that is an indirect effect, if it happens. I cannot add more than that at this stage.
The noble Baroness, Lady Sherlock, talked about poverty, a subject that we have discussed many times. The Government are committed to a sustainable long-term approach to tackling poverty, and to supporting people on lower incomes. We will spend £110 billion on welfare support for people of working age in 2021-22. With around 1.29 million vacancies across the UK, our focus is firmly to support people to progress into work as the best way to substantially reduce the risks of poverty.
I know that there are people who cannot work, and I know the passion with which the noble Baronesses, Lady Lister and Lady Sherlock, and others talk about us wanting to help that group. Our multi-billion-pound plan for jobs, which has been expanded by £500 million, is helping people across the country into work. I know that our new Way to Work programme has raised some issues. As I have said before, when I opened the jobcentre in Hastings, the staff were alive with the freedom that it would give them to do more, and in more detail, to help people at the lowest point of their lives. I trust those work coaches implicitly to do what they can and, more importantly, to feed back if something is not working so that we can fix it.
The noble Baroness, Lady Sherlock, asked whether I still believed a Statement that I made. Perhaps she can write to me, as I did not quite catch the context. I will be very happy to write back.
I shall do so. The noble Baroness also raised the benefit cap not being increased. Again, there is a statutory duty to review the levels of the cap at least once in each Parliament. I am advised that this will happen at the appropriate time.
I am afraid that I cannot. I am sorry.
On support for people affected by the benefit cap, as I have said, our work coaches are cognisant of all these things, and I am sure they will try to find people work that helps them and alleviates some of the impact of the cap. Claimants can also apply to their local authority for a discretionary housing payment if they need help to meet rental costs.
The noble Baroness, Lady Sherlock, talked about the Private Member’s Bill. The Government continue to support this Bill and hope that it achieves Royal Assent in due course. I thank all noble Lords for their contributions.
Guaranteed Minimum Pensions Increase Order 2022
Considered in Grand Committee
Goods Vehicles (Licensing of Operators) (Amendment) Regulations 2022
Considered in Grand Committee
My Lords, I beg to move that these regulations be considered. This instrument amends legislation governing the goods vehicle operator licensing regimes in Great Britain and Northern Ireland. The changes must be implemented, as they are commitments included in the EU-UK Trade and Cooperation Agreement, or TCA, which come into effect during 2022. The changes contained in this SI reflect new requirements for transporting goods to, through or within Europe. These changes will also come into force for EU member states by May 2022. They ensure continued and reciprocal access for goods transport between the UK and the EU.
The primary objective of this instrument is the extension of the goods vehicle operator licensing regime to include some light goods vehicles, or LGVs, such as vans or pickup trucks. The vehicles involved weigh between 2.5 and 3.5 tonnes in maximum laden weight, either alone or as combined weight when used with a trailer, and operate internationally for hire or reward. These regulations also introduce minor changes to the wider goods vehicle operator licensing regime, affecting operators of heavy goods vehicles, or HGVs.
There are three principal areas of change within the instrument. First, these regulations will potentially bring an estimated 21,000 LGVs, spread across 4,200 operators, into the scope of the operator licensing regime. From 21 May 2022, if these vehicles are used to transport goods to, through or within the EU, including Ireland, they will need to be listed on an operator licence. However, to be clear, these changes do not affect vehicles used domestically. Furthermore, they will affect only commercial hire or reward goods transport and not, for example, moving equipment or materials used by an individual or organisation in the ordinary course of business internationally using a van.
Secondly, these regulations will create a distinction in the existing operator licensing regime between a heavy goods vehicle operator licence and a light goods vehicle operator licence. To avoid imposing a disproportionate burden, we have chosen to extend to LGVs only those aspects of the HGV regime required by the TCA. However, taking this approach has meant that the instrument is long—perhaps longer than might be expected
Thirdly, the regulations will introduce changes relating to the role of a transport manager, which is a requirement of operator licensing. This will be required for the new LGV operator licences. To reduce this immediate burden, we are allowing a temporary exemption from the requirement to hold a transport manager certificate of professional competence for those who can show that they had been managing light goods vehicle fleets continuously for 10 years in the period up to 20 August 2020, as specified in the TCA. For those who qualify, the application service is already open and is intended to close in May 2024.
Once granted, these “acquired rights” will be valid for up to three years, expiring on 20 May 2025. The exemption is time-limited to ensure that standards of professionalism within the industry are maintained, while also allowing a transition period to enable qualifications to be undertaken. The limits applicable to external transport managers for HGVs, namely a maximum of 50 vehicles between up to four operators, will also apply to LGVs. Transport managers must also reside in the jurisdiction, UK or EU, where the fleet they are managing is based, as per the TCA. There is a transitionary provision ensuring that those who live and work in different jurisdictions can continue in their current jobs.
At this point, I draw the Committee’s attention to an error in these regulations, leading to a disconnection between the policy intention and the legislation as laid. While the instrument is correct in so far as it is legally effective, it goes beyond the policy intentions. The SI was intended to apply only to the operation of goods vehicles, but one provision inadvertently also applies to the operation of passenger vehicles. In doing so, it disrupts the Public Passenger Vehicles Act 1981, making the regulation of the industry more complex. As a result, we laid a second, correcting instrument using the draft negative procedure on 25 February. This is of course subject to the views of the sifting committees and, while I hope it will not be necessary, the correcting instrument may need to be debated if it is decided that the affirmative procedure should be followed.
As I have communicated to the noble Baroness, Lady Randerson, and the noble Lord, Lord Rosser, I am profoundly disappointed that such an error has occurred, and I assure them and all noble Lords that the causes are being addressed urgently as part of our wider review of SI processes.
The final element of these regulations introduces minor changes affecting both HGV and LGV operators in the following areas: cross-border transport management; record-keeping; advertising requirements for licences; availability of vehicles and drivers; and conformity with tax legislation. Most operators already comply with these requirements so there should be minimal impact on the industry.
These regulations are necessary to ensure that the UK upholds a key element of the EU-UK Trade and Cooperation Agreement, thereby ensuring that UK-EU trade flows can continue. I commend these regulations to the Committee. I beg to move.
My Lords, perhaps I could ask for a point of clarification. I am here for the next business; I was not intending to speak. My noble friend the Minister eloquently moved the regulations, for which I am grateful. If we are going further than was originally intended, does this put us out of kilter with the flow of traffic across to the EU or is it neutral in that regard? That is my only question.
My Lords, I start by thanking the Minister for her explanation, including of the error. I am happy to accept that it will be corrected in due course.
The Government are going to some lengths here to comply with the terms of the TCA—but only just. This SI certainly follows the letter of our obligations under the TCA but does the absolute minimum required to do so, and in doing that, actually creates a more complex situation. As with so much associated with the post-Brexit legislation, it makes life more difficult and complex for small businesses.
The new EU regulations are tightening road safety requirements—that is obviously the intention of all this—by applying licensing to heavy goods vehicles that are less heavy than was previously the case. The Secondary Legislation Scrutiny Committee notes that this will apply to around 4,200 goods vehicle operators. It also notes that the legislation applies to Northern Ireland, too. In the case of Northern Ireland, the realities of the situation include, of course, not just the protocol but the fact that, in practice, goods vehicles cross and re-cross the border all the time, and can do so even if, for example, they start out in Northern Ireland to deliver goods to Northern Ireland, going east to west and west to east; the route can take them across the border several times. That is the way the road runs. So this could be a requirement for Northern Ireland operators a great deal more often than it will be in GB as a whole. So my question to the Minister is: am I right to assume that the vast majority of operators in Northern Ireland will have to adopt these new licences, at least as a precautionary principle?
In Britain as a whole, people will not need the licence for passenger vehicles—or they will not once the Minister has corrected the legislation. That seems simple enough, but it will also not be needed if the vehicle is not to be used internationally for hire or reward. That is a more complex issue. It is quite obvious if the vehicle you are running is a passenger vehicle, but it is less obvious if it is going to travel abroad. If you are running a Tesco delivery vehicle, you will know that it is not going abroad. But suppose you do small-scale removal of domestic equipment; you might operate for months or years without ever going abroad, then suddenly get a job that involves doing so. For a long time, you would have assumed that you do not need this licence, but that might prove a mistake and you might need to get it. That is why transport managers are so important. As the people responsible for licensing and insurance, it is their job to make sure that that sort of error does not happen, but there are some very small companies in which this kind of role might be overlooked.
The SI allows for a period of exemption so that companies and their managers can gain the required certificates. The Explanatory Memorandum says that efforts have been made to do this in time to allow companies to prepare, but in fact it comes into force on 21 May, which is a very short time span. I accept that the Government will do their best on this from this day onwards, because it comes into force tomorrow, but it is not long for people to prepare.
I welcome the limitation on who can take up acquired rights based on their previous experience. From paragraph 7.18 of the Explanatory Memorandum, it is obvious that training for transport managers increases safe working practices. I welcome the much more stringent requirement for transport managers generally, such as the limitation on the number of vehicles they can supervise, but it is illogical that they can operate an unlimited number of domestic vehicles. If you run a company with hundreds of vehicles, you will have little time to deal with the relatively small number of vehicles that are used internationally. My question to the Minister is: does the nation have a ready supply of properly qualified and experienced people for the role of transport manager, as it will obviously become more complex? Will the lack of transport managers be yet another hurdle for the freight industry to face this year?
I have a question to the Minister about paragraph 7.30 of the Explanatory Memorandum, which says that there will not be local advertising of the need for the new licences. So how will the industry know about them? What are the Government doing to inform freight operators in general, especially small companies? The big companies will know, but the small companies will need help.
I have another question for the Minister, about the enhanced role for traffic commissioners that comes from this legislation. They clearly have an important regulatory role, but what additional resources are they being allocated for this important additional work?
Finally, paragraph 7.35 sets out a new requirement for operators to try to prevent “bogus operations”. This is clearly informed by bitter experience of the past. I do not think it is necessary for the Minister to explain it to us here, but there is clearly a problem. As this is obviously a significant and specific problem that is being dealt with in this legislation, can the Minister tell us how such activities will be inspected to ensure that the requirement in paragraph 7.35 is as effective as the Government clearly hope it will be?
I too thank the Minister for her explanation of the content and purpose of these regulations. I take the same view as the noble Baroness, Lady Randerson, does about the error. I thought I heard the Minister say that a wider review of the SI process is taking place. The only comment I would make is that this is not the first time we have had an error in a Department for Transport SI. I am sure that is much to the Minister’s frustration. Perhaps it is understandable that a wider review of the process is going on. I do not wish to say any more about that subject than that.
I noticed that the Explanatory Memorandum says, under the heading “Purpose of the instrument”:
“The UK is obliged to implement these changes following commitments included in the … Trade and Cooperation Agreement”.
I suppose that is an effort by the Government to make it clear that they are not really doing it willingly; it is because they have to. But some of us thought, perhaps incorrectly, that the trade and co-operation agreement had been freely entered into—in the way that the Northern Ireland protocol was freely entered into—and that the Government thought it was a good agreement. Judging by the Prime Minister’s comments at the time, he thought that was a pretty good deal. I only make the comment—I think this is something the noble Baroness, Lady Randerson, alluded to—that whenever we come across anything to do with the EU there is always wording that makes it fairly clear that if the Government had their way they would not be doing anything along the lines of that particular instrument, which is perhaps unfortunate.
As I understand it, the Government are not introducing environmental requirements for HGV operators that stem from UK law. In the Commons, the Minister said that these
“are not required by the TCA.”
Is that now the test when it comes to environmental requirements: it is not whether they are desirable or needed, but simply whether they are “required”? Should environmental issues not be looked at on the basis of whether they are desirable or needed, rather than whether you are required to do it in some agreement or another? Perhaps I misunderstood the point that appears to have been made.
As has been said, these requirements apply only to LGVs on international trips, primarily to the EU. They do not apply domestically in the UK market. It is clear that the UK Government have no plans to regulate further, yet I think I am right in saying that the Minister in the Commons said that the operator licensing system
“continues to be vital to properly manage the use of large vehicles within the UK market.”—[Official Report, Commons, Second Delegated Legislation Committee, 28/2/22; col. 4.]
I am just interested to hear the response. Why do the Government think that the licensing system would not be needed for LGVs in the UK market? Which parts that are needed for LGVs for international trips are deemed unnecessary and bureaucratic to apply within the UK markets? I presume that that is the Government’s argument for them not wanting to apply in the UK markets, because the Government consider them bureaucratic but are obliged to apply them because of the trade and co-operation agreement, which the Government freely entered into.
I believe the Government have also indicated that these regulations will not impose any particular burden on business. I simply ask how the Government came to that conclusion when, if I have understood the Explanatory Memorandum properly, 12 organisations responding to the consultation that currently operate light goods vehicles said it was likely that they would have to cease or reduce operations due to these regulations. I do not particularly square that statement—unless, again, I have misunderstood it—with a view that these regulations do not impose any particular burden on business. Could the Minister clarify what the financial cost will be each year to operators coming into scope of these regulations for the first time?
The regulations come into force on the day after the day on which they are made, which, as I understand it, is a date that has passed. From that date, there will be some three months to apply for new licences to become compliant, which on the face of it seems quite tight. Can the Minister say—if I am right in saying that the regulations are already in force, in that sense—how many have applied so far, and what percentage of the estimated total of those who need to apply that represents?
Finally, the Explanatory Memorandum says that 18 respondents to the consultation
“approved of the measures, arguing that the sector required better regulation”,
and that “several of these”—that is, of the 18—
“also felt that these changes should be extended more widely to apply to national operations.”
The EM then goes on to say:
“However, to do so would go beyond the scope of the TCA requirements.”
So once again, we are back to this idea that the only thing that matters in looking at it is not the merits of it but whether or not it is required within the scope of the TCA requirements. Is that the only argument that the Government can produce to answer those consultees who thought that the changes should be extended more widely to apply to national operations in the UK?
My Lords, as ever, I thank the noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, for their contributions to this DfT SI. Once again, I express my regret that an error has occurred; as the noble Lord, Lord Rosser, pointed out, the department is very aware of recent errors. This SI was drafted long before the reform programme within the department was under way, and I shall do my absolute best to ensure that errors do not happen again in future.
I shall briefly cover some of the questions raised. My noble friend Lady McIntosh wanted reassurance that the flows of traffic would be maintained. Indeed, this is precisely what we are doing here—making sure that measures in the EU are reciprocated in the UK, so that there is a level playing field and international traffic can continue as we would expect.
The noble Lord, Lord Rosser, made quite a significant point about this being linked to the TCA, and the noble Baroness, Lady Randerson, said that it was the minimum required—doing what was set out in the TCA. The noble Lord asked whether we felt obliged to do only what is in the TCA. At this moment in time, to be honest, that is absolutely right. Standing here as a Transport Minister, I would not want to put this additional burden on the domestic industry knowing what is going on in the logistics sector, so we are in a situation whereby we are doing what we are required to do in the TCA to maintain the flow of international traffic. I am not considering extending this domestically; I do not think that the logistics sector needs it right now.
