House of Commons

Wednesday 18th January 2012 Commons Chamber

Wednesday 18 January 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 18th January 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 18th January 2012 Commons Chamber

The Secretary of State was asked—

[Chris Ruane (Vale of Clwyd) (Lab)]

1. What steps the Government are taking to reduce the claimant count in Wales.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

The latest claimant count figures in Wales show some encouraging signs, but there is still much to do to ensure that the recession does not leave a legacy of worklessness in Wales. The Government remain committed to creating the right conditions for the private sector to grow and to create jobs in Wales.

[Chris Ruane]

Some 46% of the workers in my constituency and 45% of the workers in the hon. Gentleman’s constituency work in the public sector. The coalition Government’s theory is that as they sack public sector workers, the number of private sector jobs will increase and those sacked workers will be taken on. How many private sector jobs were created in the Minister’s constituency in the past six months and in my constituency, the Vale of Clwyd?

[Mr Jones]

The hon. Gentleman repeatedly raises the issue of public sector jobs in Wales, and he will know that it is generally agreed that Wales is over-dependent on the public sector and under-dependent on the private sector. The creation of private sector jobs is largely the responsibility of the Welsh Assembly Government, of which his party is in control.

[Alun Cairns (Vale of Glamorgan) (Con)]

The potential risk to jobs related to Peacocks is a worry to all in south Wales and well beyond, across the United Kingdom. What action can the Minister take with his colleagues here in Westminster and in co-ordination with the Welsh Government? Will he pledge to do everything possible to help them find a funder to secure those jobs over the longer term?

[Mr Jones]

Yes, the issue of Peacocks is of great concern not just to Wales, but to the whole of the United Kingdom. Some 10,000 people are employed by Peacocks. Already my right hon. Friend the Secretary of State has been in communication with the Secretary of State for Business, Innovation and Skills to discuss the issue. I understand that the Welsh Minister for Business, Enterprise, Technology and Science has also been in communication with the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk).

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

Figures published yesterday by the TUC, based on Office for Budget Responsibility figures, estimate that between now and 2017 a further 40,000 public sector jobs will be lost in Wales. What is the Minister’s Department doing to stem those losses, and generally, what is the Department doing to assist the economy of Wales?

[Mr Jones]

The right hon. Gentleman is right. The OBR figures project a loss of public sector jobs. At the same time the OBR figures predict that there will be a gain of some 1.7 million private sector jobs during the same period. My Department is strongly engaged with the Department for Business, Innovation and Skills and working closely to do all we can to ensure that the private sector grows in Wales.

[Mr Llwyd]

The Secretary of State and the Minister have heard the awful news about Peacocks. Surely billions of pounds of taxpayers’ money was not pumped into the banks so that those same banks could now pull the plug on companies such as Peacocks. Will the Minister and his right hon. Friend do everything they can to save the company? It is important for the whole UK, but vital for jobs in Wales.

[Mr Jones]

The right hon. Gentleman makes a very important point, which is quite correct. He will understand, I am sure, that these are early days in this unfortunate saga. All I can do is assure him that our Department is liaising closely with the Department for Business, Innovation and Skills to do all we can to ensure that those jobs, if possible, can be saved.

[Kevin Brennan (Cardiff West) (Lab)]

2. What recent discussions she has had with Ministers in the Welsh Government on inward investment in Wales.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

I have had a range of meetings with Welsh Government Ministers and look forward to meeting the Welsh Government Minister for Business, Enterprise, Technology and Science on 6 February, when we plan to discuss, among other things, inward investment.

[Kevin Brennan]

The right hon. Lady will know that RBS is blaming the lack of investors for its decision to pull the plug on a deal to save Peacocks, threatening thousands of jobs. My constituents cannot understand why they were expected to bail out RBS, but RBS is refusing to help them in their time of need, when their jobs are at risk. What is the right hon. Lady doing to talk to RBS about its responsibilities in this matter?

[Mrs Gillan]

The moment I heard about Peacocks, I discussed it with the Secretary of State for Business, Innovation and Skills, and the Welsh Assembly Business Minister has spoken to the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk). I have the greatest sympathy. I have shopped in Peacocks myself and I know how many jobs depend on it. It is important that we explore every possibility, but I am not going to stand at the Dispatch Box, as the hon. Gentleman knows, and make false promises. We will look at what we can do for Peacocks, but it will involve the Welsh Government, as he well knows.

[Guto Bebb (Aberconwy) (Con)]

Does the Secretary of State agree that inward investment played an important part in the Welsh economy and could do so again, but to have an impact Westminster and Cardiff must work together? Is it not disappointing that the Welsh Assembly seems to be very reluctant to talk with UK Trade & Investment about providing growth for the Welsh economy?

[Mrs Gillan]

My hon. Friend is absolutely right. I was disappointed to see that in an interview on this very subject in an article in the Western Mail today no reference was made to working with the Department for Business, Innovation and Skills and UKTI. I have always advocated team Wales and that we should be working together. I was delighted to see that my noble Friend Lord Green of Hurstpierpoint, who is responsible for UKTI, has opened an invitation to every MP to get together with UKTI and host a seminar in the constituency, perhaps together with MPs from neighbouring constituencies. That is a great innovation where we can all work together, whether it is the Welsh Government, Assembly Members, MPs or Members of this House.

[Huw Irranca-Davies (Ogmore) (Lab)]

The worrying news about Peacocks hangs especially over the constituency of my hon. Friend the Member for Cardiff West (Kevin Brennan) where the headquarters stand, and the constituency of my hon. Friend the Member for Pontypridd (Owen Smith) with its distribution centre at Nantgarw, but the ramifications are felt right across the country, including in my own constituency where many travel to work in those centres, but also in retail centres such as in Maesteg. Will the Secretary of State directly intervene and work to keep these 10,000 vital jobs, not least as the jobless number is now rising inexorably throughout the UK, the economy is flatlining and consumer confidence is plummeting?

[Mrs Gillan]

The hon. Gentleman speaks powerfully, but he has been a Minister and knows that direct intervention would not be appropriate until more investigations have been made as to the reasons for this reported failure of Peacocks. Because so many jobs depend on this, if there are any redundancies or job losses, Jobcentre Plus will be there to provide individual support, as it has done in other instances. I assure him and all those beyond the Chamber whose jobs depend on Peacocks that this Government and the Welsh Government, and I am sure all of us together, will do what we can.

[Jenny Willott (Cardiff Central) (LD)]

Given that up to now Assembly Ministers have been very slow off the mark to take action to help out with the terrible situation facing Peacocks, will the Secretary of State ensure that Ministers at both ends of the M4 pull together to try to put pressure on the banks to ensure that we can save this important Welsh company?

[Mrs Gillan]

My hon. Friend is absolutely right. This is a very important company and there are many jobs to consider, as I have said before. I cannot say too often that we will look at doing all we can, but I cannot stand at the Dispatch Box and make false promises at this stage before we have further and better particulars and we know the outcome of the current negotiations that are taking place between Peacocks and the banks. She should be comforted by the fact that the Minister for Business, Enterprise, Technology and Science in the Welsh Government, the Secretary of State for Business, Innovation and Skills in our Government and I have all already been in contact on this matter.

[Ian Lucas (Wrexham) (Lab)]

3. If she will assess the effect on Wales of the implementation of the recommendations of the Sayce review on employment services for disabled people.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

Public consultation on the recommendations of the Sayce report has closed. The Government are analysing the responses and will consider the implications for Wales and across the country before publishing a statement on future policy.

[Ian Lucas]

Wrexham Remploy has made good progress in the last four years in providing jobs for disabled people in the Wrexham and north-east Wales area, but the Sayce review and its contents threaten Remploy, not just in Wrexham but throughout Wales. Unfortunately, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), who has responsibility for disabled people, refuses to give me details of the financial position of Wrexham Remploy until the review is completed. Will the Minister please work with me to obtain those figures so that the 50 people who are employed in my constituency will know what their future is and know that the Government are not threatening them?

[Mr Jones]

The hon. Gentleman will know that the Sayce review made the commitment that existing employees in Remploy should be offered the opportunity of expert entrepreneurial and business support over a decent period of time to develop businesses, so the Sayce report shows commitment to Remploy. I hear what the hon. Gentleman says about his communications with my hon. Friend the Under-Secretary and if he would care to write to me, I will certainly pursue the matter.

[Nia Griffith (Llanelli) (Lab)]

The way in which the Government propose to abolish disability living allowance will take £105 million a year away from disabled people in Wales, money they desperately need to help them cope with the extra costs of living with a disability, as the Secretary of State of all people should know. What meetings has she or the Minister had with disabled people in Wales on the Welfare Reform Bill, and how do they intend to address people’s very real fears about it?

[Mr Jones]

The Government remain committed to supporting disabled people and determined that that support should be targeted at those most impacted by their health condition or disability. As the hon. Lady will know, the new personal independence payment will be objective, fair and strongly evidence-based and will enable accurate and consistent assessments of individuals to determine who will benefit most from additional support.

[Kerry McCarthy (Bristol East) (Lab)]

4. What recent discussions she has had with the Secretary of State for Transport on the First Great Western franchise.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

The Wales Office has regular discussions with the Department for Transport on a range of transport issues that affect Wales.

[Kerry McCarthy]

Does the Minister think that electrification of the First Great Western line will boost house prices along the route and, if so, would he advise my constituents in Bristol and the good people of Wales perhaps to wait a while before selling their homes?

[Mr Jones]

I am sure that the hon. Lady is in a better position to assess the impact of electrification on her constituents than I am, but I would have thought that it is something that Members on both sides of the House would welcome.

[Mr Mark Williams (Ceredigion) (LD)]

The Minister will be aware that people in mid-Wales have campaigned for a long time for a direct route from Aberystwyth to London and an hourly service from Aberystwyth to Shrewsbury. I encourage him to encourage others to take action on both fronts.

[Mr Jones]

I hear what my hon. Friend says. He can be assured that the Wales Office always does what it can to improve transport links within Wales.

[Mr Wayne David (Caerphilly) (Lab)]

On the issue of railways, we have a great deal of sympathy with the Secretary of State on why she felt the need to sell her constituency home. Will she now take the opportunity to buy a home in Wales?

[Mr Jones]

My right hon. Friend’s living arrangements are entirely a matter for her, and that has of course been positively vindicated by the letter my right hon. Friend the Prime Minister recently sent to the hon. Member for Hemsworth (Jon Trickett).

[Mr Speaker]

I remind the House that we are on the subject of the First Great Western franchise.

[Duncan Hames (Chippenham) (LD)]

Some of the cross-border services on the franchise run on the Cardiff to Portsmouth line, which in places suffers from severe overcrowding, as experienced by my constituents in Bradford on Avon. Will the Wales Office support our call for greater capacity on that cross-border route under the new franchise?

[Mr Jones]

My hon. Friend might be aware that extra capacity is being provided this year, with an additional 48 carriages that will provide 4,500 extra seats at peak times between London and south Wales.

[Roger Williams (Brecon and Radnorshire) (LD)]

5. What recent assessment she has made of the effect of the autumn statement on the allocation of funds to the National Assembly for Wales.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

The autumn statement, and the subsequent written ministerial statement by the Chief Secretary to the Treasury, confirmed that the Welsh Government will receive an extra £238 million in Barnett consequentials. This additional money is an opportunity for the Welsh Government to act in the areas they are responsible for to ensure that Wales has a bright future.

[Roger Williams]

As a result of extra funding, the pupil deprivation fund, which was agreed to by the Welsh Government and Welsh Liberal Democrats, will mean that schools in Wales are better resourced, closing the education funding gap between England and Wales. For example, Maes-y-Dderwen school in my constituency will receive an extra £34,000 a year. Does the Secretary of State agree that this will help children and young people in Wales after 13 years of Labour underfunding in education?

[Mrs Gillan]

I agree with my hon. Friend, because it was the extra funding from the Treasury to the Welsh Government that enabled the leader of the Welsh Liberal Democrats in the Assembly to negotiate the extra funding for the pupil deprivation fund. That merely follows what my right hon. Friend the Secretary of State for Education has introduced in England. It is worth reflecting that after 13 years of Labour government the spending gap between England and Wales remained at around £600 per pupil.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The signature policy of the recent autumn statement was the capital investment programme, which included provision to raise £25 billion of finance from pension funds. What discussions has the Secretary of State had with the Welsh Government and the Treasury to put in place structures to ensure that Wales does not lose out?

[Mrs Gillan]

As the hon. Gentleman knows, the settlement on capital funding has been good for Wales. The additional moneys that were announced in the autumn financial statement have made a great difference to the way in which the Welsh Government are budgeting. I regularly meet Welsh Government Ministers and colleagues in the Treasury. If the hon. Gentleman wishes to know further and better particulars, I will ensure that we talk together from time to time about developments.

[Mr Peter Hain (Neath) (Lab)]

On funding, why does the new high-speed rail plan not follow the original route via a Heathrow hub, allowing south Wales travellers direct access to the airport and a direct connection to the network?

[Mrs Gillan]

As the right hon. Gentleman knows, that was the previous Labour Government’s route. Matters concerning high-speed rail, HS2 and Wales are handled by the Under-Secretary of State for Wales, as he well knows. I will arrange for my colleague to write to him.

[Mr Speaker]

We are on the subject of funds to the National Assembly.

[Mr Hain]

I find that reply astonishing. The right hon. Lady is Secretary of State for Wales. She has a duty, as has the whole of the Wales Office and as did her predecessors, to advance the interests of Wales. Is it not the truth that she failed to make the funding case for Wales on HS2 and we lost a great opportunity? Is it not the truth that she has spent the past 18 months demanding expensive funding concessions for her Buckinghamshire constituents, rather than advancing Wales’s funding interests? Is it not the case that she has been more concerned with stopping trains, building tunnels and selling houses in her constituency than with supporting investment, growth and jobs to benefit Wales?

[Mrs Gillan]

I am surprised by the right hon. Gentleman, because in all the years that he was Secretary of State for Wales, he did not achieve the electrification of one single inch, whereas we in the Wales Office have already announced the electrification of the line to Cardiff. Electrification of the line to Swansea is still open and that is unfinished business. As he well knows, we are now working on the electrification of the valleys line. I hope that I will have his support for that as well. [Interruption.]

[Mr Speaker]

Order. There are far too many noisy private conversations taking place in the Chamber. I am sure that the whole House will be united in wishing to hear Mr Peter Bone.

[Mr Peter Bone (Wellingborough) (Con)]

6. What discussions she has had with the First Minister for Wales on cross-border human trafficking.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

The Secretary of State met the anti-human trafficking co-ordinator for Wales in December. Combating human trafficking is a key priority for the Government and we fully recognise the importance of tackling the issue in Wales.

[Mr Bone]

I thank the Minister for that answer. Of course, Bob Tooby is the tsar for human trafficking in Wales. He has warned of the problem of internal trafficking, both into Wales and out of Wales. Can this House learn something from Wales? Will the Minister recommend to the Prime Minister that we have a similar tsar for the rest of the United Kingdom?

[Mr Jones]

The Government are very supportive of the Welsh Government’s introduction of the anti-human trafficking co-ordinator for Wales. He works closely with the UK Human Trafficking Centre and I am sure that he will make his own strong representations in that regard.

[Hywel Williams (Arfon) (PC)]

Does the Minister accept that there has long been concern about the staffing levels at Holyhead, which is the premier port between Ireland and Wales, and between Ireland and the UK? Will he assure the House that immigration and security staffing levels will be maintained at a proper level?

[Mr Jones]

The hon. Gentleman makes an important point, which I raised in opposition. Holyhead is an extremely important port and the Wales Office co-ordinates closely with the Home Office on that issue.

[Robert Halfon (Harlow) (Con)]

7. How many apprentices are employed in her Department.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

I am delighted to say that despite having a small Department of about 60 staff, two apprentices were recruited to the Wales Office last year. Both are doing very well and their teams are already impressed by their professional attitude and level of competence, as am I.

[Robert Halfon]

Will my right hon. Friend support the parliamentary apprentice school that I founded with the charity, New Deal of the Mind? Will she also consider encouraging suppliers to the Wales Office to hire apprentices? The Department for Work and Pensions is already doing that with great success and helping to reduce youth unemployment.

[Mrs Gillan]

I know of the great work that my hon. Friend has been doing on apprenticeships. Although we are a small Department, which relies on the Ministry of Justice for many of our services, I will do what I can to ensure that our suppliers are encouraged to adopt similar practices. My hon. Friend might be pleased to know that the Welsh Government recruited 24 new apprentices in 2010 and 66 in 2011. I will write to them to ask whether they can ensure that their suppliers do what he suggests.

[Paul Flynn (Newport West) (Lab)]

Although I greatly I admire the work of my close comrade, the hon. Member for Harlow (Robert Halfon), is not there a danger that apprenticeships that are essentially relabelled job creation and job experience schemes or internships, without a job, skill or indentures at the end, are likely to increase the cynicism and disillusionment among young people?

