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Grand Committee

Monday, 9 February 2009.

3.30 pm

Local Democracy, Economic Development and Construction Bill [HL]

Bill Main Page
Copy of the Bill
Explanatory Notes
Supplementary Amendments
1st Report from DPC

Committee (6th Day)

The Deputy Chairman of Committees (Baroness Harris of Richmond): If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Clause 63 : Local authority economic assessment

Amendment 160D

Moved by Lord Hanningfield

160D: Clause 63, page 42, line 8, leave out “must” and insert “may”

Lord Hanningfield: In moving Amendment 160D, I shall speak to my other amendments in this group. In presenting the amendments, I shall give a general introduction to the situation as we see it.

When the Government first raised the idea of a sub-national review, most of us welcomed it. When the initial discussions were going on, it seemed that the Government were devolving powers from the RDAs to more local systems, which is certainly preferable. But now we see the proof of the pudding in the legislation. As we have discussed over the past few days, so much is set by the Secretary of State. We are now going through a series of amendments and discussions where the Secretary of State has this or that power and there is not much localism in it at all. It is even further away from local government than we are now. That will come out in a lot of the amendments proposed to this clause.

I have been involved in several pieces of related legislation as they have gone through this House, as have most of my colleagues on this side. I think that the Minister has not been involved for so long, as most of the earlier legislation was taken through the House by the noble Lord, Lord Rooker. We had many discussions about a lot of this. I was never very keen on the RDAs when they were set up. The legislation that set them up also created the regional assemblies to scrutinise them. That has not really worked at all. Since then, the regional assemblies have been given different powers of their own and will do different things. They have never been an effective scrutiny committee for the RDAs. Some RDAs work better than others, when there is a grouping of authorities that work together anyway. The RDA that I know in the eastern region has not really worked at all. That is nothing against the individuals, but it has been a grouping of authorities that do not have very much in common, and it has not achieved very much at all. In fact, it has been a big waste of money, and the money could have been much better spent at a local level.

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I hoped when we saw a sub-national review that we were going to get some sense of it. I do not like to keep quoting Essex, but obviously I know it very well. The county that I am leader of has Thames Gateway, which relates to London and Kent, which is in the south-east region. We have Haven Gateway. At least we are in the same region, but it is across two counties of Suffolk and Essex. They are the sort of things that make sense. It would have been much better to have given more autonomy and more help to things like that, than it would to give it to this legislation.

As the Minister knows, I am a great supporter of LAAs—they work well in my county—and I am now a great supporter of MAAs. Much of the future could have been in MAAs instead of setting up the machinery which the Government are going to set up. This series of amendments from me probes what the Government expect to get out of this. We all carry out economic assessments now; we ought to do so. Any large authority does work on them, and I do not see much point in making them statutory. On the other hand, I am not that against making them statutory, because we are all doing quite a lot of work, particularly in the current situation, to support the economy in our own area. That is often done very much better at a local level than through a wider body such as an RDA.

However, we see from the Government’s suggestions that the economic assessments will not even feed into the regional strategy, which I simply do not understand. It is complete nonsense that an Essex strategy carried out in conjunction with our two unitaries or our two Gateway areas has no power to feed into the regional strategy. The Government do not describe what an area is or say whether it is small or big. Obviously a county such as Essex would work with the areas that I have just talked about. I am sure that we will have a lot of debate about what the Government expect from these economic assessments and who will participate in them. Will they be directed by the Secretary of State, which I would be totally against, or will they come up from local initiatives, which is what happens in my county now and is much more powerful and important, particularly at this time and when the recession is likely to go on for some time? This is also true of times of prosperity. We know locally what we want, so we should be able to help and get on with it. If we are going to have regional strategies, we should be able to feed our bit into them.

The thing that has been set up now does not work at all. I am not talking about housing numbers; we can talk about that later. During consideration of the planning legislation some three years ago, I said that we would revisit the subject because I never thought that the RDAs would deliver houses, and we are revisiting it because the RDAs did not deliver them before this legislation: not that anyone is delivering houses at the moment because of the recession.

We will have a whole series of debates and questions about this. As I said, these amendments are probing, and are designed to hear what the Government have to say at the initial part of this discussion. I beg to move.