The noble Lord, Lord Rosser, said that some of the organisations which responded to the consultation wanted it. Some of them did indeed: a handful. I also note that there are 4,200 operators which operate internationally and of course many tens of thousands more which operate just domestically. I am not entirely sure that that is a representative sample of people who would want this sort of regulation extended domestically at what is a challenging time for our nation.
The noble Baroness, Lady Randerson, mentioned Northern Ireland. She is right that operators in Northern Ireland will need to be licensed. We have had many conversations with Ministers and their officials in the Department for Infrastructure in Northern Ireland and they have an entire communications strategy setting out how to make sure that their operators are fully aware of the requirement. However, the major courier companies in Northern Ireland and the Republic of Ireland tend to have separate distribution networks within each particular area. Therefore, parcels tend to be moved in bulk through the land border and then more localised distribution networks are used. But it is the case that anybody going across the border in Northern Ireland would need to have one of these new licences.
The noble Baroness, Lady Randerson, then talked about it being a much more complex situation and could people cope, et cetera. I do not see that as an issue because these international journeys are happening already and transport managers already exist. What we are doing is potentially formalising the role of those transport managers that already exist in the system. What is our alternative here? We could have done nothing and that would have stopped all the international journeys, which I am fairly sure no noble Lord would want to see happening.
I think we have reached the right balance here. I accept that transport managers who have many years of experience will now need to take their certificate of professional competence. That will be a cost, probably, to their business. The noble Lord, Lord Rosser, asked how much it costs. It depends on the sort of training one does: it can be online, materials or face to face. For an HGV transport manager, it goes up to about £1,300. We would have thought for LGVs it would be lower than that but, of course, this is an industry that will grow and develop as these transport manager qualifications come on stream. It is something that we will keep an eye on, but it is a one-off cost to train somebody in some skills to get a licence. It will be a burden on business, but not an insurmountable one, I think. The lack of qualified or potentially qualified people is not something that has been particularly raised by industry. I think the cost is a greater concern because people see that there is a cost of having the licences.
The noble Baroness asked how we are going to communicate with the industry. I have quite a lot of information about that because we have done a lot. We started communicating about this to make sure that we hit both the large and the smaller operators back in August last year. We have had advertising campaigns on Facebook, Instagram, Twitter and government channels—DVSA Direct has been doing industry updates—and obviously GOV.UK has set out exactly what is required. We employed a commercial agency and worked with partners such as Biffa, John Hudson Trailers and DAF Trucks and Moto, Roadchef and Welcome Break motorway services. I think they know. We have done everything we possibly can to make sure that people who operate LGVs internationally know that they will need a transport manager if they have a single journey or more.
Traffic commissioners are already well versed in the provision of licences, the maintenance of the fit and proper test, and taking to tribunal or equivalent those people who do not meet the fit and proper test. I am content that they are appropriately resourced to ensure not only that the licences can be issued in a timely fashion but that the licensees are fit and proper and are held to account if they are not. However, should it not be the case that licences are issued in time, we are looking at providing interim licences at a cost of £68, which will tide over whatever bow wave of applications comes through. I believe we have the right arrangements in place, but I would not want any operator to be held up because it does not have a licence, whether an interim licence or a full licence.
The noble Lord, Lord Rosser, mentioned environmental issues and of course we take them seriously, but we will look at them on their merits and at the right time. As I said, they will probably not be at the top of my inbox right now, but we are considering all manner of environmental interventions on vehicle standards. There will be more on that in due course.
One reason why there is no urgency to extend these regulations to LGVs domestically is that from an economic perspective it would not be brilliant, but another is because HGVs need a firm operating licensing system because the vehicles are far more dangerous. They have strict maintenance regimes. It is essential that those vehicles are in tip-top condition and are kept by fit and proper people. The LGV system is slightly lighter-touch in that, for example, the level of financial standing an operator must have is less than for HGVs. The system is slightly different from that for HGVs.
This is my last point, I promise. The noble Lord, Lord Rosser, said something about the SI not being in force and asked how many applications we have had so far. If he does not mind, I shall go back to Hansard to try to understand the point a bit better and will write. In the meantime, I commend these regulations to the Committee.
One of the environmental aspects that are being disapplied by these regulations is the requirement to have an appropriate place to park vehicles. The Government have made great play in recent months of the importance of having good facilities for lorry drivers. Does the same argument not apply to the drivers of these vehicles, who might be part of the same workforce? Is this not cutting across the Government’s declared policy on improving conditions for drivers?
The noble Baroness is covering a point that I deleted from my briefing, sadly, because I did not think it would come up, and therefore it is not at the top of my mind. There are two issues here. One is where the vehicles are parked overnight in storage by the operator and the other is where they are parked when they are on the road and making journeys. I will write to the noble Baroness with more details on that because unfortunately I do not have them to hand.
Cumbria (Structural Changes) Order 2022
Considered in Grand Committee
My Lords, this order was laid before this House on 24 January 2022. The other place approved it on 1 March. If approved by this House and made it will implement a proposal submitted by Allerdale and Copeland councils for two new unitary councils on an east/west geography, covering the entirety of Cumbria, to be known as Cumberland council, and Westmorland and Furness council, respectively.
This order will establish for the people of Cumbria two new unitary councils. Implementing this proposal and establishing these unitary authorities will enable stronger leadership and engagement, at the strategic level and with communities at the most local level. It will pave the way, as envisaged in the levelling-up White Paper, for a significant devolution deal, involving a directly elected mayor for Cumbria, if that is an option which local leaders wish to pursue.
This locally led process for reform began on 9 October 2020, when the then Secretary of State, my right honourable friend the Member for Newark, Robert Jenrick, invited the principal councils in Cumbria to put forward, if they wished, proposals for replacing the current two-tier system of local government with single-tier local government. That invitation set out the criteria for unitarisation.
Unitary authorities will be established that are likely to improve local government and service delivery across the area of the proposal, giving greater value for money, generating savings, and providing stronger strategic and local leadership, and which will be more sustainable structures. They will command a good deal of local support as assessed in the round, and where the area of each unitary authority is a credible geography consisting of one or more existing local government areas with an aggregate population which is either within the range 300,000 to 600,000, or such other figure that, having regard to the circumstances of the authority, including local identity and geography, could be considered substantial.
Four locally led proposals for local government reorganisation in Cumbria were received in December 2020—one for a single unitary and three for two unitary councils. Before deciding how to proceed, the Government consulted widely. Around 3,200 responses were received by the Government in response to their statutory consultation on the Cumbria proposals. This consultation was launched on 22 February 2021 and ended on 19 April 2021. Of these responses, some 2,400—73% of the total responses—were from residents living in the area affected.
There was a very good deal of local support for local government reorganisation across the categories of respondents, from residents, local authorities, public sector providers, parish councils and the business sector. However, across these categories, there was a spread of responses in favour of each proposal. This meant that each proposal had some support. The east/west proposal had the support of local businesses, especially in relation to supporting the diverse nature of local economies better, particularly the advanced manufacturing base and supply chain around Sellafield. There was some resident support for the east/west proposal, with those in favour considering that the new authorities would be more accessible local organisations, better able to respond to local needs. Among local government organisations, there was a view that the geography of the east/west proposal would ensure equal levels of population density across the two proposed new council areas and that this would contribute to a balanced service delivery, including addressing deprivation, and credible geography.
Based on the consultation responses, the Secretary of State considered that, if implemented, the east/west proposal would command a good deal of local support, as assessed in the round overall across the whole area of the proposal, and that the criterion had been met. In considering the locally led unitary proposals against our long-standing assessment criteria, he concluded that the north/south proposal did not meet the credible geography criterion, that the bay proposal did not meet the improving local government and service delivery and credible geography criteria, and that while the county council’s proposal for a single unitary met the three criteria, the east/west proposal was more appropriate on grounds of geography.
Noble Lords will recall that my right honourable friend the then Secretary of State announced his decisions on the proposals. A Written Ministerial Statement was made on 21 July 2021, which I repeated in this House. In reaching this decision, my right honourable friend made a balanced judgment, assessing all the proposals against the three criteria to which I have referred and which were set out in the invitation on 9 October 2020. He also had regard to all representations received, including responses to the consultation, and to all other relevant information available to him. He concluded that the east/west unitary proposal for Cumbria met all three criteria.
The Government believe that there is a powerful case for implementing this locally led proposal for change. The east/west unitary proposal will improve local government for half a million people in Cumbria by enhancing social care and safeguarding services through closer connection with related services such as housing, leisure and benefits. It will also improve local government by offering opportunities for improved strategic decision-making in such areas as housing, planning and transport. It will provide improvements to local partnership working with other public sector bodies by aligning with arrangements in existing public sector partnerships.
The proposal will generate savings estimated by the Allerdale and Copeland councils in their unitary proposal of between £19.1 million and £31.6 million per annum; this is a wide spread, and the savings actually achieved will depend on the new councils. These are savings that can be reinvested for the improvement of local services; they are not cuts in service provision. It will also deliver proposals aimed at maintaining and strengthening local community identity, and integrate local services, while reflecting the challenges of rurality in the areas of both new unitary councils. If Parliament approves this order, there will be, from 1 April 2023, two unitary councils for Cumbria delivering the improvements I have just outlined.
In response to an issue raised previously by the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Campbell-Savours, I put on the record, categorically, for the avoidance of any scintilla of doubt, that if this order is approved and Carlisle City Council is abolished, the city status of Carlisle will be preserved. My officials are already working with the officers of Carlisle to ensure that we follow past precedents for maintaining city status. The arrangements for maintaining city status will be to establish charter trustees. The council has asked us to do this, and we have agreed.
We have prepared this order in discussion with all the councils concerned. I take this opportunity to thank everyone involved in this process, and for their work undertaken together constructively and collaboratively, notwithstanding the county council’s leader seeking a judicial review, for which the courts refused permission on 22 February.
Our discussions with the councils have included transitional and electoral arrangements. These are key to how the councils will drive forward implementation. Where there has been agreement between all the councils, we have adopted their preferred approach. Where there were different views as to the detailed way forward, the Secretary of State has considered all the differing views and reached a decision accordingly.
Turning to the detail of the order, I will highlight the key provisions. The order provides that on 1 April 2023 the districts of Allerdale, Barrow-in-Furness, Carlisle, Copeland, Eden, and South Lakeland, and the county of Cumbria, will be abolished. The councils of those districts and county will be wound up and dissolved. In their place, the functions will be transferred to the new unitary Cumberland council and Westmorland and Furness council. I add that the order ensures there is no change to the ceremonial county of Cumbria, and hence the roles and responsibilities of the lord-lieutenant and high sheriff of the county of Cumbria are unaltered.
The order also provides for appropriate transitional arrangements. These include that in May 2022 there will be elections for the new unitary councils, which will assume their full powers from 1 April 2023. These elections will be on the basis in Cumberland of a 46-member authority, with 46 single-member wards, and in Westmorland and Furness a 65-member authority with 33 wards of between one and three members. Subsequent elections to the unitary council will be in May 2027 and every four years thereafter. We expect that the Local Government Boundary Commission for England will undertake a full electoral review before the May 2027 elections. Parish council elections will remain unchanged. There will be a duty placed on all existing councils to co-operate during the transitional period until 1 April 2023.
There is also provision in the draft order relating to the establishment of a combined authority for Cumbria. I can make it clear that these are designed to be enabling powers for the shadow authorities to be able to do necessary preparatory work if they so wish. We thought that this was prudent, given that the establishment of a combined authority was mentioned in the unitary proposals. The inclusion of these provisions does not represent a requirement for the shadows to pursue arrangements for a combined authority.
If this order is approved and made, to support councils in the transitional period until 1 April 2023, we intend to use our powers under the Local Government and Public Involvement in Health Act 2007 to issue a direction. This direction would replace the voluntary arrangements which the Cumbria councils have already adopted about entering into contracts and the disposal of land during this transitional period. This is in line with the approach adopted in most previous unitarisations. This will ensure that the new unitary councils have appropriate oversight of the commitments that predecessor councils may enter into during the transitional period and which the new unitary councils will take on from 1 April 2023. Before issuing any such direction, we will invite councils’ views on a draft.
Finally, with sincere apologies, I must draw the Committee’s attention to the correction slip issued to correct a minor error in Part 2 of the Schedule of the draft order, which lists the existing wards that will go to make up the new wards of Westmorland and Furness council. This is to correct the name of an existing ward in the new High Furness ward, currently shown as “Dunnerdale-with-Seathwaite (Part)”. It should be shown as simply “Dunnerdale-with-Seathwaite”. We are very sorry indeed for this minor error in the original text of the draft order.
In conclusion, through this order, we are seeking to replace the existing local government structures in Cumbria, which were set up in 1974, with two new councils that will be able to deliver high-quality, sustainable local services for the people of Cumbria. These unitary councils will be able to provide stronger and more effective leadership at both the strategic and most local levels. This will open the way for a significant devolution deal if local leaders want this, as referred to in our levelling-up White Paper. I commend this order to the Committee.
My Lords, I start by thanking my noble friend for the fact that he is going to preserve the city status of Carlisle. I think that will be welcomed on all sides. I was born there 60-something years ago, and am very grateful that its city status shall be continued. I also declare an interest, first, as a Cumbrian, but secondly, as an active member of Penrith and The Border Conservative Association. I refer to that because the Penrith and The Border constituency is the one constituency that will straddle the two new authorities—I think that is correct, but no doubt others will correct me if it is not. I want to ask my noble friend about the electoral arrangements we will face in May because, as he made quite clear, we will be electing the shadow authority, which will then take over as the substantive authority in April 2023. At some time after that, as my noble friend made clear, the boundary commission will get into action and produce new boundaries for the various wards or divisions—I am not sure how we shall refer to them—in both authorities. But for the elections, we are going to have to deal with rather arbitrary selected wards or divisions in both authorities.
I do not know what the numbers on the two councils will be in future, once the boundary commission has done its work. Initially, and for the first five years of the two shadow authorities, the western division, which will be referred to as Cumberland, will use the existing county council divisions. Therefore, as I understand and remember it, there will be 42 councillors, one for each division, in that authority.
This is relevant to me because, like all political parties, we have to go through the process of selecting candidates, and we want to get that done as soon as possible. We have started on it, because we had some idea of what the boundaries would be. It is relatively easy in the western division, which is using the existing county council divisions. We have made progress in the northern half of Penrith and The Border, where we have identified our candidates and will soon be in a place whereby they can put themselves forward and go through the various due processes to stand in those elections.