[Mrs Gillan]

I hope that the hon. Gentleman will be pleased to know that, for example, all the apprentices at the Welsh Government undertake business administration NVQs and are recruited through fair and open competition via their website, with support from Careers Wales and Jobcentre Plus. That shows that the apprentice programmes are equipping young people to take up jobs in the future. [Interruption.]

[Mr Speaker]

Order. The House must come to order. We are discussing matters of intense interest, especially to the people of Wales.

[Owen Smith (Pontypridd) (Lab)]

8. What assessment she has made of the likely change in levels of public sector employment in Wales in the period up to 2017.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

A forecast of public sector job losses was published last November by the Office for Budgetary Responsibility. It was based on UK-wide macro-economic data and no regional breakdown is available.

[Owen Smith]

As we have heard this morning, it is not only public sector jobs that are at risk in Wales. Does the Under-Secretary agree that the Peacocks jobs in jeopardy in my constituency and throughout the country are at risk largely because of the Government’s economic decisions to choke off consumer demand and raise VAT?

[Mr Jones]

Of course, I share the hon. Gentleman’s concern about the plight of Peacocks. However, so far as I can see from the reports that I have had to date, it is nothing to do with the Government’s economic policy, but everything to do with Peacocks’ banking arrangements. The Wales Office is intensely concerned about the matter and will continue to express concern.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

9. What support and advice her Department provides to small businesses in Wales affected by non-payment for work undertaken.

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

I understand the effect that non-payment for work undertaken can have on small businesses in Wales. The Government are determined to challenge the long-standing culture of late payment that persists across all sectors of the economy and across businesses of all sizes.

[Simon Hart]

The Secretary of State will know about several sub-contractors working on the Pembroke power station who have not been paid because of a dispute between the main contractors, Alstom and SOMI Impianti. Will she help me to put pressure on those companies to resolve their differences and get the sub-contractors paid?

[Mrs Gillan]

I greatly sympathise with my hon. Friend’s constituents. I have always supported the rights of businesses on late payment of commercial debt. Back in 1994, I signed an early-day motion to that effect, so I have been consistent in my support for a long time. I am happy to meet my hon. Friend to see whether there is anything I can do.

[David Mowat (Warrington South) (Con)]

10. What recent discussions she has had with the Chancellor of the Exchequer on the funding formula for Wales.

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

My right hon. Friend and I have regular discussions with my right hon. Friend the Chancellor of the Exchequer on issues affecting Wales.

[David Mowat]

The Under-Secretary will know that the English regions and Wales lose out because the block grant allocation is based not on need but on Barnett. In the case of Wales, the loss is about £300 million a year. What indication can the Government give us that there will be reform?

[Mr Jones]

Governments of all political complexions have recognised for many years the need for some parts of the UK to be funded differently from others. Concerns have, of course, been expressed about the Barnett formula, but the priority now is to reduce the deficit, and any changes to the system must happen once the public finances have been stabilised.

[Nick Smith (Blaenau Gwent) (Lab)]

The Welsh Assembly has funded the initial development of a motorsport complex in Blaenau Gwent. Will the Minister please ensure that the Government give every funding support possible to get that project off the drawing board and on to the track?

[Mr Jones]

I commend the hon. Gentleman for the hard work he has done on that project. The Wales Office is very interested in the matter and we will continue to show interest.

The Prime Minister was asked—

[Mr Laurence Robertson (Tewkesbury) (Con)]

Q1. If he will list his official engagements for Wednesday 18 January.

[The Prime Minister (Mr David Cameron)]

This morning I had meetings with ministerial colleagues and others and, in addition to my duties in this House, I shall have further such meetings later today.

[Mr Robertson]

The Prime Minister will be aware of the very strong uptake of academy status by schools in Gloucestershire, but is he aware of the enormous difference in funding that puts those schools at the bottom of the league table in terms of LACSEG—local authority central spend equivalent grant—funding? I welcome the Government’s move towards a national funding formula but, in the meantime, will he look at the serious situation of those schools in Gloucestershire?

[The Prime Minister]

My hon. Friend is quite right. We need to sort out this problem even before looking at a national funding formula. We inherited the funding formula that he describes, and I believe it is flawed, which is why we are reforming it. The Secretary of State for Education has met academy heads in my hon. Friend’s constituency and will happily discuss with him how we can deal with this problem. The growing evidence is that academy schools are not just good for the pupils who go to them, but by raising standards in those areas, they are actually raising standards of all schools at the same time.

[Edward Miliband (Doncaster North) (Lab)]

The Prime Minister told us that unemployment would fall in each year of this Parliament. Today, unemployment rose for the sixth month in a row. Does he think that has anything to do with his Government?

[The Prime Minister]

The Government take absolute responsibility for everything that happens in our economy, and I take responsibility for that. Any increase in unemployment is disappointing, and it is obviously a tragedy for the person who becomes unemployed and can lead to real difficulty for that family. That is why we are taking so much action to try and help people to get back into work. Although the increase in unemployment is hugely unwelcome, it is noteworthy that the figures today show that there is still an increase in the number of people employed—another 18,000 are in work. That shows that we need more private sector employment. We need to move further and faster on that agenda.

It is also noteworthy that there is a small decrease in long-term unemployment. I hope that shows that schemes such as the Work programme that the Government are introducing are beginning to have an effect, but again, we need them to go further and faster. There is not one ounce of complacency in this Government. We will do everything we can to get people back to work.

[Edward Miliband]

Does the Prime Minister not understand that when he boasts about rising employment, it just shows how out of touch he is? In some parts of London, 100 people are chasing three vacancies. That is the situation people are facing. Can he confirm that under his policies, far from things getting better over the coming year, he expects things to get worse and unemployment to rise to 2.8 million?

[The Prime Minister]

Forecasts are no longer set out by the Government; they are set out by the independent Office for Budget Responsibility. Unlike in the right hon. Gentleman’s day, these forecasts are not fixed and fiddled by Ministers, but set out by independent economists. The Government’s responsibility is to do everything we can to help people into work. That is why we have the Work programme, which is helping 3 million people; why we have the youth contract, which will get subsidised, private sector jobs for 160,000 young people; and why we have work experience for 250,000 young people. Half those are off benefits within two months, which is 20 times better value than the future jobs fund.

As I have said, there is no boasting about anything. What we have here is growth in the private sector and contraction in the public sector, but we need to get our economy moving. Key to that is having the low interest rates that the right hon. Gentleman’s plans would put at risk.

[Edward Miliband]

The Prime Minister does not seem to understand. The reason why the OBR figures matter is that they show that over the next year, unemployment will get worse, not better, under his policies. Nothing that he can say can deny that. That long list of policies, according to the independent OBR, will make no difference.

Let us talk about young people. Can the Prime Minister confirm that in the past year, we now have 147,000 young people out of work for more than six months? That is double what it was a year ago—an increase of 102%. Why has he allowed it to happen?

[The Prime Minister]

Let me give the right hon. Gentleman the figures. Over the past year, unemployment among young people, measured by the independent labour organisation—the proper way of measuring the figures—is up by 7%. That is far too high. It is not the 40% increase that we had under Labour, but it is far too high. What we need to do is help those young people into work, and that is exactly what our programmes are doing.

Let me just make this point, because I think it is important. There is a fundamental difference between the way this Government measure youth unemployment and the way the last Government did. That is important, because the right hon. Gentleman’s Government counted young people who were on jobseeker’s allowance and in any form of scheme as not unemployed. This Government say that until they get a permanent job, we will measure them as unemployed. That is right. It is not complacent, it is frank, straightforward and what we never got from Labour.

[Edward Miliband]

It really is back to the 1980s—a Tory Government blaming unemployment on the figures. No wonder the Prime Minister has rehired Lord Young, the Employment Secretary in the 1980s.

On long-term youth unemployment, the Prime Minister is wrong on the facts. Long-term youth unemployment, which has a scarring effect on our young people who are out of work and have been out of work for more than six months, has doubled in the past year. However much he twists and turns about the figures, can he confirm that central fact—that it is up by 102% in the past year?

[The Prime Minister]

I have explained the figures. If we look at the number of young people who have been out of work for longer than 12 months, we see that it has started to go down. That is not nearly enough, and far more needs to be done, but that is what the Work programme is all about. That is what the right hon. Gentleman needs to understand.

There is a context to all this. If we want to get unemployment down, we have got to keep interest rates down, and we have had a reminder in recent days of what happens if you do not have a plan to get on top of your deficit, get on top of your debts and get your economy moving. That is what the right hon. Gentleman does not understand.

What we have is a Government who are absolutely clear about their plans and an Opposition who have absolutely no idea. Last year the right hon. Gentleman marched against the cuts, now he tells us that he accepts the cuts, yet today he is telling us that he wants to spend more and borrow more. He is so incompetent that he cannot even do a U-turn properly.

[Edward Miliband]

The Prime Minister is simply—[Interruption.]

[Mr Speaker]

Order. The House must try to calm down and contain itself.

[Edward Miliband]

I know that the Prime Minister does not want to talk about the young people out of work in this country, because he is embarrassed by his record on what is happening, but he owes it to them to tell the facts as they are about what is happening to them. I come back to this point: the Prime Minister said in his answer that long-term unemployment among young people is going down. It is not going down; it is going up.

The Prime Minister mentions the Work programme, which he introduced with a great fanfare in June. What has happened to long-term youth unemployment since he introduced his Work programme?

[The Prime Minister]

Let me give the right hon. Gentleman the figures. [Interruption.] I will give him the figures exactly. There are far too many young people who are long-term unemployed. There are 246,000 young people who have been unemployed for more than a year, but that is down 11,000 on the last quarter. That is not enough, and we want to do more, but it is because we have the Work programme, the youth contract, 400,000 apprenticeships and 250,000 people going into work experience that we are making a difference. Why does he not come up with something constructive instead of just knocking everybody down?

[Edward Miliband]

I will tell him what he should do: he should change course. It is his policy. Why is unemployment rising? It is rising because he is cutting too far and too fast. It is his record. However much he twists and turns, it is his record. That is why unemployment is rising. Unemployment among women is the highest since the last time there was a Tory Government; youth unemployment is the highest since the last time there was a Tory Government; and unemployment is higher than the last time there was a Tory Government. Is not the defining characteristic of this Government that they stand aside and do nothing as thousands of people find themselves unemployed?

[The Prime Minister]

To be fair to the right hon. Gentleman, he changes course every day; he is an expert at changing course. Labour’s shadow Chancellor said two days ago:

“My starting point is…we are going to have to keep all these cuts.”

Then Labour’s deputy leader said yesterday that

“we’re not accepting the Government’s…cuts, we are totally opposing them and we’re fighting them.”

The right hon. Gentleman is flip-flopping on a daily basis. It is no wonder that the founder of Labour’s business forum had this to say:

“At a time when the nation needs strong political leadership, Labour offers nothing…the pro-business, pragmatic approach to wealth and enterprise”

have all gone.

“Instead there is a vision and leadership vacuum.”

What total adequate testimony to what stands opposite!

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Q2. My right hon. Friend will be aware that I recently raised the case of my late constituent, Mr Martin Pratt, with the Armed Forces Minister. He will also be aware of the excellent “Fighting Fit” report, written by my hon. Friend the Member for South West Wiltshire (Dr Murrison), dealing with post-traumatic stress disorder among veterans. Owing to the stigma often attached to mental illness, many veterans wait years before seeking appropriate help, and I hope that my right hon. Friend can tell the House what plans the Government have in this area, so that those who need help can seek it at the appropriate moment.

[The Prime Minister]

My hon. and learned Friend is entirely right to raise this issue. The mental scars that people who serve this country often receive can be every bit as deep as the physical scars. It is not something that we have always accepted and understood properly, which is why the report, “Fighting Fit”, by my hon. Friend the Member for South West Wiltshire (Dr Murrison), is so important. He has real experience and understanding of this matter. We have accepted and implemented almost all its recommendations—we have launched the 24-hour combat stress support health line, we are introducing the advanced mental health assessments for service personnel and we hope to get the veterans information service up and running in April this year.

[Mr Iain McKenzie (Inverclyde) (Lab)]

With the tragic accident involving the cruise ship Costa Concordia and the 50-plus liners of the same size or bigger that will visit Greenock dock on the Clyde in the coming months and year ahead, does the Prime Minister still think that it was the correct decision to close the Clyde coastguard station?

[The Prime Minister]

First, the case in Italy is clearly a tragic one, and our hearts should go out to the people who have lost loved ones—people from countries right across the world. We need to wait and see what the exact cause of the accident was before we jump to conclusions about any changes to regulations or other things. However, if changes need to be made, including on the issue that the hon. Gentleman raises, of course we will make them.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Q3. The Prime Minister has kindly undertaken to introduce a comprehensive water Bill early in the next parliamentary Session. Will he end the uncertainty for water customers and the industry alike by publishing the draft Bill now, so that we can have proper parliamentary scrutiny?

[The Prime Minister]

We will publish a draft water Bill for pre-legislative scrutiny in the coming months. As my hon. Friend knows, there are many important parts to the water Bill. One that stands out is the promise that we have made and the funding that we have supplied to help cut water bills in the south-west of our country by £50 from April 2013. That addresses a historical unfairness: people in the south-west feel that they have paid unfair charges to provide clean beaches for many of us who do not live in the south-west. I am delighted that we can make progress on this issue.

[Mr David Hamilton (Midlothian) (Lab)]

Q4. In America, six directors from the bailed-out Freddie Mac and Fannie Mae companies have been taken to court for gross mismanagement. In this country, the Financial Services Authority says that it cannot bring enforcement action against Royal Bank of Scotland because of the ongoing legal tender. Will the Prime Minister consider introducing a legal sanction of strict liability into his draft Financial Services Bill so that those responsible for the banking crisis will be taken to task? After all, we are in this together.

[The Prime Minister]

The hon. Gentleman makes an important point. The whole point about overhauling our financial services regulation is that it gives us the opportunity to look around the rest of the world, see who has tougher penalties and work out whether we can introduce them to our system. That is why we will be introducing this Bill, with a major overhaul of how the Financial Services Authority and the Bank of England work, and dealing with the regulatory system that was not working properly.

[Andrew George (St Ives) (LD)]

A year ago the Prime Minister told me that the reason for the, at the time, new Health and Social Care Bill was

“simply that this country now has European levels of health spending but does not have European levels of success”.—[Official Report, 19 January 2011; Vol. 521, c. 831.]

Now that we know that that is not the case, will the Prime Minister shelve this disruptive and destructive Bill, which is struggling in another place, go back to the coalition agreement and build from there?

[The Prime Minister]

I have great respect for my hon. Friend, but I do not agree with him on this one. With the Health and Social Care Bill, a huge exercise was undertaken, in which the Deputy Prime Minister and I both played quite a large role, of actually listening to health professionals—to doctors, nurses and associated health professionals—to understand what they most wanted to see in the NHS reform Bill, and that is what we are delivering. My hon. Friend says that it is not the case that we have outcomes that are less than some parts of Europe; I am afraid it is the case. In some cases we could be doing a lot better. To argue just that the NHS simply needs money and not reform, I do not believe is right.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Q5. In the north-east, unemployment among women is rising at twice the rate as that among men. Where does the Prime Minister think a woman’s place is: in the home, in the workplace or in the jobcentre?

[The Prime Minister]

I want many more women to have the opportunity to be in the workplace. What we have seen in the figures is this. Of course there is a disappointing increase in unemployment among women, but if we look since the election, there are 59,000 more women in work today than at the time of the last election. However, I am not satisfied with that. That is why we are boosting child care for two-year-olds, three-year-olds and four-year-olds to help women into work. We are introducing, through universal credit, support with child care for all women who work, not just those who work over 16 hours. Lifting more than 1 million people out of tax, the majority of whom are women, obviously also helps women into the work force. That is what I want to see.

[Karen Lumley (Redditch) (Con)]

Q6. Last week I met a couple in Redditch who were appalled that a family in their area were getting more on benefits than they were earning working full time. Does the Prime Minister think that is right or fair?

[The Prime Minister]

My hon. Friend makes an important point. Let me say this about the benefit cap. We owe it to people who work hard, do the right thing and pay their taxes to make sure there are some limits on welfare. What we are saying with the benefit cap is that a family can get up to £26,000 in benefit. You would have to earn £35,000 in order to achieve that standard of living, so I believe that the benefit is fair, and that is why we are going to introduce one.

[Mr David Winnick (Walsall North) (Lab)]

Does the Prime Minister feel any shame at all that some of the most vulnerable people in our society—certainly cancer and heart patients—will undoubtedly be financially penalised as a result of the measures going through the Lords? Is it any wonder that people say that it is the same old Tories and that the Tories are the nasty party?

