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19 Nov 2002 : Column 541—continued

Mr. Deputy Speaker: Order. The hon. Gentleman does not need to justify himself to the Chair. I am simply suggesting that we should draw a line under that subject.

Mr. Davey: I suppose we should be surprised that the Queen's Speech contains no surprises. Much of the

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legislation has been trailed. We have seen the draft local government Bill, which was welcome and we are now to see the draft housing Bill. I congratulate the Government on publishing their legislation in draft form as it is helpful. We must hope that that will lead to better parliamentary drafting and more consultation, but I am concerned that the content will not improve.

Let us start with the Regional Assemblies (Preparations) Bill, which has already been published. The Liberal Democrats are, and have been for many years, strong advocates of regional government. My immediate predecessor with responsibility for regional government, my hon. Friend the Member for Bath (Mr. Foster), published detailed proposals and won our party conference's support for them. I am indebted to him for that work, because it enables me to compare the Government's programme with our own. On Second Reading next week, I hope to make that comparison in more detail.

I have two points to make tonight about that little Bill. First, and bizarrely, the Bill would allow referendums to be held before the final decisions have been made about the powers for the regions, as the right hon. Member for Haltemprice and Howden (David Davis) said. Nowhere in the Bill does it say that the House must have decided what powers it will give to regional assemblies before people are asked about them. Ministers might refer people to the White Paper, XYour Region, Your Choice", but since when has a White Paper—which is subject to consultation and change by Parliament—established legal powers? It is a strange notion of democracy to ask people to vote for something that has not yet been decided. It is like holding elections when the parties have not got round to finalising their manifestos. On second thoughts, perhaps that is where the Government started.

Mr. Bercow: Given the hon. Gentleman's avowed commitment to localism, does he accept that most people's primary loyalties are to their village, their town, their district, their borough or their county, but not to amorphous monstrosities, otherwise known as regions?

Mr. Davey: I am grateful for that helpful intervention. Of course people support their local communities, possibly more than they do regions or other tiers of government. However, it is nonsense to suggest that there is no demand for regional government in many parts of the country. The hon. Gentleman has only to visit the north-east, Yorkshire and other regions to see that.

Mr. Gordon Prentice: The Member for Yeovil in the last Parliament said that that Commons is too big and its membership should be reduced. What is Liberal Democrat policy on the creation of regional assemblies? Should there be a corresponding reduction in the size of membership of this House?

Mr. Davey: We have argued for just such a reduction.

The Deputy Prime Minister is doing down his own cause as a proponent of regionalism. If we had a referendum campaign, it would soon become clear that people were being asked a hollow question, with no clarity. I cannot think of a better weapon to give to the

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opponents of devolution. The strategy of failing to set out the powers of the assemblies before the referendum is counterproductive to the right hon. Gentleman's aims.

The Deputy Prime Minister: Would the hon. Gentleman vote for or against a regional assembly, given the opportunity?

Mr. Davey: We will vote for regional assemblies, but we will also make detailed criticisms of the Regional Assemblies (Preparations) Bill. It has a second major failing that the right hon. Member for Haltemprice and Howden did not mention. By tying a referendum on a regional assembly to local government restructuring, the Government are shooting themselves in the foot again. The most recent experience of such restructuring shows that it can be very destabilising, setting council against council, councillor against councillor—often from the same party. The net effect of the coupling of the regional question with local government restructuring will probably be that both are lost, because people who would normally be sympathetic to devolution will fight to preserve powers for their own communities. That is why the Liberal Democrats believe that the two issues should be decoupled. By all means, let us ask local government to restructure, but we should not tie the issue to regional assemblies. At the very least, the Government should ask people two separate questions—one on the regional assembly and one on any proposed local government restructuring. That would be more democratic and more likely to ensure maximum support for future regional assemblies.

Lawrie Quinn: The hon. Gentleman suggests decoupling of the issues. Would he ask areas that already have unitary authorities whether they want secondary or tertiary levels?

Mr. Davey: We shall certainly not propose that they be given the choice to revert. Most unitary authorities have had that debate and have made their choice in the very recent past.

Will the Deputy Prime Minister say when he expects the local government Bill to be published? A lot of work has already been done: a draft Bill was prepared, and the Select Committee published a report to which the Government responded. I hope that the Bill is not too far away from publication.

The Deputy Prime Minister : It will happen soon.

Mr. Davey: That is helpful. In fact, all the work that has already been done gives us an idea about what the Bill will contain, so we can talk about it in some detail. Many aspects are welcome, but it is extremely disappointing overall.

As I said earlier, the Bill is built on distrust of local government. I am not alone in thinking that, because, as the Deputy Prime Minister admitted, the Select Committee was very worried about that. It stated in its report:

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That is from an all-party Select Committee. In addition, the local government information unit published earlier this year its commission on local governance report entitled XFree To Differ". The report looked at the White Paper proposals on which the Bill is based, and stated:

Is there anything good about the White Paper and the draft Bill? Yes, there is. The prudential capital regime is welcome. Liberal Democrat Members have pushed for abolishing controls on council borrowing and for the proposed system of credit approvals, and unequivocally welcome them. However, those new freedoms will be coupled with some worrying new powers for the Secretary of State. The draft Bill makes it clear that there will be special powers—unconstrained powers—to intervene in any local authority's ability to borrow. Intervention will not be possible only in special circumstances defined in the legislation, but can be undertaken at the Secretary of State's whim. That is a real concern.