In the eastern authority, which will be referred to as Westmorland and Furness, a different process has been adopted. The new authority will not have the 38 county councillors who originally covered that area, but some 65 councillors. There is obviously no way to get 65 out of 38; the sums do not add up. The district wards have therefore been used to create the various boundaries for the new authorities, which are laid out in the schedule to this order. As I understand, that has meant consultation between the department and the three districts involved—Eden, South Lakeland and Barrow—to produce 65 seats with one, two or three members covering each ward in that area. There were problems because some of the district council wards of those three areas had one, some had two and some had three members. The whole thing has had to be done by putting odd things together, following consultations with the local authorities. I do not believe there has been consultation more widely than that.
I ask my noble friend why this figure of 65 was picked. How was it decided to put together which wards to make either one-member or two-member seats for the authority? Could that not have been done earlier? I just mentioned the practical problem of finding candidates and going through a legitimate selection process, within every political party, to make sure that members are allowed to take part, before you put them before the election. Technically, these wards do not come into existence until the passage of this structural changes order and we have elections coming in May.
My simple question is: why this process? How did it come about? What consultations took place beyond those with the individual local authorities of Eden, South Lakeland and Barrow? Why was a similar process not followed to that used for the western half, which will be Cumberland? Will Cumberland itself now have too few councillors, as it is being reduced to 42, which is the number of the existing county council seats? I see the noble Baroness, Lady Hayman, nodding. There has been a degree of confusion about this process and I would like further elucidation from my noble friend, if he can give me that in due course.
My Lords, I declare my interests in this matter. I was born in Carlisle and attended Carlisle Grammar School. I live in Cumbria now and have an interest on the present county council, as the councillor for Wigton.
I have three things to say at the start. First, I am delighted by what the Minister said about maintaining Carlisle’s city status. It means a lot to me. I remember, as a little boy in 1958, attending the 800th anniversary of the foundation of the city.
Secondly, I am glad to know that the lord-lieutenancy for Cumbria is being maintained; my wife, as deputy lord-lieutenant, will be very pleased by that. Thirdly, it is very good to have as a Minister someone with the great experience and success in local government of the noble Lord, Lord Greenhalgh, dealing with these questions. I hope he might listen carefully to what I have to say about the proposal, which I would oppose as it stands, but I know that is not the way the House proceeds and I shall obviously not do that. But I will make the case for why the Government should take the remaining opportunity to pause and think a bit about what they are doing in the case of Cumbria.
My starting point is simple. I am a passionate supporter of unitary authorities, and have been for a long time, but the proposal for Cumbria, splitting it in two, does two things. First, it removes the strategic role that the county council presently plays; secondly, it divides in two the services that the county council currently provides. These services are vast by comparison with what the districts provide. The county council’s net revenue budget, excluding the schools grant, is of the order of £400 million a year. The six district councils all together are little tiddlers: their spending together is less than £100 million. The order is, in effect, cutting in two the most effective bit of local government in Cumbria.
The justification that this makes for more local government does not stand up to serious examination. The new unitary authority of Westmorland and Furness embraces both the Barrow shipyard and the remote Pennine communities 60 or 70 miles to the north of it. They are as different as heaven and hell. I shall not say which I think is which, but they are totally different. As for the new county of Cumberland, Penrith, to which the noble Lord, Lord Henley, referred, is torn out of the historic county of Cumberland. I always remember Willie Whitelaw affectionately describing his constituency of Penrith as being a place of slumbering calm—we probably need more of that in our lives. That is removed, and for Cumberland, there is my home city of Carlisle, together with what is largely post-industrial west Cumbria. My forecast is that that will be a rather uneasy partnership. Cumbria is a county of great diversity: great beauty mixed with shocking deprivation; a very proud history, with all the problems of modernity.
What I and the majority of my colleagues on the county council think the Government should have done was to go for a single, strategic authority but then allow for maximum devolution to towns, with their rural hinterlands, for local access to services and the capacity for genuinely local decision-making over genuinely local matters. My town council in Wigton should certainly have been expanded and given a greater role.
Given the decision taken, the county council—rightly, in my view—sought to challenge the Government’s plan through a judicial review. After a very detailed consideration in a judgment that took Mr Justice Fordham, who is very eminent in this field, an hour and three-quarters to deliver, he refused leave for a judicial review. It is important to emphasise, however, that this is not an endorsement of the Government’s plan; it is only a legal judgment that the Minister had not overstepped his powers in ignoring his own criteria in deciding on the current plan.
We are now put in a very difficult position in Cumbria as a result of this split. The Minister referred to savings estimated by Allerdale and Copeland— goodness how they could calculate them, because they know nothing about the main services—of between £19 million and £30 million a year. We were expecting much bigger savings from having a unitary authority—as much as £40 million or £50 million a year. The truth is that we need those savings to reinvest in what are badly overstretched services, and we now will not be able to do that. That overstretch is apparent in all the main services one looks at. Our children’s services are under great pressure. For the last few years, they have overspent their budget every year. For social care, we were forced to put in an extra £10 million last autumn simply to keep a creaking system going so that the hospitals in Cumbria would not be completely clogged up with people who could not be given care in the community. Of course, the consequence of that would have been even longer waiting lists for patients.
People complain about highway maintenance in Cumbria—potholes are a big issue; I am always lobbied about them—but we have no extra money to spend on that. Indeed, the Government have this year cut the highway maintenance grant by some £10 million.
The situation is serious. At the same time, whereas the creation of a single unitary authority would have been a relatively simple matter, splitting the services in two is highly complex. The existing councils, and I hope that the people who support this scheme are prepared to defend this, have already had to put aside some £18 million to spend on management consultants to work out how the new authority will work. I suggest that the Minister inquires about this; a lot of money is being spent on trying to work out how to divide the services we have.
Supporters of the plan argue that we are being ridiculously pessimistic. They say that the two new authorities can form a mayoral combined authority that will deal with strategic planning, can negotiate a growth deal with the Government and could run county-wide services that it does not make sense to split—that is the argument. However, the truth is that the Government currently do not, as I understand it, have any power to force a mayoral combined authority on Cumbria. It all depends on the decision of the new authorities as to whether they want one. From what I know and from what I gather, particularly from my Liberal Democrat friends in Westmorland and Furness, there is no enthusiasm for establishing such a combined authority. Therefore, I think this is a bit of a fantasy.
However, in the House of Commons, when John Stevenson, the Conservative MP for Carlisle, whom I like a lot, asked Secretary of State Gove what the position was, the Secretary of State implied that the Government could force a mayoral combined authority on the new councils. Can the noble Lord, Lord Greenhalgh, clarify that very important point for us? I can send him chapter and verse on what was said in the House of Commons, and I would like to know what he thinks about what his boss said on that occasion.
The Minister probably understands the risks involved in splitting services. In fact, he wrote to the leader of my council, Stewart Young, in autumn last year expressing grave concern about the splitting of the fire service in Cumbria and saying that it had to be kept together. There is the option of putting it under the police and crime commissioner, which might be quite sensible, but it demonstrates that there are difficulties in spitting services in two.
One of the answers people are talking about at home to deal with this situation is that one of the new authorities might take statutory responsibility for delivering a whole service across the area of the two authorities, but that simply will not work. I am sure that, as an experienced local government man, the Minister recognises the problems in that. If a budget for a service is overspent, who pays? If the authority that is not the statutory authority thinks its services are being cut because of budgetary constraints, what right of redress does it have? These are complicated matters. Of course the Minister is right that, in an ideal world—particularly, for instance, when dealing with troubled families—we need a unitary authority that brings together housing, children’s services, care and all of that.
I think that we are entering a period of massive uncertainty about how public services in Cumbria will be delivered, and we have a very rushed timetable for implementation of this reorganisation. The order we are discussing will not come into effect until the end of this month, yet the new authorities are supposed to be in a position to be up and running by April 2023—less than 13 months from now. I tell noble Lords, on the basis of my knowledge, that there are no plans in the cupboard as to how this split will be carried out.
Of course, the Government could always think about this. I am sorry if I am going on too long, but these are very important matters.
Okay. I am trying to explain that there are serious risks in what is now planned. A pause could well be necessary. I do not see any problem with the Government revising their plans. What will happen if it becomes clear that the current timetable is not workable? The Government need to form a judgment on this quite quickly. I am not advocating this for any personal reason, but they could keep the county council going for longer than another year so that there would be more time to plan for the division of services, which would then have some prospect of stability.
In the light of their Levelling Up White Paper, which came after this proposal was made, the Government could think about keeping a single unitary authority in Cumbria but doing a deal with that council that it will have an elected mayor. I am not against elected mayors in principle; I am actually rather in favour of them. I think they have worked quite well in metropolitan areas. In the Levelling Up White Paper, if you are going to get maximum devolution of power, you have to have an elected mayor to achieve that. Why not put that proposal to Cumberland, to a united Cumbria, and see whether it would be acceptable?
I am very worried about what is happening, not from a party-political point of view, but simply from the point of view of how all this is going to work in practice. I hope that the Minister might take away what I have said and have a think about it.
My Lords, there are good many issues on which I have sympathy with the noble Lord, Lord Liddle. I am bound to say, however, that I have played no part whatever in the evolution of this scheme and was intrigued to see the decision the Minister has come to. Like the noble Lord, Lord Liddle, I have always been an enthusiast for unitary authorities, and I am glad to see that that is coming to Cumbria.
I have a good deal of experience of Cumbria. I went to school there and represented Westmorland and then Westmorland and Lonsdale for 33 years, and like the noble Lord’s wife—perhaps she is not former—I am a former deputy lieutenant of Cumbria. Therefore, I believe I have some locus to speak in this debate.
I am bound to say that if we are going to split Cumbria in two, having a compartmentalisation of east and west seems logical. In the west of the county, the barrier from the coast to Dunmail Raise and Shap Fell is a very real barrier with the mountains. I can see the logic of that. The eastern part of Cumbria as it is now, with the M6 motorway, is much more accessible than the western part, therefore I can see the logic of an east/west divide.
What I really wanted to say is that I am delighted to see the proposal to reintroduce the name of Westmorland. I can remember my dismay when the county of Westmorland disappeared following the 1972 Act. In fact, one of the few things of Westmorland that continued was because of something that happened immediately after the 1972 Act. A celebrated historian from Appleby approached me and said: “Don’t you think that the tragedy of losing the name Westmorland could be revived by renaming Appleby as Appleby-in-Westmorland?” I remember putting an Early Day Motion down in another place and gathering a great many signatures around the bars and restaurants at the other end of this building. In the end, Peter Walker, who was then the Secretary of State, agreed that we should rename the ancient capital of Westmorland as it is now well known.
I have one or two queries over this. When he introduced this provision, the Minister said that there would be no change with regard to the lord-lieutenant. If we are going to have two county councils, and if it should become desirable to have two lords-lieutenant—and I cannot see why it should not—what is the procedure to create new lords-lieutenants? Can he tell us? He may not have it, although I see that he has just been handed a piece of paper. Clearly, Her Majesty has to come into this but, at the moment, there has been an informal convention in Cumbria, or there was one in my time, that the lieutenancy tended to alternate between north and south of Shap Fell. As the noble Lord, Lord Liddle, said, there is great diversity in Cumbria, and I have always noticed the diversity between those who live north and those who live south of Shap Fell. They are very different communities in all sorts of ways. Perhaps the Minister cannot tell me immediately what the procedure would be for allowing there to be a lord-lieutenant for each of the new counties.
Finally, I want to ask another question. When Peter Walker introduced the 1972 Act, which did away with the historic county of Westmorland, which was exactly what my old constituency used to be, there was a threat to some of the old traditions. I am thinking particularly of the mayoralty of Kendal, a historic borough with a mayor, historic connections to Catherine Parr and Henry VIII, a whole regalia and a number of things that surround the mayoralty. That was threatened and, again, a number of us who represented areas similar to the one that I had in Kendal formed up to Peter Walker and insisted that those old historic traditions would continue. I hope that the Minister can tell us that there will be no change whatever with regard to the mayoralty of Kendal. Of course, Kendal has been part of South Lakeland District Council for all those years, and that was really the way we got around it.
As I say, I have played no part in the arguments over the creation of these two new authorities, and I wish them well.
It has been very interesting to listen to the noble Lords, Lord Henley, Lord Liddle and Lord Jopling, giving to the Committee the benefit of their personal experience and opinion on what should happen. I shall try to avoid taking a perspective about Cumbria from my vantage point on the east of the Pennines. It suspect is a complicated matter. Cumbria is a very large county, geographically, and has a substantial population, and it has a diversity to which I think the noble Lord, Lord Jopling, referred, which is extremely important. I hope that when he replies, the Minister will give specific answers to the points raised by those noble Lords who reside in the county of Cumbria or have represented it and know it, and others will be following to talk about that.
I am a bit puzzled about timing now. The noble Lord, Lord Liddle, reminded us about the elections to the shadow councils, so in his reply can the Minister tell us when they will be? It seems we do not have a lot of time. There are a lot of operational issues that need to be right. Of course, we are at the end of the consideration in parliamentary terms and it may be everybody is already prepared for what is about to happen, but I think the Minister should make absolutely clear that everything can be done in the timescales that have been set out.
This order makes substantial changes to local government in Cumbria. I recall the establishment, almost 50 years ago, of the current structure out of Cumberland, Westmorland, parts of north Lancashire and a small part of west Yorkshire. We should all pay tribute to the councillors and officers who, over those years, have contributed to the success of local government across Cumbria at all levels.
I accept that times change, and here is a set of structural changes that seems to have some local support, but not from everyone as the consultation has shown. As I said earlier, it is not for me to question local views in Cumbria or to express a preference, but I agree with the Government’s approach, which has been to say that the creation of unitary councils must be locally led and not imposed by central government.
In this case, the east/west proposal was proposed locally, but it has to be agreed by central government. There were other possible outcomes and the wide range of responses to them, as part of the consultation, was extremely important, so when I look at the support for other proposals, I begin to wonder whether all the consultation has been adequately considered.
I read the Explanatory Memorandum very carefully and think its assertion that the two new unitary councils will provide “greater value for money” and “stronger strategic … leadership” could prove to be true. I am less certain about its assertion that local leadership will be strengthened. It may well be, and it can be, but the Government and the two unitaries will need to ensure that the parish and town council tiers, which represent very local areas, have the powers, resources and support they need to be effective.
The words “credible geography” feature several times in the Explanatory Memorandum to the order. From my knowledge of Cumbria, there is no perfect answer to this. I am sure the Minister will agree that mountain ranges can be a serious barrier to effective working, as paragraph 10.11 suggests in relation to the north/south proposal, but scale is a big issue as well. With all that said, in my view, the east/west proposal can be made to work, as long as there is a strong tier below the unitary level.
I have some doubts around the proposals on fire and rescue. They will need close attention over the coming months because of the pressures of distance across Cumbria and the limited resources that will apply, given the cuts that have been made to local government budgets. The Government have spelled out the options to consider and, whatever choice is made, it must command local consent. I would prefer to see a joint board arrangement between the two councils, rather than simply enhancing the power of the police and crime commissioner, but that is for the people of Cumbria to decide.