[The Prime Minister]

I do not accept what the hon. Gentleman says. The whole point about employment and support allowance is that there are two groups. There are those who cannot work who need help, in the support group. Many people will go straight into that group and will be able to receive that benefit for as long as they need it. If he looks at what we have said, and looks at the report by Professor Harrington, he will see that there are going to be more cancer sufferers getting benefits and, actually, fewer people facing the face-to-face interview. He shakes his head; he should look at the evidence before asking the question.

[Tessa Munt (Wells) (LD)]

Q7. I was shocked to discover that mainstream terrestrial television carries adverts for online bingo at 5 o’clock in the afternoon and that 31 hours and 55 minutes each week is dedicated to live casino betting and gaming, which has been classified as teleshopping since 2009. At a time when there is £1.45 trillion of personal debt in this country and when we are encouraging people to be moderate in their expectations and behaviour, will the Prime Minister please protect consumers, children and the vulnerable from this kind of activity by asking for a review by Ofcom—

[Mr Speaker]

Order. The question was too long.

[The Prime Minister]

The hon. Lady raises an important issue about gambling advertisement on television. I am all in favour of deregulation and trying to allow businesses to get on and succeed. Gambling programmes and betting advertising were not permitted until the last Government allowed them in 2007 and they are strictly regulated by Ofcom and the Advertising Standards Authority. It is not just a question of regulation, as it is also a question of responsibility by the companies concerned. Anyone who enjoys watching a football match will see quite aggressive advertisements on the television, and I think companies have to ask themselves whether they are behaving responsibly when they do that.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

On the subject of gambling, Hackney has 90 bookies—three times the national average. Will the Prime Minister listen to the debate that took place yesterday and take action this Friday and instruct his Ministers to support the private Member’s Bill that will be before the House and will give local authorities more planning powers over bookies?

[The Prime Minister]

I will certainly look at the debate the hon. Lady mentions and the ideas expressed in it. We are all for localism and giving local authorities greater powers in these sorts of regards. I will look at the suggestion she makes.

[Andrew Rosindell (Romford) (Con)]

Q8. Does the Prime Minister agree with me that in this the 30-year anniversary of the Falklands war the actions of the Argentine Government are wholly deplorable? Will he remind Argentina that it lost the Falklands war and that it is up to the Falklanders to determine their own future?

[The Prime Minister]

First of all, it is very important that we commemorate the Falklands war this year—the 30th anniversary—and remember all those who served and fought so hard and some who gave their lives and did not come home. We should remember all those people this year. The absolutely vital point is that we are clear that the future of the Falkland islands is a matter for the people themselves. As long as they want to remain part of the United Kingdom and be British, they should be able to do so. That is absolutely key. I am determined to make sure that our defences and everything else are in order, which is why the National Security Council discussed the issue yesterday. The key point is that we support the Falkland islanders’ right to self-determination. I would argue that what the Argentinians have said recently is far more like colonialism, as these people want to remain British and the Argentinians want them to do something else.

[Nick Smith (Blaenau Gwent) (Lab)]

Q9. Blaenau Gwent has seen a rise in unemployment today to more than 3,000—a 16% increase in the past year. When does the Prime Minister expect unemployment to start falling?

[The Prime Minister]

The forecast is set out by the Office for Budget Responsibility and it is for it to make the forecasts—and it expects unemployment to be lower at the end of this Parliament than at the start, and employment to be higher. The Government’s job is to try to do everything they can to help the hon. Gentleman’s constituents into work—via the Work programme, the youth contract, the apprenticeship schemes and work experience, but above all, by keeping interest rates low, so our economy can grow and we do not fall into the mistakes that others in Europe have.

[Charlotte Leslie (Bristol North West) (Con)]

Q10. What recent assessment he has made of the effect of the European working time directive on (a) doctors’ training and (b) patient care within the NHS.

[The Prime Minister]

My hon. Friend raises an important issue about the working time directive and its effect on the NHS. Nobody wants to go back to the time when junior doctors were working 80 or 90 hours a week, but I think we all see in our constituencies that the working time directive has sometimes had a bad effect on the NHS, particularly on training programmes for junior doctors. That is why the Government are discussing this issue with the Royal Colleges and others to make sure that we can have flexibility in this vital area.

[Charlotte Leslie]

I thank the Prime Minister for his answer. Does he share the widespread concern coming largely from the medical professions themselves that while we wait for lengthy EU processes to reconsider the directive across Europe—and it has not even been decided what it is that they are going to discuss—we are seeing a critical undermining of junior doctors, as they often say themselves, an erosion of the future professionalism of the NHS and, dare I say it, we are putting patient care and patient lives at risk? What steps can the Prime Minister take to ensure that we sort this out quickly?

[The Prime Minister]

I think my hon. Friend is right. Frankly, this has nothing to do with the single market; it is to do with how we run our health service. In particular, as I have said, it affects our training programmes for junior doctors, often in rural areas where we do not have such large hospitals. What can we do to sort this out? The Health and Business Secretaries are committed to revising the directive at EU level to give the NHS the flexibility it needs to deliver the best and safest service to patients. We will work urgently to bring that about.

[Mr Denis MacShane (Rotherham) (Lab)]

Is the Prime Minister aware that, since I have been an MP, every single medical problem at a hospital in my constituency is related to weekend working by exhausted junior doctors. Far from being a problem, the directive is a solution: we have had far too many exhausted doctors in charge of patients.

[The Prime Minister]

I do not doubt—in fact, I do doubt what the right hon. Gentleman says. I cannot believe that every problem in his hospital is down to this one issue. All I can say is that the local hospital that serves my constituents in Chipping Norton was threatened with massive downgrading partly because, under the working time directive, it could not supply the training modules for junior doctors. That seemed a classic example of the cart being put in front of the horse. We ought to determine what hospitals we want, and then think about the training modules, but the EU working time directive was getting in the way.

[David Rutley (Macclesfield) (Con)]

Q11. I welcome this week’s announcement of closer co-operation between financial centres in Hong Kong and London, which will help to make the City a hub for the Chinese renminbi currency market. Does the Prime Minister agree that that helps to highlight the opportunities for trade in Asia and the importance of promoting this country’s commitment to free trade, and shows that this country is open for business?

[The Prime Minister]

My hon. Friend makes a vital point. Clearly, the markets in Europe are going to be difficult: 50% of our exports go to the EU, and we are seeing a freezing effect across the European Union. The rest of the world economy, however, is growing, and we need to get out there and sell to those markets. I am pleased to say that exports to China were up by 20% last year. The arrangement that my right hon. Friend the Chancellor has come to, which will make London one of the great renminbi trading centres, is an important breakthrough, but we need many more like that.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

Q12. Will the Prime Minister clarify the position of the coalition Government on inheritance tax? My constituency recently received correspondence from the junior partner in the coalition Government, stating:“If the Tories were governing alone, they would be cutting inheritance tax for millionaires and they would pay for it by reducing public spending even more.”Is that true?

[The Prime Minister]

The position on inheritance tax is covered in the coalition agreement.

[Richard Graham (Gloucester) (Con)]

Q13. Last week, on the Syrian border, I met Syrian army deserters who had refused to kill their fellow citizens, and a small child wounded by that regime. If things there are to get better, not worse, the world must stop selling arms to Syria. What evidence does the Prime Minister have of countries shipping arms to that regime?

[The Prime Minister]

My hon. Friend makes an extremely important point. Britain needs to lead the way in making sure that we tighten the sanctions, travel bans and asset freezes on Syria. On who is helping the Syrian Government to oppress their people, there is growing evidence that Iran is providing a huge amount of support. Some shipment interceptions by Turkey are particularly interesting in that regard. People should also know that Hezbollah is also an organisation that is standing up and supporting the wretched tyrant who is killing so many of his own people.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Prime Minister will no doubt be aware of a report from international aid agencies this morning saying how the crisis in the horn of Africa was made worse by the delay in the international community responding. It warned that a similar crisis is threatening in west Africa. What will the Government do to try to ensure a speedier international response?

[The Prime Minister]

The hon. Gentleman raises an important point, and I will study the report carefully. My understanding is that the British aid effort was swift at getting aid into the horn of Africa and was leading the pack, both in the extent—the money committed—and speed of the response. Clearly, the horn of Africa is a very difficult place to deliver aid to, not least because of the control al-Shabaab—in effect, a terrorist organisation—has in large parts of Somalia. I will look carefully at what he says about west Africa, and I will ensure that we learn any available lessons.

[Gavin Barwell (Croydon Central) (Con)]

Q14. On 26 October, I raised the case of my constituent, 14-year-old Lillian Groves, who was killed outside her home by a driver under the influence of drugs. The Prime Minister kindly met her family to talk about the case, which I believe has support across the House, for changing the law to deal with the menace of drug-driving. Will my right hon. Friend update the House on progress?

[The Prime Minister]

I pay tribute to my hon. Friend’s work on this issue. It is important that we take seriously the issue of drug-driving. As he knows, we are committed to making the drug-testing equipment available for use in police stations as soon as possible. The case that he is making, which is that we need an equivalent law to that for drink-driving, has great strength. The Government are examining that case closely. Clearly, we need to look at whether there will be an opportunity in the second legislative Session to take forward the measure, which I know he will be campaigning for hard.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

Does the Prime Minister share my concern at yesterday’s ruling by the European Court of Human Rights that Abu Qatada cannot be deported? If so, will the right hon. Gentleman agree to initiate all-party discussions focused not on rhetoric about ripping up the Human Rights Act but on how, in practice, the Court could operate more proportionately, so that rights are respected but the safety of the public is always paramount?

[The Prime Minister]

I agree wholeheartedly with what the right hon. Gentleman has said. I think that the judgment is difficult to understand, because British Governments—both the present Government and the one in which the right hon. Gentleman served—have gone to huge efforts to establish a “deportation with assurances” agreement with Jordan to ensure that people are not mistreated. In this case, the European Court of Human Rights found that Abu Qatada was not going to be tortured but was worried about the process of the court case in Jordan. It is immensely frustrating.

I think that a country such as Britain, which has such a long tradition of human rights, should be able to deport people who mean us harm. That principle is vitally important, and we are not just going to have strong rhetoric about it. I am going to Strasbourg next week to argue that as we are chairing the Council of Europe, this is a good time to make reforms to the ECHR and ensure that it acts in a more proportionate way.

[Mr Aidan Burley (Cannock Chase) (Con)]

Q15. On 26 March 2010, a two-and-a-half-year-old boy named Jobe Felton was kidnapped from his home in Cannock Chase and taken to Thailand by his mother. Six months later, his father finally tracked him down in a remote village. He found that his son could not speak, had had his teeth broken, and had bruises all over his body. He believes that had he not got him back then, Jobe would have been sold. Each year in the United Kingdom, more than 500 children are kidnapped in similar circumstances. Will the Prime Minister meet me and Jobe’s father, Sean Felton—who has set up a charity called Abducted Angels, and who is in the Gallery today—to discuss what the Government can do to help parents of abducted children like Jobe?

[The Prime Minister]

My hon. Friend is absolutely right to raise that case. It is a simply appalling case, and any parent cannot help being chilled to the bone about what happened to that poor boy.

I think it is vital for us to put in place the best possible arrangements. As my hon. Friend knows, the Child Exploitation and Online Protection Centre is to be part of the National Crime Agency. I very much hope that we shall be able to legislate for the agency and ensure that it is properly resourced, because—as my hon. Friend says—it is vitally important that when these appalling acts happen, we get on top of them right away. Early effort is absolutely vital to saving these children.

[Mr Dennis Skinner (Bolsover) (Lab)]

When does the Prime Minister expect to be cross-examined by the Leveson inquiry? Does he not agree that the British people deserve an answer to the question of why he appointed one of Murdoch’s top lieutenants, Andy Coulson, to the heart of the British Government?

[The Prime Minister]

I shall be delighted to appear before the Leveson inquiry whenever I am invited, and I am sure that other politicians will have exactly the same view. I shall answer all the questions when that happens.

It is good to see the hon. Gentleman on such good form. I often say to my children, “There is no need to go to the National History museum to see a dinosaur; come to the House of Commons at about half past twelve.”

[Several hon. Members]

rose—

[Mr Speaker]

Order. We now come to the statement by the Lord Chancellor and Secretary of State for Justice, Mr Secretary Clarke. Before the right hon. and learned Gentleman begins his statement, I appeal to Members who, unaccountably, are leaving the Chamber—who, for some reason, do not wish or are not available to hear the right hon. and learned Gentleman—to do so quickly and quietly, so that the rest of us can listen to the statement.

Detainee Inquiry

Wednesday 18th January 2012 Commons Chamber

12:34

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

With permission, Mr Speaker, I wish to make a statement.

This Government stand firmly against torture and cruel, inhuman and degrading treatment or punishment. We do not condone it, nor do we ask others to do it on our behalf. In July 2010, the Prime Minister announced a package of measures to this House designed to deal with allegations about British involvement in the mistreatment of detainees held by other states overseas. As he told the House then, those allegations are not proven, but their consequences are serious. In his words:

“Our reputation as a country that believes in human rights, justice, fairness and the rule of law—indeed, much of what the services exist to protect—risks being tarnished. Public confidence is being eroded, with people doubting the ability of our services to protect us and questioning the rules under which they operate.”—[Official Report, 6 July 2010; Vol. 513, c. 175.]

No one should be in any doubt about the vital nature of the work that our security and intelligence agencies perform on our behalf or the debt that they are owed by all of us. Without public recognition, the men and women of the services take the gravest personal risks to protect the security of our country. So in his statement 18 months ago the Prime Minister set out a package of measures designed to ensure not just that we can get to the bottom of allegations of mistreatment, but that we learn any lessons, improve the framework for litigation where sensitive material is involved, and enable our security and intelligence services to get on with their vital job.

Since July 2010 the Government have taken a number of steps to fulfil this commitment. We have published for the first time the consolidated guidance for intelligence officers and service personnel on dealing with foreign liaison services regarding detainees held in their custody, to make clear the basis on which our security and intelligence services operate. We have also secured a mediated settlement of the Guantanamo Bay civil damages cases, about which I made a statement to this House on 16 November 2010. I also made a statement to this House on 19 October 2011 on the publication of the Government’s Green Paper on justice and security, which aims to improve our courts’ ability to handle intelligence and other sensitive material and to strengthen the parliamentary and independent bodies that oversee the security and intelligence services. We will set out our response to the consultation on the Green Paper in due course.

We also established an inquiry under Sir Peter Gibson to examine whether, and if so to what extent, the British Government and their intelligence agencies were involved in the improper treatment of detainees held by other countries in counter-terrorism operations overseas, or were aware of improper treatment of detainees in operations in which the United Kingdom was involved. Since then, the Gibson inquiry has been in a preparatory phase, with the panel focusing on a review of key underlying material. The inquiry has had the full co-operation of Departments and agencies during its preparations and has received a large volume of material in response to its requests for information, which it is in the process of considering. We have always been clear, however, that the detainee inquiry would not be able to start formally until all related police investigations had been concluded.

Last week, the Director of Public Prosecutions and the Metropolitan Police Service made a joint statement that they would not charge any named individuals in the Security Service and Secret Intelligence Service in relation to the investigations in Operations Hinton and Iden. However, they also announced that allegations made in two specific cases concerning the alleged rendition of named individuals to Libya and their alleged ill-treatment there were so serious that it was in the public interest for them to be investigated now rather than at the conclusion of the Gibson detainee inquiry. I made a written ministerial statement on Monday this week explaining that the Government were considering the implications for the detainee inquiry of these new police investigations.

The Government will continue to co-operate fully with the police and the Crown Prosecution Service in their investigations, and we remain committed to drawing a line under these issues. As part of this process, the agencies will continue to review their records, and we will ensure that this process is thorough and comprehensive. We and the agencies are absolutely clear that where there are any questions about knowledge of improper treatment of detainees, they must be fully examined and, where necessary, investigated. Looking to the future, we will carefully review the responses to the Green Paper about the oversight of the agencies.

However, these further police investigations into the Libyan allegations may take some considerable time to conclude. The Government fully intend to hold a judge-led inquiry into these issues, once it is possible to do so and all related police investigations have been concluded. But there now appears no prospect of the Gibson inquiry being able to start in the foreseeable future. So, following consultation with Sir Peter Gibson, the chair of the inquiry, we have decided to bring the work of his inquiry to a conclusion. We have agreed with Sir Peter that the inquiry should provide the Government with a report on its preparatory work to date, highlighting particular themes or issues which might be the subject of further examination. The Government are clear that as much of this report as possible will be made public. We will continue to keep Parliament fully informed of progress. The Government fully intend to hold an independent, judge-led inquiry, once all police investigations have concluded, to establish the full facts and draw a line under these issues. Meanwhile, however, the police inquiries that have now commenced must obviously continue. I commend this statement to the House.