In addition to the powers to intervene over borrowing, the Bill will contain new powers to intervene in connection with minimum reserves, and its proposals to pool capital receipts could have some bizarre effects. Those pooling proposals give us real cause for concern. In some cases, they could act as a disincentive for councils to become free of debt or to manage their asset portfolios efficiently. That cannot be right, and we shall seek significant changes in that regard.

We welcome the Government's change of heart over their original proposals to merge the revenue support grant with national non-domestic rates. That shows the value of consultation. As the Deputy Prime Minister has realised, the proposals would have reduced transparency, and I am glad that he has dispensed with them. However, the Bill contains no proposals for returning business rates to councils, either in their current form or reformed as we propose. I am afraid that that lack has not been welcomed by people in the local government family up and down the country.

We welcome the ideas on business improvement districts. Some time ago, indeed, Lord Ashdown, our party's former leader, was one of the first to advocate such districts.

We welcome some of the muted reforms to council tax. The abolition of the council tax benefits subsidy limitation comes not before time. As my hon. Friend the Member for North Norfolk (Norman Lamb) noted in an intervention, we welcome the fact that local authorities will be given some discretion about removing the council tax discount on second homes. However, we are concerned about the retention of the mandatory 10 per cent., and we are not convinced by the Government's arguments on that.

Liberal Democrat Members would prefer much more radical reform. The council tax should be abolished and we believe that local income tax should be introduced. That tax is fair and related to a person's ability to pay.

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It is surprising that a Labour Government should stick with the Tory council tax, which is increasingly being shown to be one of the most regressive forms of tax imaginable. It is the next most regressive form of tax after the poll tax. Rising council tax rates place an especially damaging burden on the poor and the nearly poor in our society. I am sure that hon. Members of all parties will recognise that trend from their constituency mail bags.

The local government Bill contains some welcome measures, but they do not add up to very much. With their comprehensive performance assessment exercise, the Government are sending a clear signal to local government up and down the country that, at best, they do not care much for local government and that, at worst, they hold it in contempt. We should consider for a moment the comprehensive performance assessment process. Liberal Democrats had concerns about that from the start. A one size fits all model of inspection for councils across the country is not good enough. The costs are huge, and many of us doubt whether central Government telling local government what it should prioritise from start to finish has anything to do with local democracy.

The allegations in last week's Local Government Chronicle provided the final nail in the coffin of this discredited exercise. It suggested that Ofsted's rankings of the performance of local education authorities were better than expected. Presumably, that should have been welcomed in Downing street. One would have thought that No. 10 would be pleased about an independent inspection showing that councils were doing a good job, but no. The better than expected Ofsted rankings implied that, under the Government's comprehensive performance assessment process, more councils would be classed as excellent or good, but No. 10 did not want a positive local government story. It is alleged that pressure was brought to bear by No. 10 to alter the provisional figures of the independent Audit Commission.

There are serious allegations that No. 10 did not celebrate success in education, interfered with the work of the Office of the Deputy Prime Minister and bullied the Audit Commission, which is the public's independent watchdog. Those allegations must be answered. If they are not answered, the view that the Government want to rubbish local government, not set it free, will be reinforced. They want to hold on to power, not to empower local communities. Ministers should be concerned about that.

What about other promised legislation? The planning Bill may be some way off, but that is probably just as well. It would seem from the Gracious Speech that the sole aim of reforming the planning system is to speed it up. Surely there are other issues to consider. What about central Government letting go? The Deputy Prime Minister recently made the bizarre decision to turn down the proposed IKEA investment near Stockport, which the town was banking on to bring new jobs and regeneration to the area. Was that done for good planning or environmental reasons, or was it really about political manipulation from the centre yet again?

However we reform the planning system, it is vital that central Government butt out when these decisions are made. The Government's involvement in planning decisions has shown that central Government are the

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real block and the cause of delay in the planning system. Reducing central Government's involvement could be the best thing they could do to speed up decisions. If planning was thereby more accountable to local and regional decision makers, so much the better. We await the publication of the Bill with interest, because as always the devil will be in the detail.

As for the draft housing Bill, it is likely that it will contain much that Liberal Democrats can support. We need to change the regulatory system for houses in multiple occupation, because in many areas they are among the most unfit and dangerous properties in the private sector. When we consider the crisis in the affordable housing market, I doubt whether the Bill will be seen to contribute much.

Local government and campaigners for regional government are not enthused about the Queen's Speech. Far from marking a major new stage in the devolution agenda, it tries to set strict limits on it. That is bad news for communities up and down the country, and bad news for a vibrant, pluralist democracy.

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