Joint working between the two unitaries and the joint committees being proposed to make sure the unitaries are in place on time are very important. That is why I also think it a good thing that in the order there is a clearly defined duty on the existing councils to co-operate.
I hope the Minister will be able to say more about the proposal for a single unitary council for the whole of the county, why the Government rejected it and how the preference for the east/west proposal emerged. It seems to me that a single unitary is very big and it is difficult to deliver local leadership with a single unitary council. The scale and diversity of Cumbria has to be understood in the proposals being made.
Finally, I take very seriously the points that have been made by all noble Lords and, in particular, those made by the noble Lord, Lord Liddle, on the mayoral combined authority. It would be distinctly unwise to pursue a mayoral combined authority. It centralises power so much in a very large geographical area that I cannot see it working. Unless the powers and resources of town and parish councils are significantly enhanced, I fear the model will not work. I hope the Minister will tell us that this is not on the Government’s agenda. Can all this be done in the timescales the Government have set if this order is progressed quickly? I think the Minister needs to bear in mind that there are still a very large number of open-ended questions that have not been resolved.
My Lords, I thank the Minister for introducing this statutory instrument, which is the first of three instruments on structural changes that we will discuss today. I have a particular interest in this instrument as it is about changes to the council structure in Cumbria, which is where I live. In fact, I live in the west, so I can vouch for its complete inaccessibility, as mentioned by the noble Lord, Lord Jopling. It is another issue that we should return to another day. I was a member of Cumbria County Council alongside my noble friend Lord Liddle.
I am sure that the Minister is aware that the Secondary Legislation Scrutiny Committee marked this and the two other draft statutory instruments we are going to discuss as instruments of interest, because some questions remain on the criteria for the approval of unitarisation. The Explanatory Memoranda set out the feedback received during consultation on the different proposals. The noble Lord, Lord Shipley, noted that according to the Government this should be locally led and command a good deal of local support. The Explanatory Memoranda show that not all chosen proposals received majority support from local residents during consultation. The noble Lord, Lord Henley, mentioned his concerns about the consultation on these proposals. Can the Minister confirm that the Government are properly applying the criteria when making decisions on new unitary authorities?
The area where concern has been expressed is about local support for the proposals. I am not particularly convinced that there has been genuine public enthusiasm for the proposals in Cumbria. My noble friend Lord Liddle eloquently expressed, in great detail, the concerns about splitting the county in two and the impact it will have on critical services such as education, social care, children’s services and highways, all of which are in need of greatly improved resources and support.
In his introduction, the Minister reminded noble Lords that the Government were presented with four proposals and eventually went with the east/west proposal we have been discussing, which creates two unitary authorities, one in the east and one in the west of the county. He also said that the east/west proposal received “some support”. But it did not receive support from the majority of respondents to the local consultation; only the proposal for the Bay did that. We have heard what that would do so I will not go into the details.
Basically, the residents did not believe that the east/west proposal offered a reasonable geography, which is one of the criteria for the creation of a unitary authority set out by the Government. The Government’s criteria also state that successful proposals need to deliver good public services and improve local governance, yet the residents who were consulted did not all believe that this was the right proposal for Cumbria in that regard. My noble friend Lord Liddle talked about the concerns around delivering public services well in Cumbria, after dividing the county into two unitaries.
The parish and town councils were also more in favour of the proposal for the Bay than others, with 28% saying that it would improve services. Even among local businesses that proposal was more highly favoured than the east/west proposal, because it was felt that it had the most credibility when it came to geography— another criterion that the Secretary of State looked at. So I ask the Minister: why was an option chosen that received less support and was not felt by a majority of local people to fulfil the Government’s criteria?
My noble friend Lord Liddle mentioned the fire service. This is particularly important when it comes to Cumbria because, unlike in most areas, fire and rescue services are still delivered by the county council. The Fire Brigades Union is particularly concerned about how this will affect the responsibilities of the fire and rescue service, and about funding pressures and the potential cuts the service might face due to restructuring, as it might have to be divided between the two new unitary authorities.
I know that DLUHC has said that further secondary legislation will be brought forward once a decision has been made on this. The Government have said that they intend to maintain the fire service on a county-wide basis, subject to local consultation. It would be really helpful if the Minister could expand on this and provide an update. If he does not have that now, it would be good if we could all be kept in touch with that as those proposals go forward. As noble Lords have said, there is not a lot of time. We are on a fairly tight timescale.
Before I talk briefly about the issue I discussed with the Minister earlier today, I say that I am particularly interested to hear his response to the different concerns raised by my noble friend Lord Liddle.
Finally, I discussed with the Minister earlier—and I thank him for his time and attention in this matter—the concerns that there is a significant omission in the order, in that it would mean that Carlisle would lose its city status. A similar order has been laid that abolishes the district and county councils in North Yorkshire and establishes the North Yorkshire unitary authority. My concern is that these have been set up differently. The former MP for Carlisle, Eric Martlew, drew this to our attention, and I thank him for that.
Carlisle has a rich history and has enjoyed the title of city since 1133. Its original charter was lost in 1292, when much of the city was destroyed by fire, but a new royal charter was granted in 1352 by Edward III. I am sure noble Lords can appreciate Carlisle’s rich history but, because it is an unparished area, there is no parish or town council for Carlisle’s charter to pass to when this legislation comes into force. So the options open to Carlisle are to either form a town council or create charter trustees, so that the city charter can pass to them and it does not lose that status.
I thank the Minister for confirming that charter trustees will be appointed and that Carlisle will not lose its city status. My concern with this, which I raised with the Minister earlier, is that where this issue arose with regard to the change order for North Yorkshire, and the rights and privileges held by Harrogate and Scarborough, to ensure that their charters remained, the structural changes order for North Yorkshire, which we will debate next, makes specific provision for charter trustees in the unparished areas of Harrogate and Scarborough, thereby ensuring that
“any historic rights and privileges associated with those local government areas which will be abolished can be maintained and vest in the Charter Trustees for the relevant area where there is no parish or town council.”
Again, I thank the Minister for his attention. Is the reason why they are different just an admin error? I am interested to know why they have been set up differently. I planned to ask for this statutory instrument to be withdrawn until this was corrected, but I am happy to take the Minister’s assurances at the Dispatch Box that Carlisle will not lose city status, which were extremely helpful. Can he also confirm that a confirmation order will be laid to set up the charter trustees, as he explained to me earlier? It is important that the historic rights and privileges of the city of Carlisle are maintained when the city council is abolished.
My Lords, I am ashamed to say that in my time on this earth, I have not set foot in glorious Cumbria, so I have learned an awful lot. One thing that I will take away is that I must visit the place. I understand that it is very rural. It is quite interesting to note how the geography is such that there are natural divisions too. That was set out incredibly helpfully by my noble friend Lord Jopling.
I always enjoy the experiences that noble Lords bring to bear. I listened very carefully to the speech from the noble Lord, Lord Liddle. However, I am calculating, at 59 minutes and 38 seconds, and having had quite a late night the night before, when we are likely to finish these three statutory instruments. However, I will do my best to respond.
My understanding of the point around preserving the city status of Carlisle is that Cumbria simply did not ask for it, whereas North Yorkshire did. It is just a process of responding to the customer, rather than an intention not to do it. Therefore, the assurance is very sincere. We will produce whatever orders that we must. It has been written out, so we have that assurance that the process will go ahead irrespective of what we have set out in the order. It does not have to be done in the same way to get to the same end point. Noble Lords have had my assurance at the Dispatch Box. It is clear that the councils want that, so it is not a problem.
I have some experience in delivering council services, so I will respond directly to the central point made by the noble Lord, Lord Liddle. Philosophically I agree with him that where possible you build bridges rather than walls, and that with services such as adult social care, which is typically about a third of a council’s budget, you had better not split the overhead of commissioning the service, but it is very possible. For instance, when I was the leader of the council in Hammersmith and Fulham we had a voluntary arrangement with neighbouring councils to bring together the commissioning of adult social care across three London boroughs, but we had very different entry criteria into the social care system. You could save on the overhead by collaborating with other councils but have very different criteria. I am very proud that my council had the best entry criteria into the social care system, extending right through to people in greater moderate need, which is very rare in local government these days, particularly with the increasingly ageing population. Therefore, you can do both if you want to. That requires local leadership, above all, but there is nothing in this structure, east/west, that would stop that sort of arrangement taking place as a possible outcome, where you can create two different entry points but share the overhead of the delivery of the service.
I really appreciated the point made by my noble friend Lord Jopling. The reality is that the units of local government, if we think strategically, become awfully large. A stat that is not in my speaking notes but which really interests me is that the average unit of local government in Switzerland is 3,733. In the United States it is 8,333. In Germany, it is 7,454. In the United Kingdom, it is 155,000. Therefore, I have great sympathy with the point raised by the noble Lord, Lord Shipley, that we must ensure that we do not forget the tiers, the town and parish councils, and their contributions to their local areas, particularly more rural areas as opposed to cities. There is no intention of changing that structure from this order. I give that reassurance. It is about ensuring that the funding flows down through local government to the lowest tier. Sometimes it does, sometimes it does not, but we are not changing that structure in this order. I note the important contribution that parish and town councillors make to their local area.
I will respond directly to the noble Baroness, Lady Hayman, who speaks with great experience of Cumbria—I have admitted my own failings in that regard. I understand that the criterion is not about a majority: it is whether there is a good level of support. In this case, two proposals had a good level of support. It is not a referendum, where you win if you get more votes. That is essentially the answer to that question. In the round, there are three criteria and then you form a judgment. I tried to set that out as best I could in my speech. Any Government will take those three points and form a view. There are pluses and minuses for different routes, and the Secretary of State took a decision in the round on the three criteria that I set out in my speech.
I was worried by some of the comments about elections, but I assure noble Lords—and the noble Lord, Lord Shipley, in particular—that elections to the new unitary authorities will take place as scheduled in May 2022. The councils will be in shadow form until they take on their new, full powers on 1 April 2023, and they will serve until May 2027. We are on track to deliver that. In response to my noble friend Lord Henley and the noble Lord, Lord Shipley, the order provides for the returning officers for the May 2022 elections, so we can be confident about the administration of those elections. The May elections will go ahead; we are on track for that. That is very important, given that, presumably, candidates are out there pounding the streets already.
My noble friend Lord Henley asked why 65 and why the wards are as they are. The warding arrangements are a local choice, and councils in both areas made their choices. It has been very much a bottom-up process. These arrangements are for the 2022 elections only. As I know from my experience in local authorities, the Electoral Commission will review ward boundaries and so forth, and then there will be representations, but this has been very much a bottom-up process.
I now have a series of attempts to respond to the very many points raised by the noble Lord, Lord Liddle. Candidly, I am unlikely to succeed in answering every question. If he wants to approach me afterwards, I will do my best to get a full response.
I have addressed the central issue, which is that you can split into two councils but not necessarily split services. It is also fair to say that many of the services are area-based and they may be a smaller part of the budget. Sometimes it is better to recognise that fact. Universal services are often organised on area lines, and so forth; it depends on the service areas of the council.
The noble Lord, Lord Liddle, invited me to comment on something said in the other place by my current boss, rather than my previous one. We do not have that interpretation when he said the word “yes”, which has been interpreted as there being great support for a particular person, as opposed to imposing mayors on a particular place. It is all down to interpretation. Of course, you cannot impose a mayor on a particular area, but yes, there is support for a particular candidate—if there were a mayor.
I think I have my “get out of jail free” card. I will write a very careful note responding to the point raised on the debate in the other place and ensure that I lay a copy in the Library.
I move on to a topic that I know a little bit better. I have spent just up to two years as Fire Minister now, which is actually quite a long time to survive as a Fire Minister for England, which includes Cumbria. We are about to launch a White Paper looking at reforming fire and rescue services. I assure people that we have thought very carefully about governance models that enable a move from the scrutiny-based arrangements we have typically seen to a more executive-based arrangement. That provides a county council model, as well as a PCC and mayoral model where appropriate. You can get single-person leadership and accountability through different governance models.
The PCC is currently consulting on fire going to the PCC. He needs to consult. Local people will have their say on that. Time will tell where we end up there, but that is the status at this time. We recognise the need to continue investing in our fire and rescue services to ensure that response times are effective and that we continue to see the downward trend in fires, as well as investment in capability, because they do so much more than that as a fire and rescue service, dealing with flooding and other events of considerable concern to the people of Cumbria.
I move on to the ceremonial points raised by my noble friend Lord Jopling. Everyone seems to have a special interest in the lord-lieutenancy, or the deputy lord-lieutenancy, whether current or past. We leave that alone with this order, so the current arrangements remain as they are. It is a matter for the Crown if it wishes to change the arrangements to reflect the new east/west divide. I am delighted that one of the benefits is to reinstate the proud status of Westmorland, as my noble friend raised. That is a matter for the Crown rather than the state, if you like, but it could come to pass. This order does not push that one way or the other.
Just for completeness—this will be my last point—in response to my noble friend Lord Jopling, the Kendal mayor is the mayor of Kendal Town Council. There will be no change to this town council or any other existing town council, as I said in response to the noble Lord, Lord Shipley.
This order seeks to respond to the local area. I say to people of clear Cumbrian heritage, who have served the people of Cumbria, that in essence the order will largely restore a structure that local people will recognise, which will provide much benefit and, I hope, stand the test of time.
North Yorkshire (Structural Changes) Order 2022
Considered in Grand Committee
My Lords, this order was laid before this House on 24 January 2022. The other place approved it on 22 February 2022. If approved by this House and made, it will implement a locally led proposal submitted by North Yorkshire County Council for a single unitary council for the whole of North Yorkshire county.
In my introductory words for the Cumbria order, I set out the Government’s views on the benefits of strong local leadership. The order will establish for the people of North Yorkshire a new single unitary council. Implementing this proposal and establishing this unitary authority will enable stronger leadership and far greater engagement both at the strategic level and with its communities at the most local level. The order will also pave the way, as envisaged in the levelling-up White Paper, for a significant devolution deal involving a directly elected mayor for North Yorkshire together with York.
I set out the full detail of the process for all three areas undergoing unitarisation in my previous speech regarding Cumbria. I will not repeat the detail of the invitation, the criteria or the dates of the statutory consultation here, but will highlight the matters specific to North Yorkshire. When issuing the invitation to the principal councils to submit proposals for unitary local government, the then Secretary of State, my right honourable friend the Member for Newark, Robert Jenrick, invited City of York Council alongside North Yorkshire County Council and its seven district councils. Two locally led proposals for local government reorganisation in North Yorkshire were received, one for a single unitary council and one for two unitary councils.