12:41

[Sadiq Khan (Tooting) (Lab)]

I thank the Secretary of State for advance sight of his statement. The whole House unequivocally condemns torture, and inhumane, cruel and degrading forms of punishment. We must not condone it or ask others to do so on our behalf. One of the marks of a civilised society is that we will do everything in our power to champion human rights, both at home and abroad, and that we will properly investigate, prosecute and punish those alleged to have committed such crimes in this country or on behalf of this country elsewhere across the globe. So, allegations that members of our security and intelligence services may be involved in the improper treatment of detainees held by other countries, with acts that contravene these basic levels of human decency that we hold so dear as a nation, need proper and full investigation.

The investigations in Operations Hinton and Iden relate to serious and highly sensitive matters involving, as they do, allegations about members of the Security Service and the Secret Intelligence Service. Operation Hinton followed a referral from the former Attorney-General, my right hon. and learned Friend Baroness Scotland, in November 2008 and Operation Iden followed a referral, also by the former Attorney-General, in June 2009. These independent investigations concluded on 12 January this year, as has been said, with a decision not to charge any named individuals in relation to the investigations in Operations Hinton and Iden.

Our security and intelligence agencies perform vital work on our behalf and we owe them a debt. Without public recognition, the men and women of these services take the gravest personal risks to protect the security of our country. But it is clearly right that, in the light of the further, specific allegations of ill-treatment made recently, the Metropolitan Police Service and the Crown Prosecution Service investigate these thoroughly. Although it was also right that the inquiry led by Sir Peter Gibson was put on hold while investigations into criminal proceedings were ongoing, I would ask the Justice Secretary why he has decided not to have a further hold in Sir Peter Gibson’s inquiry while these further investigations are carried out. It is also important that the pause is used as an opportunity to ensure that the former detainees and the human rights and campaign groups who chose not to engage in the Sir Peter Gibson inquiry are brought back into the fold.

May I ask the Justice Secretary what his views are on the representations made by those acting on behalf of the detainees, non-governmental organisations and others that an inquiry conducted with the current terms of reference and protocol does not comply with articles 3 and 6 of the European convention on human rights? It is clearly important that any inquiry has legitimacy, and I invite the Justice Secretary to use the period while the allegations are being investigated by the police to work with ourselves, NGOs and other experts to ensure that the new inquiry has as much legitimacy as is possible. I also ask the Secretary of State when and how he intends the work of Sir Peter Gibson, or as much as is realistically possible, to be published.

The key point is that we must get to the bottom of what happened. We are firmly of the view that there must be an independent inquiry as the quicker these questions are answered, the quicker we will be able to draw a line under these issues.

[Mr Clarke]

I am grateful to the right hon. Gentleman for his broad support for the aims we are pursuing. I agree with everything he said about the security services and I think we owe it to them, as well as to the reputation of this country, to draw a line under these matters as quickly as possible, which involves investigating them all properly and making the position clear as well as considering matters such as the supervision of the services in future.

The right hon. Gentleman asked why we did not have just another pause in the Gibson inquiry, as we were previously just waiting for the outcome of the police inquiries into the Guantanamo Bay cases. With great respect, it is not even fair to the team to keep things going on in that way. I had hoped to be able to come to the House and say, if anyone asked me, that the Gibson inquiry was now under way, that it was starting its proceedings and that all was going smoothly. We now have to wait for an as yet unknown period of time while the Libyan investigations are carried out and while we see where they go. The Metropolitan police took three years to look into the Guantanamo Bay cases and I think everybody is anxious that we should be quicker than that as we look at the Libyan cases, but we have no idea how long it will take.

Sir Peter and his colleagues have done some work and the sensible thing is to publish the outcome of their preparatory work now, wait to see what happens to the investigations and to set up an independent judge-led inquiry as soon as it is feasible, which might require a fresh team of people to carry it out. We have the terms of reference for Gibson because we think the Gibson inquiry itself should not take too long and I have discussed the terms of reference with NGOs, representatives of former detainees and so on. I will quite happily continue those conversations and I have been trying to persuade them that the Gibson inquiry meets their needs and that they should actively participate and engage in the process. I will continue that and I will listen to their views, too, about the nature of the inquiry. I can assure the right hon. Gentleman and those outside the House who have an interest that the Government will hold an independent judge-led inquiry. We are where we are, and the Gibson proposals are our proposals.

[Sir Menzies Campbell (North East Fife) (LD)]

As a member of the Intelligence and Security Committee, may I endorse the observations made by my right hon. and learned Friend and by the shadow Justice Secretary about the contribution that the security services make to the security of the nation? When the Gibson inquiry was first conceived, the hope was expressed that it might complete its work within one year. As events have subsequently proved, that prognosis was rather optimistic. May I say to my right hon. and learned Friend that I think that he has inevitably had to bow to the changed circumstances and that his announcement today is entirely sensible and will preserve all the issues that would otherwise have been dealt with by the Gibson inquiry?

[Mr Clarke]

I am grateful to the right hon. and learned Gentleman. The point that lies behind the debate I have been having with NGOs and detainee representatives about the terms of reference is that our aim would be that the judge-led inquiry might conclude within a year. We do not want an inquiry that takes years and years and becomes too legalistic. We are still open to discussions about that, but the right hon. and learned Gentleman obviously shares my view that it would be much better if we were able to get things under way and hold this inquiry. I am grateful for his support for the inevitability of holding fire and getting Sir Peter to produce what he has done so far.

[Mr Jack Straw (Blackburn) (Lab)]

Sir Peter Gibson is a retired senior judge of the highest integrity and skill and I am personally quite certain that had he had the opportunity to continue this inquiry, he and his colleagues on the panel would have been able to do a most thorough job and would have gained the confidence of the NGOs and others in the course of that inquiry in exactly the same way as Sir William Macpherson, who was faced with a high degree of scepticism when he first began the Lawrence inquiry, was able to assuage the concerns of many of those involved in the course of the proceedings. May I also say to the right hon. and learned Gentleman that I believe that he is absolutely right to do what he has and that in practice he has had no alternative?

[Mr Clarke]

I am grateful for that view and for the right hon. Gentleman’s support because I keep trying to assure people that there is no conspiracy here. The Government actually want these things to be properly investigated and want the full facts to be shared with the general public so far as they sensibly can be, consistent with the interests of national security.

[Mr Andrew Tyrie (Chichester) (Con)]

It was widely held that the Gibson inquiry’s approach to the investigation set out in the protocol and in the interpretation of the terms of reference was defective in a number of important respects. I have brought those to the attention of the Government already and have discussed them in correspondence with the Prime Minister, as my right hon. and learned Friend will know. In particular, there was no intention to cover detainee transfer in theatre and no intention to appoint an investigator or even to try to investigate all the cases of credible allegations brought forward. Will my right hon. and learned Friend undertake to review fully all these aspects of the Gibson inquiry’s proposed work so that we can rectify these defects when an inquiry reconvenes?

[Mr Clarke]

I will continue the conversations I have been having with my hon. Friend and others about the basis on which the Gibson inquiry is proceeding. I have been trying to persuade people to be more co-operative with the Gibson inquiry, but I am also quite happy to listen to points that people make to me about why they have reservations. The Government wanted to proceed with the Gibson inquiry on the present terms of reference and would have done so if we had not had this final delay. We have more time to consider the matter, although we did not want more time, and I am happy to discuss these matters with my hon. Friend and others again.

[Hazel Blears (Salford and Eccles) (Lab)]

Our intelligence agencies do a hugely important job for this country, but it is essential that they operate and are seen to operate within the highest standards of human rights ethics and a proper legal framework. Does the Secretary of State agree that it is essential in the current circumstances to take forward his proposals in the Green Paper on justice and security to strengthen the role of the Intelligence and Security Committee so that we can have the legal powers and the necessary resources to be able to scrutinise fully the work of our intelligence agencies?

[Mr Clarke]

I assure the right hon. Lady that there is no delay to that aspect of our policy. We will shortly be responding to the consultations on our Green Paper, the first of which concerned the basis on which courts and other proceedings can handle intelligence material in a way that improves their ability to try cases without jeopardising national security. The second concerned the important matter that she raises of the supervision by this House and elsewhere of the security services.

[Mr James Clappison (Hertsmere) (Con)]

I welcome my right hon. and learned Friend’s approach to this matter. Does it remain his hope that at the end of this process we can avoid the situation that arose in the previous Parliament when my hon. Friend the Member for Chichester (Mr Tyrie) and others were reassured over and again on the Floor of the House that there was no United Kingdom involvement in any respect with any extraordinary rendition, which subsequently turned out not to be the case?

[Mr Clarke]

Like my hon. Friend, I was a member of the all-party group on extraordinary rendition being led by my hon. Friend the Member for Chichester (Mr Tyrie), so I was as anxious to see the outcome of the police and other inquiries as everybody else. The whole point is to dispel all this because we must have an effective national security system and effective agencies. People who work in those agencies do very brave work that is essential to this country. We must draw a line under all this and investigate fully this legacy of allegations in order to find out exactly what happened and work out how to proceed and how to scrutinise the services in future.

[Keith Vaz (Leicester East) (Lab)]

The Justice Secretary clearly has the support of both sides of the House in the decision he has taken today. Could he clarify whether this was his decision or whether Sir Peter came to him and asked to be relinquished of his responsibilities in view of the fresh investigations? I know that the Justice Secretary cannot give us a timetable, but does he envisage this lasting for months or years?

[Mr Clarke]

It was discussed with Sir Peter Gibson and he agrees that this is the way to proceed. I did not personally have the conversation, but in the light of last week’s inquiry it was decided that it was sensible to discuss this with Sir Peter and he agrees with the decision we have taken to proceed in this way. I wish I knew how long the Metropolitan police investigations will take. I hope that they will not take as long as the Guantanamo Bay cases, but there is absolutely no basis on which I can properly intervene with the police. We want these matters to be investigated thoroughly so we will wait and see.

[Mr Robert Buckland (South Swindon) (Con)]

It looks increasingly clear that this is going to take years rather than months. Can my right hon. and learned Friend assure me that in the intervening time he will take particular care in defining the terms of reference on the Libyan dimension, which in my opinion is much wider than just rendition? What about, for example, the training of Libyan forces at the defence academy at Shrivenham? We need to narrow down the issues when it comes to Libya so that we can avoid the pitfalls that have beset the Gibson process thus far.

[Mr Clarke]

The intention was that the Gibson inquiry would cover that aspect of the Libyan allegations, particularly the two allegations of rendition, that fitted with the terms of reference the inquiry already had for the Guantanamo Bay cases, but a lot of issues have been thrown up by the Libyan allegations and we will consider how best to handle them. Unfortunately, the Metropolitan police are bound to take months at least, I should have thought, so we have time to consider how best to handle these matters.

[Dr William McCrea (South Antrim) (DUP)]

I wholeheartedly agree with the statement that the Justice Secretary has made today, but how can we ensure that the security and intelligence agents who do such sterling work on our behalf are protected against false allegations against them?

[Mr Clarke]

I have never been able to protect anybody against false allegations but the easiest way of handling such allegations is to investigate them quickly and dismiss them. I have no doubt that allegations that turn out to be false will be quickly dismissed by Sir Peter Gibson and I hope that any future inquiry will get rid of malicious or politically motivated allegations, to which people who work in this field are bound to be exposed. However, that is not a description of the things now being looked at. The questions being raised here are serious and this issue calls for some explanation. We want the Libyan cases to be investigated very thoroughly and we look forward to the police conclusion and the results of a judge-led inquiry on the whole matter.

[Jane Ellison (Battersea) (Con)]

Last July, my right hon. and learned Friend confirmed to me at the time of his statement on the Gibson inquiry that he wanted Shaker Aamer, the last British resident detained in Guantanamo Bay, to be available to give evidence to it. Does not this pause give a fresh opportunity to press the case that he should be released and be available to give evidence to any new inquiry?

[Mr Clarke]

My hon. Friend is probably right. That is another good reason why we would like Shaker Aamer to be released and I will bring her remarks to the attention of my right hon. Friend the Foreign Secretary. We keep making representations and trying to get him released and brought back.

[Chris Bryant (Rhondda) (Lab)]

When some of us were calling for a public inquiry led by a judge into phone hacking at the News of the World, we cited the Gibson inquiry as one that had been set up even while criminal investigations were ongoing, and the Secretary of State said that it was important that Gibson was able to secure whatever evidence there was that might in other cases be destroyed. I hope that he can still make that assertion today.

[Mr Clarke]

The agencies are reviewing their accessing of the necessary records, because these Libyan allegations emerged as a surprise. We are making sure, as far as one can, that this matter is reviewed and that we access such records as are available.

[Tom Brake (Carshalton and Wallington) (LD)]

We must get to the bottom of the allegations of mistreatment as soon as possible. The credibility of the intelligence services depends on it. To that end, how soon after police investigations are concluded does the Secretary of State expect a successor detainee inquiry to be established? In the interim, is there an enhanced role for the independent reviewer of terrorism legislation that might require him to have a salary and an office outside the Home Office to review these matters independently and effectively?

[Mr Clarke]

We have not taken any decisions yet about the exact point at which we will start constituting a new judge-led inquiry or approaching a judge and people who might wish to serve on the inquiry. What we did this time was to set up the Gibson inquiry in the belief that we were about to start imminently—going into the full formal stage after a few months of preparation. Presumably, we will try to repeat that, but at this stage it is impossible to know when we will be in a position to do that. At the moment, we want to review the facts of these cases so I do not feel the need to create a new appointment to review the legislation in this area; indeed, I would argue, subject to what emerges, that the law in this area is reasonably clear. It is the facts that we hope to investigate, and then the application of the law to those facts.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Is not the real lesson of Gibson that important inquiries such as this cannot proceed properly without the full confidence of all interests and participants? What is the Justice Secretary doing to ensure that any future inquiries will have the full confidence of all human rights groups and all lawyers involved in such cases?

[Mr Clarke]

I have met a very wide range NGOs, human rights groups and those with an interest, and I have been trying to persuade them that the Gibson inquiry is something that they should get engaged with. I very much hope still to see them doing that. I am still having meetings about the Green Paper on security and justice and of course on the supervision of the security services. My right hon. Friend the Home Secretary was here earlier; we will continue to engage. I agree that it would be very much better if we could get the NGOs and others to accept that this is the way to proceed. We will continue to listen to their arguments about why they feel that they cannot, and we will do our best.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I welcome the Secretary of State’s statement. Does he agree that under procedure there is no other way than to allow the Crown Prosecution Service to make those investigations before carrying on with the inquiry?

[Mr Clarke]

I am glad to hear that my hon. Friend believes that. I think that is right. The problem of letting the inquiry go ahead while the police are carrying out the investigations is obviously that one could hopelessly compromise the other. We cannot have witnesses giving evidence about events when the police are in the middle of inquiries into the self-same events. [Interruption.] Well, that was the basis upon which we started, and everybody accepted that Gibson could not start until the police investigations had finished. There are sensible reasons, as my hon. Friend says, why we are in that situation.

[Yasmin Qureshi (Bolton South East) (Lab)]

Our country has a reputation around the world as one which protects human rights. When allegations of extraordinary rendition were made, it tarnished that image. I welcome the Lord Chancellor’s inquiry into the whole issue and the support given by the shadow Secretary of State for Justice. I ask the Lord Chancellor to take on board the points that the shadow Secretary of State for Justice mentioned.

[Mr Clarke]

I am grateful to the hon. Lady. It is extremely important that we maintain this essentially cross-party approach to these matters and that the House gives its full support to our attempts to get to the bottom of these matters. As she says, it is in the interests of this country and of the Security Service that we do so.

[Bob Stewart (Beckenham) (Con)]

For quite a long time, together with the security services and the police, I was responsible for detainees and for interviewing them. In all that time we took huge care to comply with instructions, particularly about human rights, when interviewing detainees. It is very difficult and sometimes dangerous work for the officers concerned. I hope—I know—the Secretary of State will agree that instances of poor practice are few and far between and are very sad indeed.

[Mr Clarke]

My hon. Friend speaks with much greater authority than I on the subject and puts forward an opinion with which I wholeheartedly agree. That is why it is in the interests of the vast majority of those brave men and women who serve in those services, often in very dangerous situations, that we tackle these allegations of malpractice. I am sure the allegations are against a tiny number of officers and it may be that they will turn out to be unfounded. The sooner we can clear this up and draw a line under it, the better.

[Mr David Winnick (Walsall North) (Lab)]

Will the Justice Secretary accept that the allegation that British security officials handed over suspects to places abroad where they were tortured is a matter of great concern for Britain’s reputation? I said “allegation”, but in the case last week of the two Libyans, the letter which was found from the MI6 officer confirms that that was not merely an allegation. The two were sent over to Libya and were tortured. As we know, one of them, who holds a high position now in post-Gaddafi Libya, is accordingly bringing legal action against the UK Government.