Baroness Hamwee: We on these Benches have three amendments in this group. I do not want to detain the Committee by making a Second Reading speech, but I

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will put on the record a comment that I made in response to the suggested groupings that we received on Friday; there were so many amendments and such long groupings because all this amounts to the fact that we really do not like this.

My Amendment 160E deals with subsequent parts of the Bill that we like even less than the economic assessment provisions, and would provide that the local authorities should prepare assessments in accordance with their own criteria. The noble Lord, Lord Hanningfield, has used the term “autonomy”, which is the first word that I wrote down in my notes on this amendment. The assessment should not be top down. Most authorities, after all, do not need to be told that they need to assess the economic situation of their own area. The two clauses in this part of the Bill do not explain the purpose of economic assessments. It is common sense that one would carry them out. In many different ways, they provide for the Secretary of State to direct the process, so central government will tell local authorities what to do but not why.

Amendment 160F would provide that,

“In preparing the assessment, the authority shall have regard to social and environmental matters”.

We are really concerned that the economic focus of the previous three or four parts of the Bill will undermine, and possibly even edge on driving out, the other facets of sustainable development. The three facets—social and environmental as well as economic—together with other matters which are perhaps of a second order rank but which are now generally accepted as going along with them, such as the sensible use of science, should be inseparable. I accept that economic and environmental issues may need to be balanced but they should all remain within the same part of the consideration. They cannot be separated in practice anyway because, for instance, economic problems may well lead to an increase in social needs. To focus so rigidly on economic matters carries with it very great danger.

My Amendment 161A is consequential on the other two amendments. We support the Conservative’s Amendments 160D and 161. I do not see the point or the necessity for these clauses. That would not matter except that central Government are requiring local authorities to carry out yet another function, and will probably require them to do it a bit differently from the way it has been done—this is not a new point on the Bill—which will result in a waste of resources, officer time, member time and money.

Lord Greaves: I very much go along with what the two previous speakers have said. I have tabled Amendment 160G in this group. I also oppose the Question that Clause 63 stand part of the Bill in order to ask one or two fairly fundamental questions, some of which were touched on by my noble friend. Amendment 160G questions whether, in making this economic assessment, local authorities really are starting from scratch and with an empty sheet, and whether many of them have not already met the requirements of the clause. The noble Lord, Lord Hanningfield, suggested that Essex had spent a lot of time carrying out an economic assessment, conducting a survey of its area for the

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purposes of the Planning and Compulsory Purchase Act 2004, which we discussed not long ago, and collecting wider economic information. There is a real danger that setting out a whole series of detailed requirements on how a council has to go about collecting this information will result in duplication and with no new information being collected that would not have been collected anyway. A lot of time and energy could be taken up unnecessarily. Therefore, Amendment 160G says that the duty to carry out the economic assessment,

(a) such an assessment has been prepared within the previous five years by the principal local authority, another principal local authority, a partner authority, any other appropriate body, or a combination of any of these”.

In other words, if the information that is being sought already exists and there are great piles of paper with it all written down and many sites on the council’s computers are storing it, probably rather more tidily, it is ridiculous for a local authority to have to start again and collect it from scratch under this part of the Bill.

The second part suggests that it does not all have to be done at once, but in stages for different areas. It may be that work is required only on certain parts of a large unitary or county authority, perhaps because of a particular problem such as declining industry, unemployment or other economic problems and opportunities. There might be an opportunity to make improvements to the transport infrastructure which leads to the possibility for development and thus economic progress. That is common sense.

3.45 pm

As regards whether Clause 63 should stand part of the Bill, like the noble Lord, Lord Hanningfield, and my noble friend, I question whether there is any lack of information. In relation to Part 4, the Briefing Pack for Peers dated 5 December last states:

“Local authorities are to have a well-informed, robust assessment of economic conditions to inform local and regional strategies”.

The argument is that in many cases they will already have it. The briefing goes on to say:

“Although some local authorities take their economic role very seriously and have made real progress, evidence shows that the quality, depth and scope of local economic assessments vary considerably”.

We know, of course, that local variation is something this Government do not like. It continues:

“The failure of some authorities to develop a robust, accurate economic evidence base has hampered their development of coherent economic strategies”.

Before we are satisfied that this clause is needed, which at the moment we do not think it is, what is the evidence that the failure of some authorities to do this has hampered their development of coherent economic strategies? Which authorities does it concern? Are we going to have some authorities named and shamed, or is it more a general view that, “Well, there’s too much variation. Everything is being done in different ways. We don’t like it and we want to set out detailed rules and regulations”?