Turning now to the responses to the statutory consultation in North Yorkshire, we received almost 4,300 responses on the two proposals. Some 3,600 responses, 84% of the total, were from residents living in the area affected and 53% of these were in favour of the single unitary council. In addition, 52% of business respondents supported the single unitary council proposal, along with the majority of public sector partners, including 68% of the health organisations which responded, nine out of 12 education organisations and police and fire organisations.
Noble Lords will recall that my right honourable friend the then Secretary of State announced his decision on the proposals. A Written Ministerial Statement was made on 21 July 2021, which I repeated in this House. In reaching this decision, my right honourable friend made a balanced judgment, assessing both proposals against the three criteria to which I have referred. He also had regard to all representations received, including responses to the consultation, and all other relevant information available to him. He concluded that the two unitary councils proposal did not meet the criterion of improving local government and service delivery across the area or the credible geography criterion. He concluded that the single unitary council proposal for North Yorkshire met all three criteria.
Indeed, the Government believe there is a powerful case for implementing this locally led proposal for change. It will improve local government by enhancing social care and safeguarding services through closer connection with related services such as housing, leisure and benefits. It will improve local government by offering opportunities for improved strategic decision-making in such areas as housing, planning and transport. It will provide improvements to local partnerships working with other public sector bodies and generate savings, estimated by the county council to be £31.9 million per annum. It will preserve service delivery over a county-wide area that has an established local identity and which is easily understood by residents and will provide a single point of contact so that residents, businesses and local communities will be able to access all council services from one place. If noble Lords approve this order, there will be from 1 April 2023 a single unitary council for North Yorkshire delivering the improvements I have just outlined.
We have prepared this order in constructive and collaborative discussion with all the councils concerned and I take this opportunity to thank everybody involved in this process. Our discussions with the councils have included discussing the transitional and electoral arrangements, which are key to how the councils will drive forward implementation. Where there has been unanimous agreement between all the councils, we have adopted their preferred approach. There were some differences in views and, where they have existed, my right honourable friend the Secretary of State has considered all the differing views and reached a decision accordingly.
Turning now to the detail of the order, I will highlight the key provisions. The order provides that on 1 April 2023 the districts of Craven, Hambleton, Harrogate, Richmondshire, Ryedale, Scarborough and Selby will be abolished. The councils of those districts will be wound up and dissolved. In their place, their functions will be transferred to the new unitary North Yorkshire council. The order also provides for appropriate transitional arrangements. These include that in May 2022 there will be elections for the new unitary council, which will assume full powers from 1 April 2023; these elections will be on the basis of a 90-member authority with 88 single-member electoral divisions and one two-member division. Subsequent elections to the unitary council will be in May 2027 and every four years thereafter. We expect that the Local Government Boundary Commission for England will undertake a full electoral review before the May 2027 elections. Parish council elections due in May 2023 and May 2024 will be brought forward to May 2022 to align with the unitary council electoral cycle. There will be a duty to be placed on all existing councils to co-operate during the transitional period until 1 April 2023.
As I set out in the previous debate, if this order is approved and made, we intend to issue a direction. This direction would ensure the new unitary council has appropriate oversight of the commitments that its predecessor councils may enter into during the transitional period and which the new unitary council will take on from 1 April 2023. Before issuing any such direction, we will invite councils’ views on a draft.
Finally, with sincere apologies, I must draw noble Lords’ attention to the correction slip issued to correct three minor errors in Schedule 1 to the draft order. These corrections remove an extraneous “and” between Harrogate Fairfax and Harrogate Starbeck wards, correct a misspelling of the name of Byram and Brotherton ward, and ensure that the Mid Craven electoral division is in the correct alphabetical order. We are very sorry for these minor errors in the original text of the draft order.
In conclusion, through this order, we are seeking to replace the existing local government structures which were set up in 1974 in North Yorkshire with a new council that will be able to deliver high-quality, sustainable local services for the people of North Yorkshire. This council will be able to provide stronger and more effective leadership at both the strategic and most local levels. It will open the way, with the city of York, for a significant devolution deal referred to in our levelling-up White Paper. I commend the order to the Committee and once again apologise for those minor errors. I beg to move.
My Lords, I thank my noble friend for racing through the provisions of this order. I have sat through three SIs this afternoon and it is a matter of regret that each of them has had to have a minor correction. Perhaps if we spent a little longer preparing the SIs before we brought them before the House, we would save all departments some time.
I am possibly in a minority of one, but I am afraid that I am very wedded to the two-tier system. It has served extremely well. My connection to North Yorkshire goes back years. I grew up in an area that, until 1974, represented on my western flank North Yorkshire, on my eastern flank County Durham and, to the north-west, Cumberland. I think that people appreciated and felt wedded to those areas. I went to school in what was then Harrogate, West Yorkshire, and is now Harrogate, North Yorkshire. One begins to see how confusing it becomes with all these changes, and I believe that there is such a thing as voter fatigue.
I was very fortunate to be returned a number of times—I think, four. I served 18 years for two separate constituencies in North Yorkshire. I want to pay tribute to one of my predecessors, my noble friend Lord Jopling, who looked after me during one of the elections. I think we had some fun at the time, so I hope that continues in elections for constituencies. I also stood in Cumbria in 1987, where again my noble friend was my neighbour, took me under his wing and saved me from some of the errors that I might otherwise have made—which I hope he will not remember and repeat during this debate.
According to Wikipedia, there are 159 district council wards across North Yorkshire. That goes to the rurality of what is the largest, most rural and most sparsely populated county in the country. This has led me to believe that successive Governments—I cannot accuse one particular Government—have simply failed to understand how to deliver public services effectively in rural areas. I do some outside work with the Dispensing Doctors’ Association, as declared in the register of interests. Its headquarters is in Kirkbymoorside, which was in my constituency for the last five years that I was in the other place. Dispensing doctors come into their own particularly in rural areas where there is no community pharmacy. That shows to me the lack of understanding of one particular department of how difficult it is to deliver health services in this regard. We are building bigger hospitals that are further away and more difficult for patients to get to.
I turn to the subject of the orders presented to us by my noble friend. If I understand correctly, we are going to have a situation created from 2023 whereby we have a unitary authority for North Yorkshire. At some undetermined time in the future, it will then be possible to have a metro mayor—and I would like to understand whether the mayor will cover the city of York alone or is intended to cover the rural areas as well. I have great difficulty in understanding how a mayor for a rural area such as North Yorkshire can possibly do that work. I still live in North Yorkshire for a good deal of the time when I am not in London, and I think that it has definitely lost out in the stakes to, for example, the Tees Valley mayor. He is a very effective mayor and gets a lot of funding for a lot of infrastructure and other facilities.
My understanding is that we are going to be told in North Yorkshire that we simply will not get these funds if we then do not vote for a metro mayor. Travelling in what was my second consistency—my last constituency— of Thirsk, Malton and Filey, I was easily driving 200 miles a day. I was trying to co-ordinate the meetings as best I could in the particular corner of the constituency I wanted to be in that day, but it often meant that I could not do interviews on television, because they had to be miles away, in Leeds or, heaven forfend, Newcastle, because there were two different broadcasting areas for one constituency.
My first point is that there is a lack of understanding of how this will work in rural areas, yet great pressure will be put on metro mayors for rural areas such as North Yorkshire that, if we do not subscribe to them, we simply will not get the funds. There is also a misunderstanding. We are asking people to vote—and I have had a leaflet from one of the candidates already for the election this year, which I presume is for the county, yet we are told that the existing district councillors will remain in place until next year. Possibly that makes sense, but it is very confusing. I am told that I must vote for the candidate for unitary this year, but I am told that some of the responsibilities may be taken away and I do not quite understand what the timeframe for that would be. It would be helpful to know how long we expect the unitary to be in place before it is to be taken over by a metro mayor.
I would also like to understand what the consultation will be of local people, when they put their views forward. I am slightly concerned that paragraph 10.3 of the Explanatory Note says:
“The Government’s consultation was conducted online using ‘Citizen Space’, the department’s dedicated platform for consultations, with online capture of responses and an alternative option of email responses or post.”
We should bear in mind that we have probably the most woeful internet capability in many of the dales—in Rosedale, Bransdale and all the North Yorkshire moors, and I am sure that it is the same in the Yorkshire Dales. I hope that there was also a more traditional means, perhaps through newspaper advertisements, for people to respond. If there were only 4,297 responses on the two proposals for north Yorkshire, I draw the conclusion that the vast majority of people simply did not respond. I do not think that we can conclude that there is overwhelming satisfaction with the proposals before us.
I could go on, but I think I have made my point. There is no huge demand for this unitary authority. People work closely with their district council. In my experience, in my surgery appointments, most of what I was asked about, with it not being a big area of immigration and that sort of issue, was related to planning—and most of the planning, as we know, goes through the district council. With those few remarks, I look forward to hearing the response from my noble friend.
My Lords, following earlier discussions about errors in statutory instruments, when I worked for Customs and Excise, there was a VAT instrument in which I had a passing interest which had one word wrong. The view was taken that the Under-Secretary whose responsibility it was would never be promoted again as a result. Sadly, he never was, although there may have been more fundamental reasons for that. I am sure that will not be the fate of the Minister.
My interest in this is that I am a resident of Ripon, which is affected by this change. From looking at the two orders we have so far discussed, the similarities and the differences strike me. North Yorkshire is bigger than Cumbria in every way. Cumbria has a population of 498,000; North Yorkshire’s population is 602,000. Cumbria is 60 miles long from north to south; Scarborough to Bentham is 108 miles or three hours’ drive. This is a big place and even some of the wards are huge. I draw the Minister’s attention to Upper Dales, which has Hawes, High Abbotside, Upper Swaledale, Lower Swaledale and Arkengarthdale, and is 20 miles long. It would take you at least 40 minutes to drive from one end to the other and for a fair bit of winter it is impassable, because you have to go over from Wensleydale to Swaledale. This is a very different type of country, as is Cumbria, to much of the rest of England and the rest of the United Kingdom.
As the noble Lord will be aware, whether this is the best proposal was the subject of a massive amount of in-fighting in his party, and a lack of consensus in my party and every other party, about which is the best way forward, because getting it right is extremely complex. I shall not argue the toss about whether there should be a division down the A1, which was highly supported in some places. There was also no effective consultation. People may have responded to an online petition but, having done some canvassing in Ripon, I know that nobody knows it is happening, and far less have they expressed a view.
Although this is nominally the creation of a unitary authority, it will work only if there are two tiers of local government, and the second tier is different from the district. It will be the local. At the moment, Ripon is part of Harrogate district and North Yorkshire county, and there is huge resentment to being part of Harrogate. I knocked on a door and a man answered who was not a natural Liberal Democrat. He made that clear by ripping up the leaflet that I was attempting to give him. I asked him who he was supporting and he said, “I am supporting UKIP because, if UKIP were in here, we would have had our independence from Harrogate by now.” This sort of parochialism is rampant in far-flung parts of North Yorkshire.
Unless there is an effective form of very local government, that feeling of distance will inevitably grow because of the increasing distance. Harrogate is just down the road compared with Northallerton if you live in Ripon, so that man and people generally who live in Ripon, who are fed up with what they see as their subordinate position to Harrogate, will be looking for Ripon, which already has a city council having a cathedral which celebrates its 1,350th anniversary this year, to take on more responsibilities, and that poses major problems.
At the moment, Ripon City Council is a modest affair when it comes to doing things. It is very good when it comes to appearing in the cathedral wearing gowns and being proceeded by the macebearer, but the issue which occupies more of the time of that city council at the moment is the provision of Christmas lights. This will not do in future. There needs to be much more devolution of small powers down to Ripon City Council so that the people of Ripon feel that they can have a real say about small things that matter a lot to them.
North Yorkshire has submitted to Ripon and more generally a list of 27 areas of responsibility, which it says it is prepared to discuss in principle with parish councils and town councils, with a view to devolving. They go from running car parks to providing dog wardens and library services and a whole raft of those sorts of minor things. I know there is an appetite in Ripon for those powers to be taken back, but there is no capacity to do it at the moment. The town hall is a wonderful building but there is no space to do it. The people who work for the city council are estimable, but they do not have the scope to take on many of these powers. I cite Knaresborough Council, which has taken the majority of powers that it can exercise under the current arrangements, as an example of already doing this well. It has a very detailed plan about how it can slowly take on more powers and reckons it will take over a decade to build up the capacity to take on all 27 powers that it could conceivably have. I think, having looked at it and talked to the council, that it is probably right.
I have two questions for the Minister. First, if a parish or town council is taking on a power with expenditure attached, can the Government give an assurance that the resources that come with that new devolved power will not be cut and will be the same as they are currently? Secondly, and more importantly, how do the Government plan to empower local parish and town councils to take on the responsibilities that will be essential if this scheme is going to retain public support?
At the moment, there is not the funding for staff, offices and expertise. It seems to me that this is a very big gap. North Yorkshire says positive things about undertaking this process of devolving things down but, in an area the size of North Yorkshire, you will need a lot of new organisations at very local level and even more resources put into existing ones to turn them from worthy but very limited bodies to ones that exercise real authority and responsibility for delivering the majority of those local services. Northallerton, 50 miles east or west, and the people who work in Northallerton are not going to be the best people to manage those 27 local responsibilities that I have discussed.
This is a challenge to everybody involved in politics in North Yorkshire and a real challenge to the Government because, unless they help, we simply will not get the kind of further devolution away from Northallerton that is essential if this new arrangement is to command popular support over the longer term.
My Lords, I was intrigued to listen to the noble Lord’s stories about Ripon in his speech. I was born in Ripon and have lived within 10 miles of it my entire life, so am familiar with many of the points that he raised. However, as I said in the previous debate about Cumbria, I have always been an enthusiast for the unitary arrangement and I say that in spite of being a former member of a rural district council at Thirsk.
I was lobbied some months back by Harrogate Borough Council, which asked me to support the east/west arrangement. I tried to look into it and make my own mind up. I came to the conclusion that the unitary body for the whole of North Yorkshire was the best way out, and that, in spite of the reservations of Harrogate and others, I would support what we are considering this evening.
It is a wide area—noble Lords only have to look at a map—but there is a difference between North Yorkshire and Cumbria. Largely it is with regard to the administrative centre. I have heard few, but not very many, complaints about the accessibility from Skipton to Northallerton, but that is in no way as difficult as the problems of travelling from Barrow-in-Furness to Carlisle, which is a much more serious problem of remoteness. Whereas I have heard a good many complaints about remoteness over my days in Cumbria, particularly by people who live on the Furness peninsula, I have heard few similar ones in North Yorkshire.
Now that this proposition has been made by the Government through the Minister, I am told that those early differences that I talked about have now largely been resolved and that all of North Yorkshire’s Members of Parliament support the scheme we are discussing. I am told that the preparations are going well. I have been talking to members of the county council about this, and have asked them particularly about how well it is going. I am told that it is going well, especially with regard to the staff who serve the various local authorities, some of whom are going and others of whom will be expanded.