[Mr Clarke]

Those are the serious allegations which need to be investigated and are being investigated by the police. On the principle of the matter, which the hon. Gentleman underlines, this Government are absolutely clear that we do not engage in torture, we do not condone torture, we do not get engaged in torture in any way, and we are not remotely going to get involved in the cruel and inhuman treatment of detainees in any way. The sooner we investigate the serious allegations that have emerged from Tripoli, the better.

[Mark Durkan (Foyle) (SDLP)]

The Secretary of State said that in pursuit of the Libyan allegations “the agencies”, which I presume are the security agencies, “will continue to review their records”, and that the Government will ensure that the process is “thorough and comprehensive.” Is there any room for independent oversight of that review by the agencies of their records and of any lack of records that might be identified? How exactly can he assure the House that that process will be thorough and comprehensive, as it seems that the subsequent police investigation will be entirely dependent upon it?

[Mr Clarke]

One must adopt a sensible approach to this. We did not expect the Libyan revelations to appear until they emerged from that office in Tripoli. For that reason a most thorough review of records is being undertaken and will continue. To bring in fresh people to review the review—one gets carried away. I have no reason to doubt that at present the most thorough review is taking place to make sure that we know where we are and we can put an end to the matter by having it properly and independently investigated, eventually by a judge-led inquiry.

Points of Order

Wednesday 18th January 2012 Commons Chamber

13:06

[Ian Austin (Dudley North) (Lab)]

On a point of order, Mr Speaker. Is it in order for the hon. Member for South West Devon (Mr Streeter) to describe Dudley as ugly? Why should a place which boasts the UK’s first national geological nature reserve, a fantastic castle, a beautiful town centre which traces its roots back to mediaeval Britain, and the award-winning Black Country living museum be sneered at by somebody like him? Should he not come to Dudley and see these gems for himself? Would you like to come to Dudley, Mr Speaker, so that you can see how wrong he was?

[Mr Speaker]

I am grateful to the hon. Gentleman not only for the content of his point of order, but for his courtesy in giving me advance notice of it. I remind him that a wise person said that there is no point in arguing about taste. Beauty is in the eye of the beholder, and I am sure Dudley is beautiful to its own Member of Parliament. That the hon. Gentleman is a doughty and articulate exponent of that perceived beauty is no surprise to me, as this year marks 30 years since he and I first made each other’s acquaintance at the university of Essex. I am afraid that on the matter of the beauty or otherwise of Dudley, I have not yet had an opportunity to form my own judgment, but I appreciate the hon. Gentleman’s prospective invitation and I would, of course, be inclined to accept it. I do not think expressions of aesthetic opinion fall within the rules of order unless those expressions of opinion concern another Member of the House.

[Paul Flynn (Newport West) (Lab)]

rose—

[Mr Speaker]

I will come to the hon. Gentleman. I am saving him up. He is too precious. I do not want to waste him too early. I call Mr Chuka Umunna.

[Mr Chuka Umunna (Streatham) (Lab)]

Thank you, Mr Speaker, and on a point of order. You will be aware that excessive pay and rewards for failure in the City and in boardrooms round the country are a matter of huge public interest. The Government have let it be known that they will announce what they plan to do about the issue on Tuesday next week. Our strong view is that the Business Secretary should do so in an oral statement to the House. He is giving a speech to the Social Market Foundation at 12.30 pm on Tuesday, before the House sits. Can you advise the House whether you have been given notice that he intends to come first to the House on Monday to give an oral statement on what the Government are to do about the matter, and whether you would expect him to do so?

[Mr Speaker]

I am grateful to the hon. Gentleman for that point of order, of the content of which I did not have advance notice. I would certainly expect that if a significant policy announcement is to be made, a statement in one form or another—there are different forms of statement, as the hon. Gentleman will be aware—would first be made to the House. I hope the hon. Gentleman will understand if I say that more widely than that I would be reluctant to go. I would want to observe how the Government conduct themselves and judge matters accordingly, but both the Leader of the House and the Deputy Leader of the House are aware of the premium that I attach not on my account, but on behalf of the House, to the House hearing and, preferably on very important matters, having the opportunity first to question Ministers. It is desirable that the House hears first, rather than audiences outside.

[Paul Flynn (Newport West) (Lab)]

On a point of order, Mr. Speaker. One of the areas of parliamentary life—the manners of this Chamber—that has improved in recent years is that it is now completely unacceptable for one Member to criticise another Member on the basis of gender, race, ethnicity or disability. The most under-represented group in this Parliament is the septuagenarians. Today we heard what I believe many of us thought was a gratuitous and entirely offensive insult to a greatly respected hon. Member, made entirely because of his age. Is it not right that ageist discriminatory remarks should be outlawed in the same way that other discriminatory remarks are?

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Further to that point of order, Mr. Speaker. Is it not also the case that “Erskine May” makes it very clear that no Member of Parliament should criticise another and call them a name that relates to an animal? In those circumstances, is it not only right that the Prime Minister should come back to the House and apologise to my hon. Friend the Member for Bolsover (Mr Skinner)?

[Mr David Winnick (Walsall North) (Lab)]

Further to that point of order, Mr. Speaker. Is it not important that those of us of a certain age group should not be seen as the new persecuted minority?

[Mark Pritchard (The Wrekin) (Con)]

rose—

[Mr Speaker]

Is it on the same matter? Gosh, a vintage quartet indeed, and a very high quality vintage.

[Mark Pritchard]

Further to that point of order, Mr. Speaker. You have seen the grey hairs as well—on my head, of course. I seek your guidance on whether this Parliament and this House of Commons would be better with more or less humour.

[Mr Speaker]

I am always in favour of humour, but just as beauty is in the eye of the beholder, humour is a matter of subjective judgment. Sometimes people are funny, sometimes they think they are funny, sometimes they think they are funny deliberately when they are not, sometimes they do not realise they are funny when they are. There are all sorts of different permutations. It would be unwise for me to offer a view as to the category into which the matter of current discussion happens to fall, but I have never had any doubt about the hon. Gentleman’s well-developed and furnished sense of humour.

I agree with the hon. Member for Walsall North (Mr Winnick) that septuagenarians should not become a persecuted minority. The hon. Gentleman is sometimes in a minority, and a principled minority, on a range of matters, and has been throughout his long parliamentary career. All I would say is that I do not think that the hon. Gentleman himself is persecuted, certainly not by me, and anybody trying to persecute the hon. Gentleman should frankly give up the unequal struggle, because that person will not get anywhere with the hon. Gentleman.

With regard to the point of order from the hon. Member for Central Ayrshire (Mr Donohoe), I think that I am right in saying that “Erskine May” no longer contains the prohibition to which the hon. Gentleman refers. I think that, certainly at one time or another, there has been a prohibition on, or presumption against, reference to an existing animal.

With regard to the point of order of the hon. Member for Newport West (Paul Flynn), it is very difficult for me to interpret the mindset of another hon. or right hon. Member, be that a newly arrived Member, or a very senior Member, or the most senior Member of the Government. Sometimes an observation might be made with reference to perhaps a past attitude, style or conduct, and I do not think that I want to get into the issue of what was said today. I might want to reflect on it. All I would say is that I share the hon. Gentleman’s absolute disapproval of sexism, racism, ageism and other forms of discrimination. The hon. Gentleman’s track record on that matter speaks for itself over a very long period.

Keeping of Primates As Pets (Prohibition)

Wednesday 18th January 2012 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

13:15

[Sheryll Murray (South East Cornwall) (Con)]

I beg to move,

That leave be given to bring in a Bill to prohibit the keeping of primates as pets in the United Kingdom and the breeding, sale and purchase of primates; to introduce breed-specific codes of practice for the keeping of primates in animal sanctuaries and for species conservation; and for connected purposes.

I present this Bill to the House today on behalf of those who cannot speak for themselves. I refer to non-human primates, most commonly referred to as monkeys. The Royal Society for the Prevention of Cruelty to Animals and Wild Futures estimate that between 2,500 and 7,500 primates are kept as pets in England, Wales and Scotland, but others suggest the number might be as high as 15,000 to 20,000. Owing to the lack of registered breeders and the unregulated nature of selling monkeys to private buyers, it is very difficult to come up with an exact figure. I will explain to the House how monkeys suffer by being kept as household pets, and why there is such a strong case for banning primates as pets.

More than 360 highly regarded primatologists and other respected professionals support the call for a restriction on primate keeping to genuine specialists, and only for the purposes of sanctuary or conservation. There are many countries that have already banned keeping primates as pets, including Israel, Mexico, Honduras, India, Brazil, the Netherlands, Belgium and Sweden. I will explain to the House why it is entirely necessary to follow the lead of these countries and introduce a ban on keeping primates as pets in the UK.

As some hon. Members may know, the Monkey Sanctuary in Looe is in the heart of my constituency of South East Cornwall, and some may even remember the tale of Donkey the monkey, whom I spoke about in another debate. I would like to report that he is keeping very well. It is telling that none of the monkeys re-homed at the Monkey Sanctuary was free of behavioural problems on arrival, and most showed multiple neuroses. Primates show evidence of self-awareness and intelligence, and have sophisticated cognitive capacities and complex patterns of behaviour. They also form intricate social relationships and are keen problem solvers. It is well known that non-human primate intelligence is on a par with that of humans.

However, the RSPCA has confirmed that 61% of incidents involved primates being housed alone. The effects of a lack of socialisation are profound. These include high levels of abnormal behaviours such as self-mutilation and difficulties socialising. Furthermore, cutting off the period in which young primates are dependent on their mothers is known to have long-lasting negative psychological and physiological effects. The Monkey Sanctuary informed me that common repetitive behaviours are classic in ex-pets. Examples include pacing, head twisting, teeth grinding, rocking and overeating. Primates also require a high level of specialist care to provide for their complex needs.

Commercially available primate foods do not account for specific dietary requirements. Inappropriate diet can increase susceptibility to diseases of human origin, including respiratory, gastro-intestinal, skin and viral disorders. Primates have been found to have been fed seriously inappropriate items, such as coffee, tobacco and marijuana.

Furthermore, RSPCA records show that over a quarter of cages were judged to be ridiculously small—in some instances, monkeys were found housed in parrot cages. For those who do not think that it could get worse for those monkeys, here is another fact: they are mostly kept indoors. That leads to a lack of sunlight, which means that the necessary vitamin D levels are rarely met. Bone disease in primates kept as pets is a recurrent problem.

Let me tell the story of Joey, a capuchin monkey who is now residing at the Monkey Sanctuary in Looe—Members who wish to see a photo of Joey can see me after the debate. He was kept in a small cage in a London apartment for nine years. A lack of natural light and proper diet led to nutritional bone disease. He has extensive bone deformation, including bowed limb bones and poor bone density. He cannot climb or eat easily and is permanently disabled. He also displays the stereotypical rocking behaviour that is classic for ex-pets. His owner was away most of the time and, other than a friend who spent about an hour with him every day, Joey had no social companionship. It appears that the local council granted a licence for Joey under the Dangerous Wild Animals Act 1976 for at least the first year, but at some point it was not renewed and the council never followed up the case. That means that the council seems to approve of the conditions in which Joey was kept, conditions that led to serious physical deformities and behavioural abnormalities.

Another case only last month concerned a ring-tailed lemur found on Tooting common. He had collapsed in sub-zero temperatures and was diagnosed with hypothermia, severe dehydration and shock. Named King Julien by the staff at the Blue Cross animal hospital in Victoria, he was cold, scared and did not want to eat. Happily, the lemur is now on the road to recovery and strong enough to leave the charity’s care. He has been transferred to Specialist Wildlife Services. I would like to thank those at the Blue Cross hospital for everything they did for King Julien and for doing all they can to re-accommodate him in a suitable environment.

Another recent case did not have such a happy ending. A west-midlands couple who owned a crippled baby marmoset monkey sold him in a fish and chip shop car park for £650 in June, rather than take him to a vet. An RSPCA primatologist said that Mikey had advanced bone disease and seven fractures. His tail, which is used for balancing, was broken. His injuries were deemed so severe that he had to be put down. The couple were convicted of animal cruelty and banned from keeping pets for life.

I argue that the Animal Welfare Act 2006 has not been an effective tool in protecting primates that are kept as household pets. The Act states that local authorities are meant to inspect the primate’s living conditions and assess whether it has a safe environment. Monkeys are let down by the fact that many local authorities lack primate expertise. They do not have the working knowledge required to assess correctly whether a primate is in a healthy environment. This leads to cases such as that of Joey, who ended up being re-homed at the Monkey Sanctuary but with severe physical and psychological problems, and monkeys like Mikey inevitably having to be put down.

The RSPCA has also confirmed that, proportionately, complaints reported to it were four to 12 times more frequent for primates than for typical pet species. I cannot fault the premise of the 2006 Act, but evidently it is not accomplishing what it set out to do, which is to protect these animals. The only effective means of adequately safeguarding pet primate welfare is banning the keeping of primates as pets. I therefore urge all hon. Members to support the Bill, which would free these monkeys who cannot help themselves.

Question put and agreed to.

Ordered,

That Sheryll Murray, Oliver Colvile, Zac Goldsmith, Bob Stewart, Mark Pritchard, Caroline Nokes, Stephen Gilbert, Katy Clark, Mark Lazarowicz, Neil Parish, Peter Aldous and Joan Walley present the Bill.

Sheryll Murray accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 30 March, and to be printed (Bill 273).

Local Government Finance Bill

Wednesday 18th January 2012 Commons Chamber

[1st Allocated Day]

Considered in Committee

[Mr Lindsay Hoyle in the Chair]

Clause 1

Local retention of non-domestic rates

13:26

[Helen Jones (Warrington North) (Lab)]

I beg to move amendment 20, page 2, line 13, leave out ‘2013’ and insert ‘2014’.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following: amendment 21, in clause 2, page 2, line 19, leave out ‘2013’ and insert ‘2014’.

Amendment 22, in clause 3, page 3, line 21, leave out ‘2013’ and insert ‘2014’.

Amendment 23, in clause 4, page 3, line 35, leave out ‘2013’ and insert ‘2014’.

Amendment 24, in clause 5, page 4, line 5, leave out ‘2013’ and insert ‘2014’.

Amendment 25, in clause 6, page 4, line 22, leave out ‘2013’ and insert ‘2014’.

[Helen Jones]

We have tabled these amendments because we are concerned about the way the Bill is being rushed through the House and, should it be enacted, the short time allowed for its implementation. Understandably, the Bill deals with difficult questions. It is not easy when dealing with local government finance to resolve exactly where the line should be drawn between central and local government, how far services should be uniform and how far we are prepared to tolerate variations in them. I accept that the Government carried out a consultation before bringing in the Bill, but the problem is that the Bill seems to reflect little of that consultation.

In addition, the Bill is being taken through the House at a break-neck pace. It was published on 19 December, just before the Christmas recess, and had its Second Reading on 10 January, which was the first day the House returned and only two sitting days later. Instead of sending the Bill upstairs to Committee, where we could have taken evidence, which we cannot do on the Floor of the House—that is the important thing about Public Bill Committees—the Government insisted that the Bill should be considered in Committee of the whole House in three days, and I think that it was originally meant to be two days.

Why are the Government so worried about taking evidence upstairs in Committee? They might be a little worried about what they could hear, because the truth is that local councils, having started to look at the Bill in detail, are particularly concerned about the speed of implementation for its provisions and are struck by the number of powers being given to the Secretary of State.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend agree that another possible motive for considering the Bill on the Floor of the House is the coalition Government’s botched programming of business for this Session and the fact that, were it not being considered here, there would be little to be heard in the Chamber?

[Helen Jones]

My hon. Friend makes an extremely good point, which I will come to in a moment.

If the Bill comes into force, one extremely complex system will be removed and replaced with another extremely complex system, without time for local authorities to prepare for it.

[John Healey (Wentworth and Dearne) (Lab)]

Before my hon. Friend moves on from the question of evidence, I do not want her to overlook the value of such evidence. Does she agree that democracy works better when a wide range of organisations has an opportunity to contribute effectively to our discussions? Evidence sessions in a Public Bill Committee give organisations that represent people with a wide range of interests the chance to assess, analyse and propose amendments to improve legislation. That stage will be sorely missed because of the way in which the Government are handling the Bill.

[Helen Jones]

I could not agree more with my right hon. Friend. Since I have entered this House, I have learned that the best way to improve legislation is to scrutinise it effectively and listen to those who will have to deal with it when it comes in. If the Government chose to take evidence, they would have ample opportunity to table amendments to the Bill in Committee or on Report.

[Mr Robert Syms (Poole) (Con)]

There are 650 Members of Parliament, many of whom are former councillors. There is a good body of experts in this Chamber. I welcome what the Government are doing. It allows people to have their say.

