Members discussed amendments covering clause 1 of the bill dealing with the new system of local retention of non-domestic rates.
The division took place over amendment 4A which proposed a new clause providing for an independent review of the new system within three years of its introduction. The bill states that tariffs and top-ups will not be changed or reset, other than by the retail price index, until 2020.
Lord McKenzie of Luton (Labour), a former council leader and opposition spokesperson for communities and local government, tabled the amendment. He highlighted the potential impact of such a ‘fundamental switch in method’.
He said: ‘Under the government's proposal that there should not be a reset until at least 2020, these challenges could be left unaddressed for at least seven years. This, I suggest, is far too long. We should at least be taking stock after three years of the system so that, if necessary, it can be recalibrated.’
Lord Williamson of Horton (Crossbench) spoke in favour of the amendment. He argued that 'the situation between local authorities is not even' and that a review after three years would be reasonable given the impact on individual local authorities.
'The result of what we have here running for seven years would be changes in local authorities' resources which would in due course have consequences for their services and council tax payers.'
Lord Palmer of Childs Hill (Liberal Democrat) put forward a contrary view: 'This amendment would do no more than add further confusion and uncertainty to an already uncertain situation.'
Baroness Hanham (Conservative), spokesperson for communities and local government, responded on behalf of the government and argued against a timetabled review. She stated that such a step ‘will completely undermine one of the main principles of the scheme, which is that local authorities should invest and benefit from growth.’
The division resulted in a government win with 198 members voting 'for' and 220 'against' the suggested new clause. A second day of report stage is scheduled for 16 October.
About the Local Government Finance Bill
The bill supports the government’s commitment to delivering economic growth, decentralising control over finance and reducing the deficit.
It will introduce a rates retention scheme, enabling local authorities to retain a proportion of the business rates generated in their area. This will give local authorities a strong financial incentive to promote local economic growth.
The bill will also provide a framework for the localisation of support for council tax in England. This, alongside other council tax measures, will give councils increased financial autonomy and a greater stake in the economic future of their local area and provide council tax support for the most vulnerable in society, including pensioners.
The Local Government Finance Bill so far
What is report stage?
Report stage gives all members of the Lords further opportunity to examine and make changes, known as amendments, to a bill.
Report stage usually starts 14 days after committee stage. It can be spread over several days (but usually fewer days than at committee stage).
Before report stage starts, all members' amendments are recorded and published. The day before a report stage debate the amendments are grouped into related subjects and placed in order - a marshalled list.
During report stage detailed line by line examination of the bill continues. Any member of the Lords can take part and votes can take place.
After report stage the bill is reprinted to include all the agreed amendments. The bill then moves to third reading for the final chance for the Lords to debate and amend the bill.