I am particularly pleased that there will be area constituency committees based on parliamentary constituency boundaries. That seems a sensible and constructive idea. I hope this will remove accusations of remoteness and demonstrate that local concerns and problems are being heard and dealt with. I certainly welcome the way in which the various councils at the two levels are co-operating to create the new level. As I ended my remarks on the Cumbria discussion, I wish it well.
My Lords, I am in the happy position of agreeing totally with my noble friend Lord Newby—that is a good start, is it not—particularly with reference to the absolute importance of having a two-tier approach to local governance in all rural areas, but particularly in North Yorkshire. That obviously means that I agree with many of the comments made by the noble Baroness, Lady McIntosh, who put her cards on the table and said that she prefers a two-tier system.
I bring to the Committee’s attention my relevant interests as a member of Kirklees council and a vice-president of the Local Government Association.
The difficulty we have is that the statutory instrument is very much a done deal. The legislation has come too late for effective challenge. You cannot elicit changes when people are already on the streets, knocking on doors, with the new ward boundaries in their minds. I heard from the noble Lord, Lord Jopling, that many elements of the reorganisation are already in train and we know the elections are taking place in a couple of months, so it is a done deal. But it is still worth making some comments, perhaps so that we do not go down some of this route again.
The government policy is that unitarisation—what a horrible word that is for creating unitary councils—must be locally led and not imposed on areas. One of the criteria is that a unitary authority should have a minimum population of 300,000 and a maximum of 600,000. That is interesting: the population of North Yorkshire, as we have heard from my noble friend, is already more than 600,000, so is beyond the limits that have been set.
We heard in the earlier debate what a difficult and large terrain Cumbria is. Here are the figures: Cumbria is 2,580 square miles, and North Yorkshire is 3,400. The population of Cumbria is 500,000; North Yorkshire is 600,000. Cumbria can have two unitary authorities, but North Yorkshire has one. You wonder why.
I picked out at random a London borough for comparison. The council of North Yorkshire will serve a population four times that of the London Borough of Hammersmith and Fulham, and it covers substantial challenges of geography and size. It includes two wonderful national parks, the Yorkshire Dales and the North York Moors, and very scattered populations, again as you have heard. Connectivity is not good. A noble Lord has already mentioned how difficult it is to acquire mobile signals in parts of the dales, and bus services are being cut as we speak. Access by road can be hugely difficult, especially in winter. I have chosen a simple example: if you want to go from Settle in the west to the county town of Northallerton, which is fairly in the middle of North Yorkshire, it is about 60 miles but will take the best part of two hours. It is not easy and it will not be easy for a unitary authority to govern that vast area effectively.
The noble Baroness says she is concerned about the unitary arrangements. We are returning to my ministerial days, when Ministers were served with advice from behind them. I have had some advice on my email from the leader of North Yorkshire County Council, Councillor Les, which may be some consolation to the noble Baroness. I will briefly read what he said: “We do intend to introduce devolution to parish and town councils, where they want it, and we will help them to do it. All is possible in time”. That seems to be a helpful contribution to this debate.
I thank the noble Lord, Lord Jopling, because, as we heard from my noble friend, it will be very important for there to be devolution to parish and town councils—if they have the capacity to do so, which is one of the key challenges of this arrangement.
What concerns me about this statutory instrument, the previous one and the next one is that they are all about creating a convenient administrative unit. There is no mention in the instrument of the extent of the area covered, its population, its representation, nor a word about people, and we are talking about local government. People are at the heart of any local government: people who can have their voice heard, engage in influencing decisions, know their elected representative and can readily contact them. That is what local government is about, and there is no mention of it in the instrument.
For me, this is about creating efficient local government —whether it will be is a different matter. Whether it will be effective is a moot point. I know from long experience in local government that there is always pressure to make decisions at the expense of listening to the local voice, because that takes time and commitment, and can be difficult. That will be a challenge for North Yorkshire.
I understand that North Yorkshire and the local districts have considered the importance of devolving some decisions to the town councils, and to the area constituency committees being set up. That has been really good, compared with other reorganisations, and they are also setting up local networks to engage local businesses and other partners who deliver public services. That part of what is being done is positive, and I am pleased that where there are no town councils—Harrogate and Scarborough—we will have the chartered trustees referred to in the instrument.
I shall just mention Councillor Les. I worked with him years ago on Yorkshire matters, so he and I know each other, but I totally disagree with him about having a mayor for North Yorkshire. I do not think that will work, and the Government must think of a different way to devolve funding for strategic priorities to the unitary authorities they create such as this one.
The local government map is being reshaped in England bit by bit. There is a strategy somewhere that somebody in the department knows, because it is being eaten away gradually: getting rid of the district councils and replacing them with unitaries, whether they like it or not. The local is gradually being extinguished from local government in the name of getting an efficient—convenient, maybe—local administrative unit. In this case, I think a lot of thought has gone into how North Yorkshire might work, which I applaud. It will face huge challenges. I am not convinced that it will make for local government that listens to local voices and provides an effective response to what local people want for their area, but I hope it works, for the sake of the people who live in North Yorkshire.
My Lords, I thank the Minister again for his introduction to this draft statutory instrument and other noble Lords for giving me so much in-depth information about North Yorkshire. It has been very interesting to listen to the debate.
I shall be brief and shall not repeat the questions that I asked earlier. As with the previously instrument, the Secondary Legislation Scrutiny Committee marked this one as being of interest, particularly around the concerns about the implementation of criteria in decision-making. The Minister went into that in his previous answer about Cumbria, and the noble Baroness, Lady Pinnock, has talked about it, so I shall not go into any more detail.
One thing that has been particularly interesting in the debate, which is important in Cumbria as well, is the issue around identity. People talked about Ripon, Scarborough and Harrogate, and how different parts of North Yorkshire are distinct areas. The thing that I am interested in is how we ensure that they continue to have a distinct ownership of place and locality, as well as services. How can they have a genuine say in what is happening going forward, to ensure that, as we move from one council set-up to the new unitary, there is no democratic deficit? The noble Lord, Lord Jopling, talked about constituency committees, but I imagine that those are quite large groups. Of course, the noble Baroness, Lady McIntosh of Pickering, drew our attention to the fact that there were 159 district wards. That is a lot—and I imagine that there are probably more parish councils within that. It is important that powers are not just devolved up to the new body but that there is strong interplay between local communities and the new council being set up. That is something that has come across very strongly to me in the debate—that this is important to local people. I am sure that the Minister will have taken it on board.
The noble Lord, Lord Newby, also talked about the importance of resources, which will obviously be critical, but I would also be interested to know whether there are any investments that need to be transferred or budget surpluses or debt that need to be consolidated. We know that local government has had serious cuts over the past decade, so there may well be debts that need to be resolved. I would be interested to hear about that from the Minister, and whether it is likely to cause any difficulties.
The noble Baroness, Lady McIntosh of Pickering, also raised concerns about what could happen if there was a metro mayor for the area, and her concerns around the pressures put on local authorities and people that this is the route that they have to go down to get the sufficient resources and funding that everyone has been talking about. Having lived in rural Cumbria, I totally appreciate that having a metro mayor for a large rural area is not the same as having one for an urban area, and that really needs to be taken into account. I would be very interested in the Minister’s reply on that as well.
Finally, the noble Lord, Lord Newby, seemed to imply that North Yorkshire was bigger than Cumbria in every way. I would just like to say that we have some rather large mountains. I am sure that, if we took all the area of the mountains into account, we would probably have more than North Yorkshire.
My Lords, this debate has shown a humongous knowledge of North Yorkshire. I remember a school visit to Scarborough and many conferences in Harrogate, but I have a fleeting knowledge of some of the places mentioned by noble Lords. I thank my noble friend Lord Jopling. In these debates, I have never had covering fire as effective as that provided by him, and I wish that he turned up to every statutory instrument that I had to deliver. I would ask him to please be here more often, with his forensic knowledge of every single part and corner of this country, from Cumbria to North Yorkshire. It is stupendous in every respect.
Noble Lords very helpfully said that there was unanimity of support from MPs representing constituencies in North Yorkshire for this proposal, and it is tremendously helpful to know that. In response to the noble Baroness, Lady Hayman, it actually preserves the service delivery over a county-wide area and has an established local identity which is easily understood by residence. It maintains the brand of North Yorkshire. That is important as well, and I think it is recognised by the MPs who have been elected in constituencies within North Yorkshire. It also aligns with arrangements in existing public sector partnerships and will allow existing relationships and partnership working to be maintained without disruption.
Responding to my noble friend Lady McIntosh of Pickering, when we hear a number such as 4,300, those are not individuals. Very often they are small, medium and large-scale organisations responding to the consultation. Of course we can always make consultations more effective, but we need to see individual responses from groups, not just the individual citizens of North Yorkshire.
I thank the noble Baroness, Lady Pinnock, for reminding me on the criterion of size that I was leader for only 16 years of my life in a terribly small London borough. She is always tremendously helpful in pointing these things out. We have a population approaching the size of Bern in Switzerland, and it has its challenges, but none the less, I agree with her that it is far smaller than North Yorkshire. The whole of Yorkshire, in aggregate, seems to envelope the vast majority of the north of England. All I will say is that Lancashire has definitely lost the Wars of the Roses when it comes to geography and scale.
However, the criterion is not simply around numbers. The criterion makes a specific point that a credible geography can be outside the 300,000 to 600,000 range if its population is a figure which, having regard to the circumstances of the authority, including local identity and geography, could be considered substantial. I am happy to set that out in writing if the noble Baroness, Lady Pinnock, wants to understand the issues, but there is a tolerance around the 300,000 to 600,000 figure, in essence. I do not need to write that out.
I enjoyed most the speech by the noble Lord, Lord Newby, which pointed out the horrendous antagonism between Ripon and Harrogate. It is true. My father grew up in Derbyshire and pointed out that there is sometimes antagonism between Long Eaton and Ilkeston. That is just the reality of where we are. You can see it in any part of continental Europe as well; villages that abut each other are often big rivals. Dare I say that it was ever thus?
I thank again my noble friend Lord Jopling for his covering fire. He invoked the name of Councillor Carl Les, who I had not heard of, but I now know is leader of North Yorkshire County Council and is clearly known by the noble Baroness, Lady Pinnock. His assurance that there is an intention to have that strategic authority but to devolve power and responsibility to town councils is incredibly helpful because the unitary will send that funding flow down to the town. Not every leader should be held at the centre. He has strong decentralising and devolutionary instincts, and it is tremendously helpful to have that assurance.
My noble friend Lady Pickering let me know that she would ask about the mayoralty. This order, in and of itself, allows a mayoralty to happen but does not impose it. I assure her that the introduction of a mayoral combined authority and devolved powers requires local support, but it is understood that any such move would require a full public consultation run by the area. A summary would then be submitted to the Secretary of State, who must be satisfied that there has been adequate consultation, so there is that proviso.
Regarding how the consultation is conducted, I will have to respond to my noble friend in writing. Regarding timeframes, I think they will probably be indicative from other areas, but again it must come from the bottom up, as opposed to the top down. I understand that there is some strong support in the local area for potentially having a mayor, but I will set all that out in a letter.
The last question concerns assets and debts. Within the current structure, although the top layer does not change, all the assets and debts essentially transfer to the unitary. All the assets, liabilities and debts just transfer, so that is a very simple matter.
We have had a very interesting debate. I continue, lord-lieutenant or not, to become a more rounded exponent of the virtues of local government in different parts of the country. I thank noble Lords for their contributions.
Somerset (Structural Changes) Order 2022
Considered in Grand Committee
My Lords, this order was laid before this House on 24 January 2022. The other place approved it on 28 February. If approved by this House and made, it will implement a proposal submitted by Somerset County Council for a single unitary for the whole of the Somerset County Council area.
In my introductory words for the Cumbria order, I set out the Government’s views on the benefits of strong local leadership. This order will establish for the people of Somerset a new single unitary council. Implementing this proposal and establishing this unitary authority will enable stronger leadership and far greater engagement at the strategic level and with its communities at the most local level. While Somerset is not among the areas for an early county deal, we will continue discussions with Somerset about a future devolution deal. The reform for which the order provides can help pave the way for such a deal.
I set out the full detail of the process for all three areas undergoing unitarisation in my speech regarding Cumbria. I will not repeat the detail of the invitation, criteria or dates of the statutory consultation here but will highlight the matters specific to Somerset. When issuing the invitation to the principal councils in Somerset to submit proposals for unitary local government, the then Secretary of State, my right honourable friend the Member for Newark, Robert Jenrick, also wrote to the neighbouring unitary councils of Bath and North East Somerset and North Somerset. Two locally-led proposals for local government reorganisation in Somerset were received in December 2020, one for a single unitary council and one for two unitary councils.
Turning now to the responses to the statutory consultation, we received almost 5,500 responses on the Somerset proposals. Of them, 5,167 responses, 94% of the total, were from residents living in the area affected. Both proposals received of a good deal of support. Some 3,000 residents, or 57% of those who responded, supported the two unitary councils option, while some 2,000 residents, or 35% of those who responded, supported the single unitary option. Some 72 % of respondents from the business sector supported the single unitary option and 88% of respondents from other public service providers also supported that option.
The district councils in Somerset ran a poll of residents about the unitary proposals. My right honourable friend had regard to the results of that poll and the representations he received about the way it was conducted. In essence, the poll showed similar levels of resident support as the consultation. Namely, there was a good deal of support for both proposals, with greater support from residents for the two unitary proposal.
However, I stress that the decision about the proposals is not a decision on the basis of any form of poll or referendum, nor is it on the basis of which proposal is most popular among a group of consultation respondents. It is a decision on the basis of the criteria to which I have referred and which were set out in the invitation of 9 October 2020.
Noble Lords will recall that my right honourable friend the then Secretary of State announced his decision on the proposals. A ministerial Statement setting this out was made on 21 July 2021, which I repeated in this House. In reaching this decision my right honourable friend made a balanced judgment assessing both proposals against the three criteria to which I have referred. He also had regard to all representations received, including responses to the consultation, and to all other relevant information available to him. He concluded that the two unitary proposal did not meet the criterion of improving local government and service delivery across the area. He also concluded that it did not meet the credible geography criterion. He concluded that the single unitary proposal for Somerset met all three of the criteria set out in the invitation of 9 October.
The Government believe that there is a powerful case for implementing this locally-led proposal for change. It will improve local government by enhancing social care and safeguarding services through closer connection with related services such as housing, leisure and benefits. It will improve local government by offering opportunities for improved strategic decision-making in areas such as housing, planning and transport. It will provide improvements to local partnership working with other public sector bodies and generate savings, estimated by the county council to be £52.6 million over five years. It will preserve service delivery over a county-wide area that has an established local identity and is easily understood by residents and provide a single point of contact so that residents, businesses and local communities will be able to access all council services from one place. If noble Lords approve this order, there will be, from 1 April 2023, a single unitary council for Somerset delivering the improvements I have just outlined.