[Helen Jones]

I am grateful to the hon. Gentleman for that point. Although he is correct in saying that many of us have been local councillors, I point out to him, with all due deference because this applies to me as well, that many of us were local councillors some time ago and that the system of local government has altered in the time since. It would be beneficial for the House to hear from those who are running local councils now. I sincerely regret that we have not had time to do so.

[Graham Stringer (Blackley and Broughton) (Lab)]

My hon. Friend is making an important point. I have always found local government slightly more complicated than quantum mechanics.

[John McDonnell (Hayes and Harlington) (Lab)]

Only slightly?

[Graham Stringer]

Well, a lot more complicated. Does my hon. Friend the Member for Warrington North (Helen Jones) agree that the last time a Conservative Government had a major reorganisation of local government finance, they ended up putting VAT up for ever and costing the country £20 billion per year?

[Helen Jones]

My hon. Friend, who is a distinguished former leader of a local authority, makes a valid point. I agree with him on one thing: local government finance is exceedingly complicated. For that reason, it might well have been useful to hear in Committee from people such as finance officers in local authorities who will have to deal with this procedure from day to day. They might well have been able to suggest technical amendments that would have been beneficial to the Committee and which, if we are honest, are beyond the expertise of most hon. Members.

[George Hollingbery (Meon Valley) (Con)]

Will the hon. Lady remind the Committee how many months of extensive consultation the proposals for the Bill have gone through before this stage and how many changes to the scheme were proposed and then adopted?

[Helen Jones]

The hon. Gentleman should recognise that it is not much use having a consultation unless it informs the legislation. [Interruption.] Local authorities say that it has not. A second process, which many Members have found useful, is to allow people to give evidence on the exact wording and form of the Bill once it has been published. I believe that if we are serious about the legislation that we introduce in this House, it is right and proper to give people the opportunity to do that. People have not had time to do so with this Bill because we are not having evidence sessions in Committee. The House introduced such evidence sessions because it was believed that they would improve legislation. It is a pity that the Government have decided to miss them out.

[Several hon. Members]

rose—

[Helen Jones]

I am inundated. I will give way to my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford).

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

Is it not very clear to my hon. Friend and to Government Members that there is something slightly odd about a Bill that is supposed to give benefits to local government arousing considerable anxiety and concern in local government, as we have seen in the briefings that we have received? Is that not clear evidence of the need for further thought and attention to the detail to ensure that we do not end up with a disaster that is problematic for local government, rather than a measure that gives greater discretion and benefits to local government?

[Helen Jones]

My right hon. Friend makes a very good point. In delivering local services, we are meant to be partners with local government. It is right and proper that the House has an opportunity to take on board the views of local government on the legislation.

As my right hon. Friend is a London Member, perhaps I may read out what London Councils says:

“The retention scheme as written is extremely complex and does not, in our view, incorporate adequate reward and incentive for local authorities. London Councils believes that the Government needs to urgently rethink the business rate retention scheme that it has set out in the Bill.”

If we had had a proper Committee stage upstairs, we could have taken evidence on that matter, considered technical amendments and debated them properly. It is a shame that we are not doing so.

[Chris Bryant (Rhondda) (Lab)]

I agree with my hon. Friend completely. We are only doing things in this way because the Government do not have enough to fill our days. Since we have the innovation of the whole Committee stage on the Floor of the House, could we not have another innovation of having witnesses before us? There is a special place for them at the Bar of the House. We could devote one day, or perhaps additional days, to hearing exactly what those in local government think about the legislation.

[Helen Jones]

My hon. Friend, as usual, makes an interesting point, but he is tempting me to go beyond my remit and discuss the procedures of the House. Perhaps the Procedure Committee could look at that point.

[John Healey]

Before my hon. Friend moves off the question of procedure, does she agree that it is important that we do not lose sight of the fact that the introduction of evidence sessions as part of the Public Bill Committee process, as opposed to the Standing Committee process, was one of the good reforms of the previous Parliament? The hon. Member for Poole (Mr Syms) is right that there is useful expertise across the House from Members with a background in local government. However, unlike the previous consultation and the public statements of Ministers, evidence sessions would give members of the Committee and Members who are following the legislation time and help in getting to grips with the content of the Bill. It serves our purpose, as well as the wider purpose of better legislation, to have those evidence sessions and not to put them to one side, as the Government are doing in this case.

[Helen Jones]

My right hon. Friend is right. We do have a lot of expertise across the House, but we need up-to-date and informed expertise, which is what evidence sessions give us.

[Graham Stringer]

On a point of order, Mr Hoyle. I was interested in what my hon. Friend the Member for Rhondda (Chris Bryant) said. Will you advise the Committee on how it could hear from witnesses in its sittings on the Floor of the House?

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

There is no procedure to do that in Committee of the whole House. Mr Bryant was taking the hon. Lady away from the subject that is before us.

[Helen Jones]

If I may return to the subject of the amendment—

[Chris Bryant]

rose—

[Helen Jones]

I will just make a little progress.

Councils are expected to prepare for the changes that the Bill will bring in without knowing exactly what they are preparing for. This is an enabling Bill and we have not seen any draft regulations to go with it. In the Government proposals, there is no guarantee that councils will not be worse off after the first year of the scheme. Councils do not yet know what percentage of business rates they will be allowed to keep. They do not know how the levy will be set, nor who will qualify for a safety net payment and in what circumstances. They do not know what their business rate baseline will be.

[Bill Esterson (Sefton Central) (Lab)]

My hon. Friend is making an incredibly important point, which cuts to the heart of the matter. The Government say that they are in favour of localism, yet they have created a Bill in which the Secretary of State retains many powers. As my hon. Friend says, those powers are not defined, so it is not clear whether local government will keep business rates and how much it will keep, or whether and when the Secretary of State will intervene.

[Helen Jones]

My hon. Friend makes a powerful point. As the Bill progresses, we will table amendments to attempt to clarify some of those matters. However, at the moment, local authorities are in the dark about what they will deal with next year, if the Bill is passed.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

As with so much legislation under this Government, whether in Committee or on the Floor of the House, we are being asked to consider the Bill blind. We are not given the background information that we need—for example, the national planning policy framework in the case of the Localism Bill. Does my hon. Friend agree that the Bill, like so much current legislation, is therefore likely to form part of the logjam in the other place at some point further down the line? The amendment makes enormous sense, because the last thing we want is legislation stuck in the other place, and, in this instance, for the timetable to be missed.

[Helen Jones]

My hon. Friend makes an important point about our not seeing the draft regulations. It is difficult to debate the Bill properly without them and it also makes matters difficult for local authorities. Moreover, the measure is a carry-over Bill. The Government have got themselves into such a mess with their legislation backing up in the Lords that they cannot, even with the extended Session, guarantee that the Bill will get through before the Queen’s Speech.

[Chris Bryant]

May I pull up my hon. Friend on one point? She referred to councils, but she means councils in England. Is there not a particular irony here, in that the Conservative party has spent the past few years campaigning for English votes for English folks in the House, yet by holding the Committee stage on the Floor of the House, Welsh Members of Parliament are almost required to take part in the process when otherwise they would not be allowed to do so?

[Helen Jones]

My hon. Friend makes an interesting point, although I have never known him to need any pushing to take part in any process in the House—thankfully, because he contributes so much.

The Bill is hugely complicated, local authorities do not know what faces them, and the measure will not get through until the next Session. On the Government’s timetable, the Bill must get Royal Assent by July. That means that regulations may not be put before the House until after the Bill has finished its passage. The House will rise earlier than usual this year because of the Olympics, which means that they may not be put before the House until the autumn. That causes real difficulty for local authorities, because it leaves so much uncertainty about what they will have to deal with.

[John McDonnell]

I feel a bit like Banquo’s ghost in this debate because I was chair of finance on the Greater London council, whose expenditure tipped Mrs Thatcher over the edge and into nationalising the business rates. There are real problems with the complexities of the Bill, as set out in the briefing from London Councils. It is difficult for individual Members of Parliament and individual local authorities to work out the implications for one’s area. Although we cannot receive witnesses on the Floor of the House, as the Deputy Speaker said, the Government have introduced a procedure whereby we can pause a Bill to enable us to undertake further consideration and consultation with the relevant interested parties. Perhaps the Government could consider that at some point during the day. We might want to pause the Bill and come back to it later, after more detailed discussions with interested parties.

[Helen Jones]

I am grateful to my hon. Friend for reminding us of two things: that a Conservative Government nationalised business rates and the idea of a pause. The Government are in such a mess with most of their legislation that the whole lot could probably do with a pause while they rethink.

Let me revert to the uncertainty for local authorities. They have made it clear that they are concerned about the short time they will have, following the passage of the Bill and the regulations that go with it, to make changes to their systems. London Councils said:

“All of these changes will require substantial changes to systems and processes at the local level, and we are extremely concerned that not enough time is being allowed for all of these policies to be properly thought through and implemented.”

I could not put it better myself.

Local authorities are being asked to cope with not only changes to non-domestic rates, but the localisation of council tax benefit at the same time. That will require new IT systems, which are unlikely to be ready, and more changes to local council revenues.

13:45

[Alison Seabeck]

There are only three, possibly four companies in the UK that are capable of producing the sort of software that local authorities might require. Clearly, they will have a capacity problem if they are faced with hundreds of local authorities wanting individual systems. That is concerning.

[Helen Jones]

My hon. Friend is right—there will be a capacity problem. Again, it would have been useful to hear witnesses from the relevant companies and consider the time scale they need.

Councils will also have to cope with changes to their revenue. It is likely that some people who receive a cut in their council tax benefit will not be able to pay, and collection rates will fall. That will affect some local authorities far more than others. The change also brings with it the possibility of more claims, because we are moving from perceiving something as a benefit to its appearing as a reduction in the council tax bill. All those with expertise in benefits say that it is likely that more pensioners will claim. That is a good thing, but local authorities need time to adjust their budgets because they face a 10% reduction in the amount of money available, coupled with protection for pensioners, and the possibility of more claims.

[Mr Raynsford]

My hon. Friend is making a powerful case. She is considering the changes to the benefits scheme and she highlights the fact that an increase in pensioners’ claims as a result of the changes would be a further problem for local authorities. Indeed, it will be a major problem for them, because they will not receive the funding to pay for it that they get under the current benefits scheme. They are being asked to budget in advance, with all the uncertainties, knowing that the downside risk remains with them if the financial position is not as good as they thought when they budgeted. There is no safety net in the benefits part of the system for authorities that find themselves in difficulty. That is a fundamental problem, which is arousing real concern in local government circles. It is extraordinary that the Government are not giving an opportunity for those serious problems to be understood.

[Helen Jones]

My right hon. Friend is, of course, right. Throughout the Bill, financial risks are transferred to local authorities. The Government set the system but transfer the financial risk elsewhere.

Let me return to the problems with IT systems. Earlier, my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) mentioned that only a few firms provide those systems. Interestingly, Capita has sent an e-mail to benefit and council tax managers to set out its concerns about the timing of the system. The manager who sent the e-mail writes:

“I think the most important point to make is that I remain concerned and disappointed that the timetable remains unchanged meaning that primary and secondary legislation will not be passed until the summer / autumn / winter 2012. Without the framework and detailed regulations underpinning both the local schemes and means for ensuring that pensioners now and in the future remain protected or treated equally, it is impossible to commence planning for software changes.”

That is the system with which the Government are expecting local authorities to cope.

There are other changes in the Bill—provisions on tax increment financing, on the rating of empty properties, and on exemptions from the scheme for renewable energy projects—for which local councils need time to plan, adjust their budgets and rethink the way they do things. Those measures require changes to how councils organise themselves and changes to IT systems. Many local authorities are making it clear that they believe the Bill does not give them sufficient time to prepare for those changes.

May I make a suggestion to the Minister—it is meant to be a helpful one? I try to be helpful occasionally even if the Whip is giggling away. Why not run the proposed system as a shadow system for one year to see how it works and iron out the glitches? Why not continue with the old system for a year but give local authorities an indication of what they would have received under the new system? That would allow any problems to be ironed out and the system to work properly.

Above all, the Opposition are saying that Ministers ought to take note of the people who must implement the changes on the ground—the people who collect the rates, who design the systems, who administer council tax benefit and deliver the services. If the Government rush the implementation of the Bill and it all goes wrong, chaos could result. They need to take the opportunity to test the system properly and to think things through. If they insist on introducing this hugely complex system, they need at least to give themselves time to run it properly and ensure that local councils can adapt their systems properly. That is why I have moved amendment 20 today. It might be helpful if I tell the Committee at this point that the Opposition intend to press the amendment to a Division.

[Mr Syms]

I, too, have been an Opposition politician. Opposition politicians often argue that Bills taken on the Floor of the House really ought to be taken in a Public Bill Committee; and when there is a Public Bill Committee, they argue as eloquently as possible that the Bill ought to be taken on the Floor of the House. When Opposition politicians are not sure what to do about a Bill, one thing they say is that it has not been considered for long enough. They then try, as amendment 20 does, to delay the commencement date, because that is a good substitute for hearing their views on such reforms. If they can press an amendment, such as amendment 20, to a Division after a debate, that is very good, because in that way they cannot discuss some of the important issues in, say, schedules 1, 2 and 3. Perhaps we will end today not quite knowing where the Opposition are on some of those issues.

The reality is that we probably have the most centralised system of local government in the western world. The Bill is a step in the right direction for devolving power. Perhaps it does not go far enough, but we will doubtless see as the Committee progresses over its three days what assurances we get from the Minister on the pace at which the Government are going.

I am confident that the Government’s instincts are right. My experience of local government officials is that they must always second-guess central Government. Some are pretty good at it. Rather than prevaricating, if we are to change the system, the sooner we do so, the better. I therefore support my hon. Friend the Minister.

[Mr Kevan Jones]

The reason the Bill is being taken on the Floor of the House is that there is no business—the business is in a logjam up in the other place.

It is important that the Bill gets detailed scrutiny. As my hon. Friend the Member for Warrington North (Helen Jones) said, in a Public Bill Committee, we would have been allowed not only to scrutinise the Bill, but to take evidence from councils, professionals and others with such expertise. We will not have that opportunity. As one who sat on one of the very first pre-legislative scrutiny Committees back in 2001—it was on the Civil Contingencies Act 2004—I was converted and became a great fan of such pre-legislative scrutiny. That Committee was given the chance to look at the proposals in detail, and as my hon. Friend said earlier, the Bill will bring about a radical change in local government finance in this country.

We had just over three hours last week on Second Reading.

[John Healey]

Two hours for Back Benchers.

[Mr Jones]

As my right hon. Friend says, we had two hours on Second Reading for Back Benchers. What we will see with this Bill is what we have seen with a number of Bills. They fly through the House at the speed of light only to land in the other place to be picked apart slowly but surely because of their terrible drafting and the draconian implications they will have for many of our constituents. I can foresee exactly what will happen with this Bill. When we look at the next few weeks of business programmed for the House, we can see that we could have unlimited time to debate the Bill, but time will be limited, and the Government will push the Bill through with undue haste because they are determined to do so.

As has already been said, the time scale set out in the Bill leaves councils with a huge dilemma, which is why I support amendments 20 and 21 to 25. I said this on Second Reading, but I will say it again: the Bill is highly political in the sense that the Government are shifting blame from themselves to local councils under the guise of localism. A good example of that in the Bill is the administration of council tax benefit. The measure contains a poison pill. Local councils must defend their decisions on implementing a 10% cut locally. Clearly, the Minister and the Secretary of State will turn round and say, “It’s not us, Guv; it’s local councils.” That has been the Government’s approach to responsibility throughout. It is nothing to do with localism; it is a highly political and cynical attempt to deflect the blame from where it should lie—it should lie with the Government, not local councils.

[John Healey]

My hon. Friend makes an important point that counters the assertion of the hon. Member for Poole (Mr Syms). He said that Opposition Members argue that the Government are going too far too fast with the Bill because we do not know what to say about it. Does my hon. Friend agree, to the contrary, that the local authorities that must implement the Bill are worried about the rapid time scale? Authorities in Yorkshire and the Humber have told us that they are concerned about

“the rapid timetable for these reforms, given the huge levels of complexity involved and the radical implications they will have on councils’ ability to fund services to local communities”.

That is why my hon. Friend the Member for Warrington North (Helen Jones) was so right to table the amendments.

[Mr Jones]

I agree totally with my right hon. Friend. The Bill also has the backdrop of councils having to introduce draconian cuts—County Durham must take £125 million out of its budget over the next four years.

That is alongside the uncertainty in the Bill. Neither hon. Members nor councils know about the regulations, and they will not know exactly how the rebate system will work. When they are budgeting for future years, it is important that councils know what they can do. The time scale in the Bill means that they are walking into the new arrangements blind. They do not know what they must deduct, because we do not have the regulations before us.