Will carrying out all this extra work, in many cases duplicated work, change anything on the ground? Will it change policies or will it be just another way to

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produce a series of big fat reports that gather dust on the shelves until they have to be revised? My next question is this: what is the purpose of local elections if everything has to be controlled from above in the technocratic way implied by these provisions? Lastly, do the Government have any idea of what sort of document they are talking about? How big should it be? The impact assessment sets out how much it will or will not cost to produce, and as usual I have tried to understand it, but I cannot. Essentially, though, the Government are saying that it will not cost much, if anything. I have no feeling for what kind of document is envisaged. Should it be a 10-page report, one of 50 pages or of 2,000 pages giving a detailed economic assessment of a widespread county like Lancashire, or a big city such as Manchester or Liverpool? I hope that we can be given answers to these questions.

Lord Patel of Bradford: Amendment No. 160D, in the name of the noble Baroness, Lady Warsi, but introduced by the noble Lord, Lord Hanningfield, would effectively take away the requirement for principal authorities to assess the economic conditions of their area. The noble Lord, Lord Greaves, has also given notice of his intention to oppose the Question that Clause 63 shall stand part of the Bill.

Before I address this amendment and the others in the group, it might help if I explain specifically why we believe that a duty should be placed on local authorities. I shall restrict my comments to the economic duty in Clauses 63 and 64, and the wider issues raised by the noble Lord, Lord Hanningfield, about the RDAs will be addressed by my noble friend in later amendments.

In July 2007, we published our review of sub-national economic development and regeneration. This was a joint Treasury, DTI and CLG review that looked at how regions and localities can respond more effectively to future economic challenges. This review concluded that there are considerable opportunities for local authorities to play a stronger role in economic development and regeneration. It added that as local place-shapers, authorities are well placed to lead and facilitate the delivery of economic growth and regeneration.

To increase its focus on economic development, the review concluded that all county councils and unitary authorities should have a new duty to assess the economic circumstances of their area. Such a duty would help local authorities and their partners to work more effectively, supported by a comprehensive and robust economic evidence base. The review proposed that local economic assessments should form part of the evidence base for the sustainable community strategy, local area agreements and the regional strategy.

In March last year we consulted on the key proposals set out in the SNR, including the local economic assessment duty. The consultation revealed broad support for the duty across all sectors, including local government and business. Local government welcomed the duty as a helpful addition to local authority functions. It sees it as vital in underpinning a much stronger role for councils and groups of councils working together at a sub-regional level in economic development. The proposed duty would help to ensure that all local authorities have a clear understanding of the conditions required

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for business to flourish in their area and for people to take advantage of economic opportunities. It will also help to ensure that all future economic and regeneration interventions by local authorities and their partners are informed by a thorough and robust assessment of the strengths and weaknesses of their area. I am sure that noble Lords will agree that that duty is particularly important in the current economic climate.

As the noble Lord, Lord Hanningfield, said, of course, many local authorities already carry out local economic assessments and the duty would build on existing good practice. But we believe that it is important that all areas should be covered by an economic assessment and that they should be done to a high standard. Our own research—Review of economic assessment and strategy activity at the local and sub-regional level, undertaken in March 2008—clearly shows that local assessments vary considerably in quality and are often limited in extent. That research also shows that local strategies are not always underpinned by a strong evidence base. The proposed new duty would help to ensure that local authorities deliver high quality assessments.

As noble Lords may be aware, we have published a policy statement entitled Local Economic AssessmentsPolicy Statement. This sets out how we believe local economic assessments should be taken forward and the principles that should shape them. We have worked closely with a number of stakeholders in putting together this policy statement, including local government representatives, the RDAs, regional observatories and the Improvement and Development Agency. As the statement makes clear, we believe that local authorities should determine for themselves how best to carry out their assessment. After all they know their economy best. However, we also believe that there are some core principles that should be common to all assessments if local authorities are to get a comprehensive picture of the economic conditions of their area. Our intention is to include these principles in guidance.