We have prepared this order in constructive and collaborative discussion with all the councils concerned. I would like to take this opportunity to thank everyone involved in this process. Our discussions with the councils included the transitional and electoral arrangements. They are key to how the councils will drive forward implementation. Where there has been unanimous agreement between all the councils, we have adopted their preferred approach. Where there were different views about the detailed provisions, my right honourable friend the Secretary of State considered all differing views and reached a decision accordingly.
Turning now to the detail of the order, I shall highlight the key provisions. The order provides that on 1 April 2023 the districts of Mendip, Sedgemoor, Somerset West and Taunton and South Somerset will be abolished. The councils of those districts will be wound up and dissolved. In their place, their functions will transfer to the new unitary Somerset Council. The order also provides for appropriate transitional arrangements including that in May 2022 there will be elections for the new unitary council, which will assume its full powers from 1 April 2023. These elections will be on the basis of a 110-member authority with 55 two-member electoral divisions. Subsequent elections to the unitary council will be in May 2027 and every four years thereafter. We expect that the Local Government Boundary Commission for England will undertake a full electoral review before the May 2027 elections. Parish council elections due in May 2023 will be brought forward to May 2022 to align with the unitary council election cycle. A duty will be placed on existing councils to co-operate during the transitional period until 1 April 2023.
As I set out in the previous debates, we intend, if this order is approved and made, to issue a direction. This direction would ensure that the new unitary council has appropriate oversight of the commitments that predecessor councils may enter into during the transitional period and which the new unitary council will take on from 1 April 2023. Before issuing any such direction I will be inviting councils’ views on a draft.
In conclusion, through this order we seek to replace the existing local government structures that were set up in 1974 in Somerset with a new council that will be able to deliver high-quality, sustainable local services to the people of Somerset. This council will be able to provide effective leadership at the strategic and most local levels. All the existing councils have made clear they share these aims and are committed to the very best services for Somerset residents. This order delivers this, and on that basis, I commend this order to the Committee. I beg to move.
The noble Baroness is of course right. I apologise to those present. The speed with which the Minister finished off North Yorkshire completely fooled me about when he was about to start on Somerset. I thank the Committee because as the only representative of Somerset here, and having represented a Somerset constituency in Parliament for 30 years, I would like to comment on the changes that are taking place without the Minister looking too worried that I am going to seek to overturn the proposals that he has made. He can relax on that.
In my earlier career, I was, among other long-forgotten things, Minister for Local Government for three and a half years and I was in the Department of the Environment, as it was then. My noble friend Lord Heseltine and I worked together in that field looking at the activities of local government.
I accept that bringing in unitary authorities leads to more efficiency and more opportunity for strategic development for the county. However, there is obviously a concern about whether it becomes more remote from any individual authorities. Noble Lords may know that I am Lord King of Bridgwater. Bridgwater was a constituency that stretched a long way out to the west and included in it was west Somerset. When we look at the arrangement for this new unitary authority, the abolition of Taunton and Somerset West is the one that gives me some concern—not for Taunton, which will look after itself. I used to have Porlock, Oare and Minehead and the further west parts of Exmoor and that part of the county. I make one plea. I accept that this idea is sensible and think I am right in saying that my successor is one of the ones who is not too enthusiastic about it. I think the other Members of Parliament for Somerset are in support of this for the greater efficiency and the greater strategic approach that can be taken. However, we must try to ensure that the centre of power does not become too remote from those in the more remote parts of the proposed new area.
That is my only plea at this stage and I hope that the Government, in putting these proposals, will try to ensure that the interests of the more remote parts that might otherwise be left out are taken into account. I am not quite sure of the mechanism but there needs to be some way of ensuring that every part of the new unitary gets proper representation. The Minister has already said that there are 110 councillors in this new authority—that seems pretty big to me—and I think west Somerset will have eight of them. The warning on the packet is that they could easily be overridden and forgotten in approaches. I am very grateful to the Minister for listening to my concerns on this having, as I said, for 30 years represented part of what he is talking about today. I understand why it is being done but I am still going to stand up for the people I had the honour to represent for a time and make sure that their interests are taken into account.
My Lords, I start by adding an additional interest to the ones that I declared earlier, as I have a family member who is a councillor in Somerset, so I know a bit about what is going on. I am glad we have heard from the noble Lord, Lord King, because I agree with him about the danger of local government becoming remote from people, which is a comment I made earlier about North Yorkshire. It then loses the “local” out of the government. What you might gain in strategic oversight, you lose in terms of local voice and listening to local people. I think the Government would do well to listen to the points made by the noble Lord, Lord King. I think I will repeat some of the remarks I made earlier. It is a done deal. Everything is in train to create this unitary authority in Somerset. It is not necessarily something that I think is completely right—I agree with the comments that have been made.
One of the issues that arises with the Somerset local government reorganisation is that one of the three criteria that lead the Government to determine whether to have a one-or two-unitary council model is that it commands a good deal of local support. The Minister whizzed through what the Explanatory Memorandum says, but I will repeat some of the figures because they are important in this regard. The views of residents, where they have been asked, are very clear on this issue: 58% of those who live in the area support a two-council model. Some 67% of parish and town councils support a two-council model. The voluntary and community sector supported a two-council model by 53% to 20%. When the district councils set up the online poll, to which there was a huge response—100,000 people responded—65% supported the two-council model. Although there was the counterview from Somerset County Council, which stuck up for what it had already, the people wanted a two-council model. Unfortunately, that has been overridden by this decision.
This is the point at which I draw the Committee’s attention to the comments of the Secondary Legislation Scrutiny Committee, to which I would like the Minister to respond. It said:
“Given the Government’s commitment to unitarisation”—
“being ‘locally-led’ … it is not clear whether or how the three criteria are prioritised.”
What weight is given to each of them? The people of Somerset clearly said no to having one council, and the Government said, “Hard luck, you’re going to have it.” The Secondary Legislation Scrutiny Committee invited those of us debating this to ask the question. I am asking it, and I would like an answer.
I heard what the Minister said about credible geography being important in this case. Perhaps he can explain what that means, given that Taunton, as we heard from the noble Lord, Lord King, is in the bottom left-hand corner, if I can put it like that, so it is nowhere near the middle. It is at the south-west edge of the county, which is very rural. A consequence is poor connectivity and access to services that are to be administered miles away from the northern part of the county. To get to Taunton from the north—from Frome or somewhere such as that; that is a new town for the Minister to know—would take an hour and a half. There is no public transport to get there, so unless you drive you cannot get there. It should be a matter of concern that the administrative centre of a new council is not easily accessible for people who live in one part of the county.
As I said, what has really upset me about these instruments is that there is no mention of people in them. I do not want any further instruments to come here without mentioning people, who are at the heart of local government. There is no mention of them at all, except in the consultation. Somerset has a population of 500,000. It is very rural. As we heard from the noble Lord, Lord King, it is proposed that there will be 110 councillors for the initial interim council, but I have heard it suggested that 85 will be the maximum number once the local government boundary review is done.
Each councillor will represent 2,000 households in the interim council and probably 2,700 households when the Boundary Commission has spoken, which is a very significant cut in representation. It makes them quite large in terms of numbers of councillors per household. I take as a random choice the London Borough of Hammersmith and Fulham, just as a comparator. It has a population of 180,000 in 80,000 households, and there are 46 councillors, so each represents a mere 1,700 households—a mere nothing. My colleagues and I represent 9,000 households between us, by the way. On top of that, in London there are also Assembly members providing additional local representation—and you have a compact borough, with excellent connectivity. So what is the problem with Somerset having equivalent levels of representation at a local level?
I applaud what the council is doing about the local community networks; that is something to agree with—it is trying to get something done. But there is no coherent plan for devolution to local communities at all, as there was in North Yorkshire, and no devolution plan for parish and town councils or, as they have in North Yorkshire, area constituency committees. There is much to be concerned about.
Of course, residents understand that some decisions, such as on highways, are best made at a county-wide level. But what is less acceptable, particularly in this case, is for decisions on planning or bus services to be made in Taunton by a Cabinet of 10 members out of 110 who will not understand the practicalities. Those who live near and around the Somerset Levels, for instance, or live in the north of Somerset, in Shepton Mallet, Frome or Street or any of those small towns in the north, do not want their planning decisions to be made in Taunton. Currently, the plan is for planning not to be devolved to area committees, which is a huge mistake. I hope that those with influence in Somerset, such as the noble Lord, Lord King, will do their best out of this to get some devolution at a local level, because that is the only way that these vast unitary authorities will work.
Noble Lords can see that I am not enamoured by this plan, because that is what it is—we do not have a choice today. The focus and purpose of the change is being driven by administrative and financial demands. Local democracy has been steamrollered out of the equation; it is entirely about process and not people.
These big unitary authorities may be more efficient because they can take a strategic view of what is needed across the area. I have served a community on the edge of a big metropolitan authority of 450,000 people for 30 years, and I can tell you how difficult it can be to make the voices of the villages I represent heard at the centre. It might be more efficient in administrative terms, but it will not be more effective at hearing the voices of local people. For me, local democracy is about local people, and their representatives listening to them and doing something about what they have said. There is not much point if they do not.
As noble Lords can hear, I am very concerned about what is happening in Somerset. It is going to happen, so I hope it is made to work. It will only work if there is proper devolution. I wonder whether the Minister will be able to put some pressure on his colleagues in Somerset to insist that that happens. With those few words, I look forward to what he has to say.
My Lords, this is the third and last of the SIs on structural changes we have been debating. I will be brief, as we seem to have been here for some time. I thank the Minister for his introduction and the noble Lord, Lord King, for giving the perspective of someone from Somerset. As always, it was helpful and useful to hear that. My credentials are that my husband is a Somerset boy—well, not such a boy anymore, but he is from Somerset.
I understand from the consultation that
“The Secretary of State has concluded … that the proposal for a single unitary council meets all three criteria and that the proposal for two unitary councils meets only the criterion on local support”,
not those on improving local government and being a credible geography. From looking at the consultation, it seems the people of Somerset supported a proposal for two councils. Both the noble Baroness, Lady Pinnock, and the Minister mentioned the poll that was run by the four district councils, with a good number of people taking part—more than 100,000—of which 65.3% voted for the district council’s “Stronger Somerset” proposal, which would have created two councils, western Somerset and eastern Somerset.
As referred to by the noble Baroness, Lady Pinnock, Somerset County Council did not like that proposal. My understanding is that it described the poll as “deeply flawed” and “biased”, but the Member of Parliament for Bridgwater and West Somerset, Ian Liddell-Grainger, said that the Secretary of State “cannot afford” to ignore the poll. Could the Minister explain why the then Secretary of State ignored that poll? Did he agree with the county council that it was deeply flawed and biased? Will the Minister and the department assure the people of Somerset that their views in the consultation will not be ignored, and will be heard loud and clear in the transition phase to the new unitary authority? The people of Somerset need to be fully involved in the process at every stage. I hope the Minister can give specific assurances on this.
Noble Lords have said it is important for local people’s voices to be heard. Local decision-making must be part of any future structures. If the Minister could give reassurances on these matters, I would be grateful.
My Lords, this is almost like a well-oiled relay. First, we had my noble friend Lord Jopling stepping in to provide covering fire. Then we had my noble friend Lord King of Bridgwater, with his Somerset credentials, stepping in to cover my lack of them. I went to a school in Somerset once—I think Blundell’s is in Somerset—and I did a prize-giving there, but that was about the first time.
Is it in Devon? Gosh, that was not particularly good; I am probably not best placed to sell the virtues of Somerset. I wanted to say that I learn something every time, such as the fact that my noble friend was a Local Government Minister under the noble Lord, Lord Heseltine. You succeeded him, did you not? That was your first Cabinet position and you continued to serve with great distinction, for almost a decade, in the Cabinets of Margaret Thatcher and John Major. Each time I see my noble friend I am reminded of “Spitting Image”; he has not changed a bit in all those years, I have to say.
Most importantly, my noble friend raised the issue that Governments need to be strategic but also deliver. As someone who has served in the town hall, in City Hall and now as a Minister, I absolutely recognise that. It is possible to do both. It is possible to be strategic and focus on delivery. That is what local leadership is all about. That is what I would say in response to my noble friend.
It has been very difficult to listen to some of the passages from the noble Baroness, Lady Pinnock, because I was being lectured by someone from Yorkshire about Somerset and about Hammersmith and Fulham. In response to her and the noble Baroness, Lady Hayman, I would say that the process was done properly. The key point is that both options had a great deal of support in Somerset. As I set out in some detail for the first statutory instrument, the three criteria are considered in the round. Residents are central to the criteria that have led to this order, in the sense that this reform is all about better delivery of services to the residents of Somerset.
Before I conclude, I will just say that the electoral arrangements are clearly for an election in May 2022. That was proposed by the Somerset councils. There will be a review by the Local Government Boundary Commission for England before the second election in 2027.
This has widespread support from residents, local businesses, and the voluntary and community sector in Somerset. I commend the order to the Committee.
Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022
Considered in Grand Committee
My Lords, I beg to move that the draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022, which was laid before the House on 9 March 2022, be approved.
The UK Emissions Trading Scheme, or UK ETS, was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme to encourage cost-effective emissions reductions which will contribute to the UK’s emissions reduction targets and net-zero goal. This scheme replaced the UK’s participation in the EU Emissions Trading Scheme, and the 2020 order applied EU ETS rules on the monitoring, reporting and verification of emissions, with modifications to ensure that they work for the UK ETS.
The 2020 order was subsequently amended by the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 to include provisions for the free allocation of emissions allowances and to create the UK ETS registry. Regulations under the Finance Act 2020 established the rules for auctioning allowances and mechanisms to support market stability. The UK ETS launched on 1 January 2021 and the first auction successfully completed on 19 May. The scheme has been running well since this launch, but there is a need to continue to improve its operation.
Further amendments to the scheme were made by the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2021, which was subject to the negative procedure and came into force on 7 February 2022. In broad terms, the 2021 order made various technical and operational amendments to the UK ETS across a number of scheme aspects, including providing for installations in the hospital and small emitter opt-out scheme to be able to increase their emissions targets and for installations in both opt-out schemes that return to the main scheme to benefit from free allocation.
The purpose of this order is to amend the 2020 order to address several residual operational issues identified in the development of and legislation on the scheme, and to support the scheme’s technical operation. This legislation also addresses an issue of doubtful vires relating to the previous amendments raised by the Joint Committee on Statutory Instruments.
This proposed order consists of various operational issues that were identified by BEIS, the devolved Administrations and the national scheme regulators during the establishment of the scheme but were required to be legislated for via an affirmative procedure. In particular, this order introduces a civil penalty to enforce an existing obligation to return overallocated allowances; creates an offence of intentionally obstructing the scheme regulators exercising enforcement powers; makes it clear that some enforcement powers previously introduced by the negative procedure are valid; and provides that, when an installation’s permit is surrendered or revoked, the notice given to the operator will include a requirement to surrender any deficit of allowances from previous scheme years.