[George Hollingbery]

Having spent 11 years as a local councillor, I can reflect on the fact that in almost no year that I can remember did we have any certainty about our finances. It was all entirely settled by national Government through an incredibly complex system that nobody understood. I am stretched to understand why the hon. Gentleman thinks the new system will be any more confusing.

14:00

[Mr Jones]

I do not know when the hon. Gentleman left local government, but we introduced three-year budgeting, which helped local councils. I agree that under the old system, when I was a councillor in the days when the Tories were last in government, the biggest problem for councils was having to guess what their annual budget would be. I am not sure whether three-year budgets were introduced by my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), who is in his place, but they gave councils some certainty. The Bill will add more uncertainty. Councils will be asked to second-guess what the system will be, and we will have no opportunity to scrutinise it before it becomes law.

[Andrew Gwynne (Denton and Reddish) (Lab)]

It is precisely that uncertainty that is unsettling a number of local authorities, including Tameside metropolitan borough council in my constituency. Had we had the opportunity to scrutinise properly the impact of the Government’s changes on various local authorities as part of the process of deliberating on the Bill, we would have been able to assess the winners and losers across the country. Despite the picture that Ministers paint that everybody is a winner and nobody is a loser, the reality is quite the contrary. Over the coming years, as the new mechanism operates, the gap between authorities that win and those that lose will widen. I believe that areas such as mine, and no doubt my hon. Friend’s, will be the losers.

[Mr Jones]

I agree, and that uncertainty will be a problem not just because councils will not know what the rebate is going to be. It is quite clear that Durham is not going to gain from the new system, and it was interesting to hear the Secretary of State and the Minister say last week that the area would be a net gainer. However, the Secretary of State failed to tell the House—he is very good at that—that he was referring to the last five years’ figures, for some of which time the economy of County Durham was growing. Now, under the coalition Government, it is—

[Gavin Barwell (Croydon Central) (Con)]

It is a relative change.

[Mr Jones]

It is not at all. If the hon. Gentleman comes to my constituency and says that to the 21% of young people who are unemployed, I am sure they will find it very amusing. It is quite clear that given the economies of regions such as the north-east, if local authorities do not know what their compensation will be, they will not be able to make plans.

It is interesting that Government Members seem quite quiet this afternoon, including the Liberal Democrats, who claim to be the party of local government.

[Mark Tami (Alyn and Deeside) (Lab)]

Not for very long.

[Mr Jones]

No, and that is possibly because they will have to explain to northern councils why they are supporting measures that will have a terrible effect on their budgets. They sidestep that issue and say that it is all because the matter is covered by the coalition agreement, and then we have the usual deathly silence from them. We need to remind all our constituents on every possible occasion that such draconian cuts could not be got through the House without the support of the Liberal Democrats.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Would the hon. Gentleman like to tell the House whether he agrees with the principle of local authorities retaining more of their business rates? That is what we are meant to be discussing, and I would very much like to hear his view.

[Mr Jones]

I think the hon. Lady represents Dorset, and there is a big difference between Dorset and parts of County Durham. Even though there are some very beautiful parts of County Durham, I am sure that Dorset’s economic activity shows it to be far more affluent than parts of County Durham. I support local decisions being taken at a local level, but I do not support a system in which her constituents in wealthier areas will gain at the expense of constituencies such as mine that need support for economic development.

What we heard last week on Second Reading from Government Members was absolutely disgraceful. Conservative Member after Conservative Member referred to local councillors not being interested in economic development. I have to say that I have never yet met one who does not want to increase the economic vibrancy of their area. They put a lot of effort into doing that, and such comments show again the prejudice of Government Members.

The changes to council tax benefit will be a nightmare for councils not just because of the localisation of the system but because of its top-slicing—

[Mr David Ward (Bradford East) (LD)]

Speak to the amendments, will you?

[Mr Jones]

I am sorry, but I think you are chairing the Committee, Mr Amess, not a Liberal Democrat Member who usually has very little to say, and frankly when he does it is not very interesting.

I am talking about the time scale of what is being introduced. We will have to work out the methodology of how the funds are to be distributed. We hear, for example, that pensioners are not going to be included, which will have an effect on some poorer councils, such as the eastern part of County Durham, with large ageing populations. The time scale for the system’s introduction is very limited, and there is uncertainty about exactly how it will happen. Instead, the Bill should have included the schedules, procedures, mechanisms for redistribution and so on.

[Christopher Pincher (Tamworth) (Con)]

The hon. Gentleman seems to be arguing that because there is uncertainty, the Bill should be delayed. May I remind him of the words of the chairman of the Local Government Association, which I am sure he has read? He stated:

“The current system of funding local government is incredibly complex and does not meet the needs of all the people we serve.”

He also said:

“Now more than ever, we need to put in place a funding system that will support local public services and generate economic growth.”

Is that not an argument for progressing more quickly rather than for delaying?

[Mr Jones]

The Conservative party needs to learn lessons, because every time it has dabbled in local government finance it has got its fingers burned. The hon. Gentleman talks about the current system being complicated, but the proposals in the Bill cannot exactly be said to be very simple, and it is clear that it will centralise power into the hands of the Secretary of State and take it away from local councils.

[Mr Raynsford]

We have heard a rather partial and not very accurate account of the LGA’s view. Perhaps the hon. Member for Tamworth (Christopher Pincher) has not read its briefing. I will not go into the details, because interventions must be brief, but it states that

“the LGA supports amendment 60 which would postpone the introduction of the scheme by 12 months.”

[Mr Jones]

Ten out of ten to my right hon. Friend for picking that up.

[Graham Stringer]

None out of ten to the hon. Member for Tamworth (Christopher Pincher).

[Mr Jones]

Or perhaps minus one for being selective in his quotation. It is not the first time that the Conservative party has been selective in using quotes.

[Christopher Pincher]

One fact that is absolutely undeniable is that Durham’s business rate growth has been greater than the national average, so the Bill will help the hon. Gentleman’s constituents, not hinder them.

[Mr Jones]

I am sorry, but when the hon. Gentleman gets his briefing notes from Conservative central office or wherever, he should perhaps examine how the figures are presented. The Secretary of State is very good at presenting figures. They are actually the figures for the past five years, when we had a growing employment base in County Durham.

[Mark Tami]

And a Labour Government.

[Mr Jones]

Indeed. Now, we see that the latest unemployment figure is nearly 7.8% for my constituency and nearly 12% for the north-east in general, and businesses are closing. Is the hon. Member for Tamworth (Christopher Pincher) saying that those businesses are somehow going to grow over the next few years as a result of this measure? In fact, councils will lack certainty about how much they will get. The local authority is one of the biggest employers in County Durham, but there has been a reduction in the numbers of people. I think the policy is that by cutting back in local government and public services, all these new jobs will rush forward from the private sector, but today’s figures show that 67,000 people have left the public service in the last quarter, while only 5,000 jobs have been created in the private sector.

As I said on Second Reading about my constituents in the north-east, the Bill will actually help the affluent south. Clearly, it is a damn sight easier to attract business to the likes of Westminster and other economic hotspots in the south-east of England than to parts of County Durham. That is no criticism of the work that local councils do to attract jobs—for instance, with the council’s full support, the area has succeeded in attracting Hitachi trains to Newton Aycliffe in County Durham. I know of the tremendous work that my hon. Friend the Member for Sedgefield (Phil Wilson) did on that campaign.

The Bill is being rushed through with undue haste. We are expecting councils and local people to walk blindly into the future. The parties in government sometimes try to portray this as a simplified system, but it is not; it will be a centralised and bureaucratic system. We cannot allow a situation to develop in which local people or local government do not know how much money they will get or how the system will work in practice.

[Andrew Gwynne]

Is not one merit of pausing, delaying and taking stock of the changes that it would allow us to get the baseline starting point absolutely right for each local authority, which is crucial, and is it not the case that using the 2012-13 formula grant model, including the damping, to determine the baseline will, for local authorities such as mine in Tameside, lock in the funding losses arising from the damping exercise and the disproportionate reduction in funding from the 2011-12 and 2012-13 settlements?

[Mr Jones]

Yes. That would have come out had we had proper pre-legislative scrutiny in Committee. It is the same for County Durham. Under the funding settlement introduced last year by the Conservatives and Liberal Democrats, County Durham lost about £10 million. That will be in the system for ever more now because of the measures in the Bill. Surprisingly, Wokingham council, Surrey council and many others gained from the system. That injustice will be written into the Bill for ever.

[Mr Mike Hancock (Portsmouth South) (LD)]

I declare an interest as a member of Portsmouth city council and the executive member for economic development. The hon. Gentleman states that the Bill will greatly damage local authorities. Will he reflect on why, over 13 years, the previous Labour Government, who received similar complaints from local authorities, did little or nothing to assist them by putting local finance on a proper footing?

[Mr Jones]

That is not true. We did. We had a three-year settlement and an increase in the settlement. Through the regional development agency in the north-east, we were putting money into areas such as Country Durham so that they could work with local councils to attract new businesses. I know that the hon. Gentleman does not necessarily agree with everything that the coalition does, but unfortunately, in places such as the north-east, it is taking away the main driver, the RDAs, that local councils could work with to attract more businesses to the north-east.

[Mr Hancock]

My recollection of those years was that money was taken away from the city of Portsmouth, where there was high unemployment and great deprivation, and that the benefits went to places such as County Durham. We felt for a long time that the formula was very unfair and we campaigned to get it changed, but the Labour Government turned a deaf ear to the pleas from authorities such as Portsmouth which were trying to make a rational case for equalisation and a much fairer distribution.

14:15

[Mr Jones]

But Portsmouth council received a year-on-year increase in its grant. It is interesting to hear a Liberal Democrat argue that deprivation should not be important to how local government money is spent. I would not be surprised to hear that from the Secretary of State because, frankly, I do not think that he cares—for instance, his support for his own Conservative areas at the expense of areas such as the north-east is highly political.

[Mark Tami]

Does my hon. Friend recall the piles of Liberal Democrat leaflets over many years calling for more and more expenditure? Now that they are in government they are taking a slightly different approach.

[Mr Jones]

Exactly. Not for the first time, some of those chickens are coming home to roost. Hopefully, we will have fewer Liberal Democrat “Focus” leaflets claiming credit for everything that goes right and criticising everything else that the previous Government did. Some of those northern councils had Liberal Democrats, but thankfully, in places such as Newcastle and Sheffield, the electorate have seen through them.

In conclusion, the timetable for the Bill needs to be rethought. As suggested by my hon. Friend the Member for Rhondda (Chris Bryant), if we can take witnesses at this stage, we should consider doing so, because otherwise the same will happen as has happened with a lot of Bills this Session: the Bill will be rushed through here only to be held up in the other place, where the ladies and gentlemen will give it the proper scrutiny that it deserves.

[Mr Ward]

I want to make just a few comments. I also consider it regrettable that the Committee stage is being taken here and not in one of the Committee Rooms. The quality of debate might have been better in that environment.

I am sympathetic to the amendments on deferment. I want to discuss that point in particular. After many, many years of seeking the change for which most in the House have called, we have before us a radical and important shift in the relationship between local government and central Government, but we face a potentially enormous change of not just a financial nature but a constitutional nature. One of the concerns that I guess we all share is about the unknown consequences of the redistributional impact.

Yes, there are tariffs and top-ups, and we welcome the application of the retail prices index to the baselines for business rates and local authority funding—that is welcome—but actually local government finance is not too complex. Yes, the formula and weightings are complex. We all know about the complexities of what goes into the computer and the figures that come out, but its purpose at the moment is actually pretty simple: to redistribute funds to authorities on the basis of need. That is pretty simple. But we are moving from that system to a new system.

We all welcome, I think, the principle behind localisation. The trouble is that, with many of the things we are facing, the easier it is to accept something in principle, the more difficult it is to challenge the consequences. Because we are talking about such a strong principle, which many of us hold, we are willing to accept some of the consequences, or potential consequences, when we are not fully aware of what they will be. There may or may not be a change if we move from a system based on the allocation of funds by need to one based on allocation by growth in business rates. However one thing we do know is that if things go wrong, it must, by definition, be one that, with the total pot—

[Graham Stringer]

Will the hon. Gentleman give way?

[Mr Ward]

Let me just finish; I shall not be much longer.

I understand all the measures that are built in, but if the total pot is the same and there is a redistribution, it must be to the disadvantage of the beneficiary authorities that receive most of the formula grant. That is a concern, and although it might not affect those authorities for the first few years, because of the baseline protection, the unknown consequences—

[Andrew Gwynne]

Will the hon. Gentleman give way on that point?

[Mr Ward]

Let me just get through this.

The Bill is not too complex. One of the arguments against having witnesses—it would have been useful to do that—is that we will get the opinions of only those witnesses. The truth is that nobody knows what the outcome of this will be, because it is dependent on the growth in business rates, while the strategy of rebalancing the economy will have implications for different parts of the national economy.

[John Healey]

On a point of order, Mr Amess. Any written evidence submitted to a Public Bill Committee, and not just the oral evidence taken in its opening sittings, will be circulated to all members of that Committee. May we have your guidance, and then the reassurance of the Minister or the House as appropriate, that any written evidence submitted to this Committee of the whole House will be circulated to all Members, who may all have an interest in participating?

[The Temporary Chair (Mr David Amess)]

The Standing Order on written evidence does not apply to Committees of the whole House, so I am afraid that I shall have to disappoint the right hon. Gentleman.

[Mr Mike Hancock]

Further to that point of order, Mr Amess. Is it not possible for the House itself to decide that it would be appropriate for evidence supplied to this Committee to be circulated to all Members?

[The Temporary Chair]

I hear what the hon. Gentleman has said, and I think that this is something that could be considered on another day. Perhaps it is something that we could put to the Procedure Committee.

[John Healey]

Further to that point of order, Mr Amess. As the Chairman of this Committee, you will have noticed that the programme order suggests that there will be at least two more part-days for our proceedings. Will you do your best to ensure that the suggestion made by the hon. Member for Portsmouth South (Mr Hancock) is put to the right authorities, so that, if agreed, a decision can be put in place for the final two of these three days in Committee of the whole House?

[The Temporary Chair]

I will reflect on the point that the right hon. Gentleman has made, and obviously those on the Treasury Bench have heard it. What is proposed might not be possible because of time constraints, but I will certainly reflect on it.

[Mr Ward]

Just to conclude—

[Mr Kevan Jones]

Good.

[Mr Ward]

You and I are going to have to have words later.

[The Temporary Chair]

Order. I would remind all hon. Members that this is the mother of all Parliaments, and we conduct ourselves in a civilised way. I am aware that something has been happening that is outside what is normal debate, but I would ask hon. Members please to calm down.

[Mr Ward]

The issue that I want the Minister to consider is not so much to do with the resets—whether they should be every 10 years or every three years—because the reset implies that something needs changing, and the truth is that we do not know whether anything will. What is much more important, as we venture into the unknown, is how quickly everything is reviewed. That might be after one year, or two years, and not necessarily the three years proposed by the amendment. We need to have clear evidence as soon as possible about the impact and the consequences of what is proposed in the Bill.

[Heidi Alexander (Lewisham East) (Lab)]

I am grateful for the opportunity to speak in this debate, Mr Amess. I just want to pick up on the point made by the hon. Member for Bradford East (Mr Ward) about the principle of this Bill. I think that he said that most people in the Committee agree with it. I agree with the principle that local authorities should do all they can to promote economic prosperity and growth in their areas. I am not sure that I necessarily agree with the principle of retention and localisation of business rates, although I will not repeat my concerns about that point, which I expressed on Second Reading last week.

I support the amendment tabled by my right hon. and hon. Friends on the Front Bench, because it is overly optimistic, shall we say, of the Government to think that they will be able to get this legislation through and that councils will be able to put the requisite systems in place to introduce the new system of finance in 2013. If we are to have this new system, the commencement date should be moved back, to 2014.

Last week on Second Reading we heard a lot about how the issue of local government finance had been much debated and how the previous Government commissioned the Lyons review. We had an historical “tour de force”, going through the history of local government finance, even referring to the work of Layfield in the 1970s. Government Members seemed to suggest that there was a case for just getting on and doing something to localise business rate retention, but doing something for the sake of it is not the same as doing something because it is the right thing to do and because it will work. The complexity of the new scheme that is being proposed will not make the system of local government finance any more transparent to local councils and councillors, or even the general public, because what we have before us is a system with a whole range of baselines, tariffs, top-ups, levies, set-asides and safety net payments.

[Andrew Gwynne]

My hon. Friend mentioned the issue of setting the baseline. It is absolutely crucial that we get that right, so that local authorities are not put at an immediate disadvantage. She talked about the tariffs and top-up system. However, the introduction of the new system is also predicated on every local authority in the country having the same council tax base and the same ability to raise income from council tax if it faces a reduction in its business rates. Local authorities such as Tameside—where more than 90% of the properties are in band A or B—do not have the same ability to raise extra income from council tax, should they lose out on the business rate formula.