For instance, we believe that the assessments should have a strong spatial focus and identify economic conditions at all spatial levels. Assessments should, wherever possible, mirror functional economic areas. Where economic areas transcend administrative boundaries, local authorities should undertake joint assessments. We also believe that assessments should review the regeneration challenges of their area. In that context they should improve understanding of how economic development can support regeneration priorities.

It is not our intention to prescribe what data and methodologies local authorities should use. However, given that the new assessments should feed into sustainable community strategies, LAAs, local development frameworks and the single regional strategy and that they will inevitably be a factor in the development of sub-regional arrangements between neighbouring authorities, there needs to be some consistency in the scope and use of data and methodology across each region. This is more likely to be achieved if local authorities and regional partners work together to agree a framework for taking forward the assessments by making the best use of the knowledge and expertise held across the region.

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We continue to work closely with the local government sector in helping local authorities to prepare for the new duty. The Improvement and Development Agency is putting together a sector-led package of support and guidance on local economic assessments, funded through the planning advisory service. Partnerships are organising a series of regional events for local authorities and other regional partners to explore how collectively they can make best use of knowledge and expertise. The events that have taken place so far have been particularly well attended and there is already a good deal of enthusiasm among local authorities for getting to grips with the new duty.

This evidence will complement our own guidance and build on the messages that we set out. I hope that the context that I have set out has been helpful and that Members of the Committee will agree that Clause 63 should stand part of the Bill and the amendment should be rejected.

Amendment 161 would take away the requirement for principal local authorities to revise an assessment, or any part of it, if the Secretary of State directs. I assure Members of the Committee that the power to direct a local authority to revise its assessment, or any part of it, is not something that the Secretary of State would use lightly. We fully expect most local authorities to ensure that their assessments are current and fit for purpose. For example, there is much to be gained from keeping up to date. So the power of direction is merely there as a safeguard.

On Amendments 164 and 160E, Amendment 164 would take away the requirement for principle local authorities to have regard to guidance issued by the Secretary of State; and Amendment 160E would enable principal local authorities to prepare an economic assessment in accordance with their own criteria. The Members of the Committee who have tabled these amendments believe that local authorities should decide for themselves the criteria for taking forward the economic assessments. I can assure them that our aim is to publish only light-touch guidance that helps local authorities to make best use of the opportunities presented by the duty and provides the level of consistency needed.

As I explained earlier, some common principles should apply to all assessments. We do not think it unreasonable to ask authorities to have regard to these in developing their assessments. For example, our aim would be to help local authorities by clarifying how the new duty links up with other duties and responsibilities, such as the sustainable community strategy, LAAs and the local development framework. It would also explain how the assessments fit in with the proposed regional strategy.

We should not forget that, as we have discussed before, to “have regard” means just that. Of course local authorities must consider the issues raised in the guidance, but that does not mean that they must slavishly adhere to them if they have good reasons not to. This strikes the best balance between having restrictive government direction and leaving local authorities to go off and do whatever they wish in undertaking their assessment. Indeed, many local authority practitioners

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welcome government guidance, as they believe it will help them to prepare for the new duty. Of course, as always, we would consult widely on draft guidance before issuing it in final form. Although we expect local variation and welcome both it and innovation, we also expect this to be within a framework, set out in guidance that ensures that the assessments achieve the aims that I have outlined.

Amendment 160F, tabled by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Tope, would require a principal local authority to have regard to social and environmental issues in preparing its economic assessment. The noble Baroness, Lady Hamwee, expressed her concerns that the new duty would possibly give too great a prominence to economic issues at the expense of social and environmental matters. Again, I reassure Members of the Committee that this is absolutely not the case. As the local economic assessments policy statement makes clear, local economic assessments should contribute to the overall aim of delivering sustainable development. Ultimately, the assessments should inform the sustainable community strategy, which should set out the long-term vision for the economic, social and environmental well-being of a local area.

We believe that the assessments should, among other things, address the social factors that impede economic growth and the causes of labour market exclusion. So the evidence gained through the assessments should also support the Government’s broad aims of tackling barriers to economic growth, creating accessible jobs and giving people the skills to progress, and empowering communities.

The policy statement also encourages local authorities to consider the impact of local economic development on the environment, and how the local economy will be affected by the transition to a low-carbon economy. On top of this, local authorities already undertake a number of other surveys and assessments that would have a bearing on social and environmental issues. It is important that there is interaction between the economic assessment and these other assessments, a point that we make in our policy statement.

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