The Government consulted on the policy in these regulations between July and September 2021. The consultation generated seven responses from a range of stakeholders. Responses were largely considered clarification-based, none of which impacted on the proposed policy changes. Alongside the consultation, the UK Government and the devolved Administrations jointly sought the advice of the Committee on Climate Change on the public consultation. The Committee on Climate Change reviewed the consultation on the proposed amendments and had no comments on the content.
The amendments made to the surrender and revocation notice provisions were not included in the public consultation. The department took the view that the policy represented by these amendments is within the scope of the consultation previously carried out on the future of UK carbon pricing in 2019 and is covered by the Government’s response to that consultation, which was published in June 2020. The scheme regulators were consulted and agreed with the proposed amendments. The Committee on Climate Change was advised of the additional provisions and had no comments.
The overall level of climate ambition in the UK ETS is unchanged by the proposals. There is no overall impact on the monetised costs and benefits to businesses. There is no change to the supply of allowances or the expected emissions from participants. There is also no expected change to the general administrative burden for emitters. In terms of other impacts, these provisions are also designed to address a number of specific circumstances for regulators and the registry administrator, including options to apply penalties specifically if operators or aircraft operators fail to return allowances. Again, these are not expected to apply generally, but might take effect in specific circumstances.
In conclusion, this order will help to improve the effective operation of the UK ETS. This in turn will help to ensure that the scheme plays its part in reducing emissions. I commend the draft order to the Committee.
My Lords, I do not intend to speak for long. This order is fairly uncontroversial, so I do not want to detain this packed Committee. The one thing that I want to mention is that the Minister mentioned consultation and said that only seven people responded. I have stood here many times and looked at consultations, and it always strikes me how woefully few the responses are. This order may not cover very much, but it seems to me that we have to consult. The Minister need not come back but, if only seven people respond, have we got the consultation right? That is a general comment across a number of departments. I shall not detain the Committee, because I do not have a huge objection; the order is fairly uncontroversial. However, I understand that this order amends a previous order, so the question is why we did not get it right in the first place. Perhaps the Minister can respond on that point in particular and about consultation. I will leave it there.
I thank the noble Lord for his kind comments and his contribution to this debate. I take his points about the consultation. I wondered why we had had so few responses, but it is a general point about consultations.
The UK ETS was designed by the UK Government jointly with the Scottish Government, the Welsh Government and the Northern Ireland Executive. It came into force on 1 January 2021, only 15 months ago, replacing the UK’s participation in the EU scheme. The UK Government and devolved Administrations are committed to the use of carbon pricing as a key policy lever to ensure that the UK reaches its ambitious climate targets, including net-zero emissions by 2050, cost effectively. We will in due course also consult on aligning the UK ETS cap with our ambitious net-zero target—and I am sure the officials behind me will take note of the consultation procedures for that. The UK ETS will promote cost-effective decarbonisation, allowing businesses to cut carbon where it is cheapest to do so. It will help mobilise the scale of capital investment necessary to deploy clean energy technologies and to capture new trade opportunities on the back of the energy transition. Alongside our UK ETS, we are also supporting and incentivising business to invest in key technologies such as hydrogen and carbon capture, which, as the noble Lord will know, is also supported by the Government.
The 10-point plan and the Spending Review contained key commitments for a green industrial revolution. The UK Government have committed to supporting the development of one carbon capture and storage power plant by 2030 to reduce emissions from gas-fired power stations; £1 billion for the CCS infrastructure fund to help establish four CCUS clusters by 2030; and the £240 million net-zero hydrogen fund and a hydrogen business model to deliver the ambition for 5 gigawatts of low-carbon hydrogen capacity by 2030.
It is important that we continue to support the effective delivery of the UK ETS by resolving operational and technical issues identified as the scheme continues to run. We understand the importance of stability for businesses covered by the scheme, and in establishing the UK ETS, we prioritised ensuring a smooth transition for operators from the EU ETS. The complexity and scale of the UK ETS legislation means that, inevitably, minor amendments are required following the initial setup of the scheme to ensure it operates as smoothly as possible. Some of the provisions in this legislation—for example, the penalties—require the affirmative procedure, so it was necessary to legislate for amendments through two SIs, an affirmative and a negative, to ensure that amendments could be delivered in time. We engaged with operators through a public consultation on this SI to ensure that they were aware of proposed amendments and had the opportunity to input well in advance of the legislation being made. Guidance is available for UK ETS participants, and the UK ETS authority will release further guidance as necessary to advise operators and facilitate their compliance obligation with the UK ETS.
In conclusion, the order will help to improve the effective operation of the UK ETS by introducing a civil penalty to enforce an existing obligation to return over-allocated allowances; creating an offence of intentionally obstructing the scheme regulators in exercising enforcement powers; making clear that some enforcement powers previously introduced by the negative procedure are valid; and providing that when an installation is permanently surrendered or revoked, the notice given to the operator will include a requirement to surrender any deficit of allowances from previous scheme years. Improving the effective operation of the UK ETS will ensure the scheme can play its part in reducing emissions and achieving the UK’s ambitious climate targets, including net-zero carbon emissions by 2050. I commend the draft order to the Committee.
Small Business, Enterprise and Employment Act 2015 and Pubs Code etc. (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, I beg to move that the Small Business, Enterprise and Employment Act 2015 and Pubs Code etc. (Amendment) Regulations, which were laid before the House on 30 November 2021, be approved.
The Pubs Code was introduced in 2016 to ensure the fair and lawful treatment of tied pub tenants of large pub-owning businesses. These regulations would improve its practical operation. A tied pub tenancy is where the tenant has agreed to purchase beer and other stock from their pub-owning landlord in return for a lower rent and other benefits. That agreement means that the tied pub tenant is unable to negotiate deals in the open market for beer and other products, but also means that their landlord has a shared interest in the success of the pub and works in partnership with the tied tenant. This has not worked well in all cases, and evidence from tenants to several Select Committees identified failures in the tied pubs sector and led the Government to introduce the Pubs Code to regulate this relationship. The Pubs Code creates certain rights and protections for tied tenants, including better information prior to signing a contract; no upward-rent-only reviews; no tied gaming machines; a right, at certain points, to break their tied arrangement and opt for a free-of-tie tenancy, by way of the market-rent-only process; and a system of redress through the Pubs Code Adjudicator.
The tied model is not inherently bad. In many cases, if not most, tenants are positive about their tied arrangements and welcome the partnership with the pub-owning business. It is therefore crucial that the Pubs Code strikes the right balance between creating rights and protections for the tied tenant, the property rights of pub-owning businesses and their ability to realise the value of their investments. To ensure the Pubs Code continues to operate as intended, a statutory review must be conducted every three years. The first such review concluded with the publication of the Government’s report in November 2020. This found that although there had been improvements, there were some aspects of the code’s practical operation that could be improved. Following a public consultation, the Government committed to make several changes to the Pubs Code.
The most significant changes in these amendments are the improvements to how the process for the market-rent-only option works in practice. The MRO process enables the tied tenant to request a proposal from their pub-owning business that sets out the terms for a free-of-tie tenancy where the tenant would pay a market rent. That rent will likely be higher with the removal of the contractual agreement to purchase tied products from the landlord and is a matter for the parties to negotiate.
The SI will improve the MRO process, first by requiring the initial MRO proposal from the pub-owning business to include a rent proposal, so that parties can negotiate both terms and rent at the same time. Secondly, it will create a single resolution period of up to three months. Unlike the current process, where the tenant has 14 days to decide whether to refer an MRO proposal to the PCA, the parties will have time to negotiate the proposed free-of-tie terms and rent. This change has been welcomed by most stakeholders, including the PCA. Only the tenant can end this period early, at any time after 21 days, enabling them to refer the proposed terms to the PCA, or the proposed rent to an independent assessor.
Finally, the SI makes other changes, adjustments and clarifications to the MRO process, reflecting the introduction of the resolution period. For instance, where there is a procedural defect in the MRO proposal, such as the omission of the rent offer, the tenant has 14 days to refer this to the PCA to resolve such technicalities more quickly. It also provides expressly for rereferral to the PCA where the tenant considers that the pub-owning business’s revised response is still not MRO-compliant.
Schedule 1 to the statutory instrument uses powers in the Small Business, Enterprise and Employment Act 2015 to amend the qualification period for a business owning tied pubs to come into or out of scope of the Pubs Code. This amends the requirement from having owned 500 or more tied pubs for six months in the previous financial year to three months. No new pub-owning business has met this threshold since 2016, but noble Lords will be aware of the merger and acquisition activity that is a feature of the pub sector.
Currently, tied tenants could wait for nearly 18 months after their landlord reaches the 500 tied-pub threshold before acquiring the rights and protections of the code. For example, under the legislation as it stands, a pub company meeting this 500 tied-pub threshold through tied pub acquisitions in October 2022 would not come under the code until April 2024. Under the amendment, the maximum period is reduced to 15 months, so a pub company meeting that 500-pub threshold in October 2022 would come under the code in April 2023. Similarly, a pub-owning business reducing its number of tied pubs to below 500 would remain regulated for a longer period, but this also means that the minimum period of full protection for the remaining tied tenants increases from six to nine months and would help to manage such changes, which are beyond the tenant’s control.
In Schedule 2, the comparison period, used to determine whether a significant price increase for a tied product or tied service has occurred, is amended from 56 weeks to 52 weeks. This is one of the events allowing a tied tenant to request an MRO proposal, and therefore serves to disincentivise significant price increases for tied beer, et cetera, under the tie.
The Government are cautious about changing this arrangement, but there is a case for amending how the comparison period is calculated. A 56-week comparison period could capture two annual price increases, raising complications for the more traditional 12-month business planning cycle. The proposed change amends the comparison period to 52 weeks but continues to disincentivise price increases, thereby protecting tied tenants.
Lastly, I move to notification of the PCA regarding extended protection, which applies where a tied pub is transferred to a landlord not regulated under the code. Tenants with extended protection continue to benefit from many of the code’s provisions for a limited time, including access to the PCA. Currently, the PCA will have no direct knowledge of such transfers. This amendment will require a regulated pub-owning business, before the transfer, to inform the PCA when it is transferring a tied pub where the tenant will enjoy extended protection. This enables the PCA to contact new owners, raising awareness of their tied tenants’ rights and protections.
In conclusion, this SI makes important changes to improve the practical operation of the Pubs Code, most notably in creating a longer period to enable the tied tenant to negotiate a free-of-tie tenancy or, indeed, a better tied deal. I commend these regulations to the Committee.
My Lords, I should make it clear at the start how much I like a pub. I have spent my adult life visiting pubs all over the country and am a big supporter of them. I see them as the heart of the community and as a very British thing. We are very well served. Having said that, we all know about how many pubs are struggling and are closing. During the pandemic, I think that 40 pubs a week were going bust. That is something that we should all regret. Even outside the pandemic, I think that we have all known for years that many pubs have struggled. Publicans, those who are tied to a company and those who are not, have to work very hard to have an offering that actually serves their community. We will all know of very different pubs that know their customers well. Good pubs know what their customers want and serve them well.
The code itself is a good thing, but in practice it has not always worked to the benefit of the tied tenant. It is a bit like a David and Goliath battle, in that even when individual tied tenants seem to get changes, they are still tied into the agreement they have. I think sometimes it is very difficult for them. Yes, the tie means that they get a cheaper rent, but they are then tied into buying the beer and other things to sell often at a slightly higher price. If they want to change to a market rent, getting out of that can take a long time. There is not really speed here. Yes, the changes make some progress, but I think that, generally speaking, the adjudicator and the process have not particularly served the landlords of tenanted pubs particularly well. I still think that, even with these changes, tied tenants are getting a bit of a raw deal in some respects. We need to do much more, otherwise it will always be the tenant who has to wait to make the change and to pay. All those things go further to ensure that we lose more and more pubs.
What I would like to hear from the Minister when she responds is what further is going to be done. If anything I am saying today has any resonance with her, what are we going to do then to ensure that we will not be sitting here in years to come with more and more pubs lost, or saying that we are going to make further changes to the code? As it is now, it is not going to be good enough and we are going to see more pubs lost.
I want to hear what more we are going to do. This is a failed opportunity; we could have done more. It is still very difficult for those pubs to survive and this will not help them. I want to see more from the Government, who say how much they support pubs. I regularly attend events in Parliament at which Members from all sides of the House say how much they support pubs, publicans, breweries and everything else, but the regulations in front of us do not.
I will leave it there. I look forward to the noble Baroness’s response.
I thank the noble Lord, Lord Kennedy, for those perceptive comments. I too am a big fan of pubs. We have a free house in the next village that gets a lot of our custom.
The points the noble Lord raised demonstrate the importance of the Pubs Code itself and the broad support to improve its practical operation. As I said in my opening speech, a number of tied tenants are very happy with the arrangements with the larger brewers, but I reiterate that the clear and narrow purpose of the Pubs Code is to regulate the relationship between large pub-owning businesses that own at least 500 tied pubs and their tenants to ensure that there is fair and lawful treatment.
The Government will commence the second statutory review this year. Ministers are considering how they wish to approach the review, but stakeholders will again be invited to share their views about how well they think the code is operating. The second review will cover the three years to the end of March this year. Stakeholders’ responses and publicly available evidence will be considered to assess the practical operation of the code to inform the Government’s conclusions. The first review did not find that the tied pub arrangement had been a significant driver of pub closures, although a number of responses to the review gave examples where they believed that the tie had contributed to the failure of a tenant’s business.
We acknowledge that these are exceptional times for the hospitality sector, including the wider pub sector. It will take time to assess the longer-term impact of Covid on the pub sector. Prior to the Covid pandemic, however, the main causes of pub closures, as identified by the Office for National Statistics, were changes in demand because of short-term economic factors and longer-term changes in consumer habits. I acknowledge that there was a worry that pub-owning businesses might have used Covid as an opportunity to punish former tied tenants for exercising their right to a market rent only free-of-tie tenancy under the code by not giving them the same support, but that is one of the reasons why the Government have introduced these streamlined arrangements to allow tenants to use the market rent only process, and why we have tweaked the Pubs Code Adjudicator to help resolve these dispute under the code.
The Pubs Code was drafted to balance those important rights and protections for tied tenants against the property rights of pub-owning businesses to operate their tied pub estate and to secure a return on their investments. We believe these amendments are proportionate in improving the practical operation of the Pubs Code and achieving real improvements for tenants without placing undue constraints on pub-owning businesses, particularly at a time that remains difficult for the tied pub sector. As I said, the next consultation is already well under way. It will be interesting to see what lessons can be drawn out of that. For the moment, I commend this instrument to the Committee.
Committee adjourned at 8.48 pm.