[Heidi Alexander]

My hon. Friend makes a very fair point, and if I am correct, those on our Front Bench have tabled amendments for debate later that deal with exactly that point.

We need to take longer to scrutinise the Bill and for the proposals within it to come into force, because I would contest that this Government do not know whether they are coming or going in relation to local government finance and the retention of business rates, or how this proposal will stimulate growth in local economies.

[Mr Kevan Jones]

What is clear from the Bill is that the Secretary of State will not only retain but increase his powers to interfere in local government finance. The question of how a future Secretary of State should use those powers will be of great concern to many councils.

14:30

[Heidi Alexander]

I think it will be, and that very point was made last week. The Government claim to be localising but they are, in effect, centralising.

I thought one of the most telling points on Second Reading last week related to where the Government are coming from with this Bill and what they understand local authorities to be doing to promote economic development. The most telling point was when the shadow Secretary of State stood up to expose this Government’s inconsistencies on what local authorities are doing currently. He pointed out that one document published by the Government said:

“We know that local authorities are keen to grow their local economies”,

while another said:

“local authorities are generally reluctant to...promote economic growth”—[Official Report, 10 January 2012; Vol. 538, c. 91.]

The Government are speaking with a forked tongue on this issue, and if the rationale is not clear, why are we going through this process of rushing to get this measure on the statute book and forcing local authorities to implement a scheme that might not have the impact on local economic growth that the Government want?

I think the Government are unclear about what local authorities are doing now to promote economic development, and I think they are unclear about the impact of their own cuts on economic development services in councils, which, as we all know, are a non-statutory service. I know that difficult decisions are having to be taken. My local authority lost a town centre management team, which was a liaison point between the business community and the council. That happened precisely because the Government imposed unfair cuts on local authorities in Lewisham to the tune of £80 million over the next three years out of a £270 million revenue budget.

When the Secretary of State came before the Select Committee in September last year, I questioned him closely about what he anticipated local authorities would do differently from what they are doing now to encourage economic growth and development in their areas as a result of this proposal. I argued that these measures were being rushed through, that we need more time and that the Government need to be clearer about what they are doing. Let me share with the Committee what the Secretary of State said to me when I questioned him in the Select Committee. I had to question him three times. I was asking a specific question about what local authorities would do differently. The Secretary of State said:

“I think they would see the reward.”

I said:

“No. What would they do?”

He then said:

“Please do not badger me like this; I am a sensitive man.”

[Interruption.] Well, the Minister says that it was a joke, but I can tell him that the Secretary of State’s following paragraph most certainly was a joke. To be honest, it was a complete load of nonsense. The Secretary of State could not answer my question, and he started to talk about sea shanties. I think this cuts to the heart—[Interruption.] I know, it was mad; I could not fathom it at all, to be honest.

My point is that Ministers are not clear about what they expect local authorities to change as a result of the new system of local government financing. They may have started with the best will in the world, but we have a hugely convoluted and complex system that, as I said earlier, contains a whole series of assumptions about baselines, about which authorities are tariff authorities and which are top-ups, about how much the set aside is going to be and for how long it will apply, about how much the levies will be, about who decides on what counts as disproportionate gain, and so forth. The position we are left in is vague, opaque and no clearer than under our current system.

[John Healey]

My hon. Friend is making a powerful case about the volatility, the unpredictability and the rogue factors that can throw out revenue from a business rate base. Is not the real argument for delaying the commencement of these provisions connected to that, combined with the fact that 2013-14, when this system is supposed to come into place, is also year three of local councils having to deal with the spending review settlement introduced by this Government? The finances are very tight, so predictability and certainty will be key to councils planning their way through that. Those are the really powerful arguments that my hon. Friend is making to justify putting back the commencement, as recommended by our Front-Bench team.

[Heidi Alexander]

My right hon. Friend expresses the case incredibly well; I agree with everything he said.

Have we not seen examples in this Parliament of the Government taking a pause—taking a break—and saying, “This is quite a complex piece of legislation”? I am referring to the Health and Social Care Bill. While this Bill might not be as sexy—I do not really think that the proposed changes to the NHS are in any way sexy; indeed, I think they are destructive and very controversial—these proposals are very controversial as well. I suggest that the Government pause and listen to what local authorities are saying.

[John Healey]

My hon. Friend amplifies her case. On Second Reading, she told the House something from which this Committee would benefit. I believe she pointed out that the ninth largest business in her borough was the local police station, while the biggest business rate payer was a business with a small office above a bowling alley, which happened to be the national headquarters of a national firm. That illustrated perfectly how contingent a local council’s business rate take is on accidents and other contingencies of business location and so forth. It showed how unpredictable and volatile the business rate stream can be.

[Heidi Alexander]

I was not going to repeat my comments on Second Reading, but my right hon. Friend tempts me into reiterating some of my remarks about the differing ability of different councils to promote and develop their local economies. Sometimes the business rate take will be dependent on a whole range of different things, not just on what a local authority is or is not doing. I suggest that Ministers go back to their geography lessons and learn what we all learned at school about why businesses locate in different parts of the country and how success can breed success so that areas with a large business rate are likely to grow much faster than those with a smaller rate. I know that the Government propose to check disproportionate growth and the effect of having a larger business base to start with, but it is undoubtedly the case that different parts of the country have different abilities to attract and grow businesses.

The Government’s policies are making those differences even more explicit. Last year saw the National Insurance Contributions Bill, which gives a national insurance holiday to small businesses that are starting up outside London and the south-east, so it is not really a level playing field for local authorities. A small business setting up in, say, Middlesbrough or Birmingham might be able to get a tax break, while a similar business setting up in Lewisham might be operating in exactly the same type of area, employing exactly the same number of people with the same turnover and the same profit margins, yet not get such a break. Is that company as likely to locate in an area where there is a tax break as in one where there is not, like London?

[Alison Seabeck]

My hon. Friend makes her point well. The Government’s left hand does not know what their right hand is doing. Let us consider transport policy and the potential impact of transport infrastructure investment in benefiting one area over another. No high-speed rail link is proposed for Plymouth, for example. Even though Plymouth is struggling and needs good transport interconnections, the money is not going there. Such issues are hugely important in businesses’ decisions about where to locate or expand.

[Heidi Alexander]

I completely agree with my hon. Friend. I tried on Second Reading to make some of those points. Local economies grow because of a range of factors, including transport and the availability and type of land—it is not all about what a local authority is doing. One can argue that a local authority should foster economic growth through its planning policies and decisions, but the vast majority of councils across the country do that already. The partial retention of business rates will not stimulate local authorities to think, “Hang on, we need to look at our planning policies to decide what more we can do to foster economic growth.”

[George Hollingbery]

As I mentioned on Second Reading, I had exactly that reaction from Havant borough council, which is by no means a wealthy council. When I explained the changes, it was enthusiastic and said explicitly, “We will now have to re-examine how we plan. We will have to think about what we will do to stimulate business.” It was excited and believed that the proposal would make a difference to its policies towards businesses in the local area.

[Heidi Alexander]

I have not had the same reaction from my local authority, although the hon. Gentleman and I represent very different parts of the country. If the Government’s proposal prompts local authorities to think more positively about what they can do, that is all well and good, but it is not the whole answer. I would also urge caution, as developments need to be appropriate. The benefits of increased business rates as a result of new commercial development, arguably in unsuitable locations, might drive more local authorities to grant planning permission for unsuitable developments. We need the right development in the right place, with local government financed in a way that allows it to provide the services needed by the local population.

[Andrew Gwynne]

My hon. Friend is getting to the heart of why a pause is needed for deliberation on the possible impacts across the country of such far-reaching changes: some local authorities might have an over-reliance on one sector in developing economic regeneration plans. In my local authority, Tameside, the largest business rate take is from IKEA, the second largest is from Morrisons, and the third largest is from the Crown Point North retail development in Denton. The three main beneficiaries of the proposal would therefore be retail developments. There is no capacity for more retail on such a scale in Tameside without destroying the market across Greater Manchester, of which Tameside is an integral part.

[Heidi Alexander]

My hon. Friend is right to ask whether the proposal will result in the development and business growth that the country needs. There are only so many supermarkets and out-of-town retail centres that the country needs. It was suggested on Second Reading that the kind of economic growth that we would ideally like has a lower business rate take. In my constituency, I am struck by the small companies that start up in people’s homes—Lewisham does not have large tracts of land where businesses are located. The Government need to think hard about the development that the proposal would stimulate. I support the amendment.

14:44

[Mr Mike Hancock]

Like many Members, I was disappointed by how the proposal has been handled. One reason why I voted against the Bill on Second Reading was that I felt it unfair that something as important and precious as local government should be treated in such a cavalier way. Rather than being dealt with on the Floor of the House, a Bill of such size warrants close scrutiny in Committee, including oral evidence sessions. I am delighted, Mr Amess, that you are prepared to take to the usual channels the important proposal that the evidence that has been submitted should be offered to all Members of the House.

During my 40 years’ experience of local authorities, every Government have used local government as an excuse. Time after time, they have talked about devolving power, but they have devolved nothing more than blame, and responsibility without resources. That has plagued local government for four decades. I regret that once again a matter as important as the future of local government finance is being bulldozed through the House in this way. It is unfair, and it will lead to great problems.

Ministers cannot begin to understand how difficult times are for local administrations that have to put together a budget for not one but three years. As we have heard, implementation will come when the third year of the round of cuts will bite deepest in many local authorities. Do Ministers truly believe that a local authority such as mine, Portsmouth, which daily challenges the market to bring inward investment to the city, is not doing all it can to make it clear that we are open for business and actively to support economic development projects? We would welcome anyone to come and see what the city has to offer. It is an insult to local government to suggest that such activity is not happening, and I resent being party to a coalition that is giving that impression. I am surprised, to say the least, at the comments from the Local Government Association, and disappointed that it is not being more forceful in defending the rights of local authorities and challenging this type of legislation.

I hope that there is still time for Ministers to think again. I chaired Committee proceedings on the Health and Social Care Bill, and was delighted at the end of those Committee proceedings, which were the longest since 1997, that the Government gave a commitment to the House and the Committee that they would take time to think again. The implications of much of this Bill leave too many unanswered questions. There is no detail about how the safety net will be implemented and how such judgments will be made. We are told that local authorities will be able to apply to be beneficiaries of the safety net procedures, but not when they have to make that application, how long a decision will take, or exactly when or how the money will materialise. Such questions would have been dealt with in Committee in greater detail. Ministers would have been able to give members of the Committee detailed responses to questions. However, three days’ consideration on the Floor of the House does not give experts in the Department enough time to brief Ministers properly to answer legitimate points raised by hon. Members. That cannot be the right way to deal with as important a matter as local government finance.

On Second Reading, the right hon. Member for Leeds Central (Hilary Benn) spoke about the Layfield report. I remember hearing Frank Layfield express his views on local government finance. At the time of his report, we all thought that it would be the turning point, that there would be proper transparency about local government financing, and that all local authorities, irrespective of where they were in the country, would be able to say, “We get a fair deal from Government.” It was said that everyone would know the formula for the funding of local government, but here we are, nearly 40 years on, and it is still hidden in mystique. The Bill perpetuates that situation although the formula should not be anything other than transparent, and council and business rate payers demand that transparency. I am at a loss to understand why the Government, whom I support, are not prepared to give local government the trust that it deserves, and reveal how they are calculating the formula.

I do not want to see the disparity that was referred to by the hon. Member for North Durham (Mr Jones) between his city and the city of Portsmouth, because I believe that the problems of poor people in my city and those who are striving to keep their businesses alive are the same as those faced by his constituents. We need an equal share of the resources that are available to local government, but they must be decided on the basis of a formula that is readily available for examination. Such a formula does not exist at present, and unfortunately the Bill does not make me feel at all enthusiastic about the possibility that it will exist in the future. For that reason, I have grave reservations about my ability to support it at any stage.

[Mr Raynsford]

Let me first draw attention to my interests as declared in the Register of Members’ Financial Interests, and specifically to my role as a columnist for the Municipal Journal—the MJ.

I hope and believe that when the Minister sums up, he will have to reflect on the fact that every Member who has spoken—with the sole exception of the hon. Member for Poole (Mr Syms), to whose contribution I shall return in a moment—has expressed real reservations about the timetable that is being adopted, in the context of both parliamentary consideration of the Bill and implementation of the measures contained in it. That is fairly remarkable, given that it was supposed to be a flagship Bill granting local government more freedom, and a measure that local government should welcome. Indeed, the hon. Member for Poole, whom I have known for many years and for whom I have a great deal of respect, made that the key point of his argument. He seemed to be saying, “This is a step in the right direction: let us get on with it, because it gives more discretion to local government.” The hon. Gentleman must wonder—as, indeed, I hope Ministers will wonder—why, if the Bill is of such benefit to local government, local government is so apprehensive about it. He must wonder why Members on his own side of the House, albeit on the Liberal Democrat Benches, have been so critical of the timetable. Let us think about that.

It is not just the organisation representing London councils, which happens to be Labour controlled at present, that has been highly critical of the timetable and has urged delay. I must remind the hon. Member for Tamworth (Christopher Pincher), who suggested that the Local Government Association was wholly in favour of rapid action, that in its evidence it specifically supported an amendment that would delay implementation of the benefit changes until 2014. Even the LGA, a Conservative-controlled body, has expressed strong reservations about the timetable, while local government experts from whom we would normally expect to hear in evidence sessions are amazingly critical.

A week ago there was a very good article in Public Finance by Sarah Philips, who was an adviser to the Lyons inquiry and knows the issues thoroughly and deeply. She made some telling comments, such as these:

“The government’s repeated use of the term ‘local’ in relation to the planned changes hasn’t been enough to persuade councils that these will be an improvement. Current local government funding is incomprehensible, but these proposals taken together are even more complex and opaque. They have been criticised by councils, commentators and the communities and local government select committee—on most of the criteria the government set for itself and others… ‘Rich’ councils were looking forward to keeping most of their business rates and being free of central control. ‘Poorer’ councils were hoping for some continuation of equalisation, to recognise the huge range of needs and council tax revenues and their limited scope to increase business rates.”

Many of my hon. Friends have made the same points during the debate. Sarah Philips continues:

“The proposed tariff and top-ups and central levy limit incentives for growth, yet do not give much hope that services in ‘poorer’ areas can continue undiminished—or that it will be possible to prevent a two-tier system.

The proposals acknowledge only implicitly the risks of localised funding. In Europe and Australia, many smaller authorities and those in poorer areas have struggled to provide quality services and many have gone bankrupt or merged. The plans threaten the technical and financial viability of small district councils. Losing Housing Benefit will remove an economy of scale with processing the council tax support—limiting the ability to maintain a corporate centre.”

Those are just some of the comments that have been made by a real expert on local government finance—an officer who is clearly extremely anxious about the implications of the Bill. I hope that Government Members who have suggested that we should get on with it will pause to think about the serious risks attached to such action.

The hon. Member for Meon Valley (George Hollingbery) said in an intervention that local authorities had had to cope with annual changes in settlements in the past. As was pointed out by my hon. Friend the Member for North Durham (Mr Jones), our Government changed that and adopted a three-year cycle, but in any event there is a fundamental difference between an annual change in the settlement—which affects the actual amount of grant that an authority will receive for that year—and a complete change in the administrative system. The separation between council tax benefit and universal credit will require the establishment of a whole new administration and an entirely different system for the making and processing of applications, along with different computer programmes to determine eligibility and provide for the granting of discounts.

[Mr Kevan Jones]

Another element contributing to the uncertainty that will characterise the proposed new system is the possibility of fluctuations in business rates throughout the year. The Secretary of State implied that councils would somehow be compensated if a large employer disappeared—Alcan in Northumberland, for instance, is unfortunately being closed—but the Bill contains no details about that compensation.

[Mr Raynsford]

There are certainly no details about how the compensation arrangements and the safety net procedure will work. Nor is there any indication that central Government are prepared to accept that they are putting local authorities in an impossible position by proposing that they should take all the downside risk of a serious increase in demand for council tax benefit in any one year which they cannot themselves have anticipated.

What will happen to a local authority if a local business closes? What will happen if there is a serious rise in unemployment in the district, and as a consequence a large number of additional claims for council tax benefit are received? The authority will have no safety net. All that the Government propose is the possibility of some sharing or pooling arrangement with neighbourhood authorities to offset the risk. That is not compensating local government; it is local government having to help itself out in order to cope with the risk that is being transferred to it by central Government.

[Alison Seabeck]

I must first draw Members’ attention to my indirect interest in the interest declared by my right hon. Friend. I should have done that earlier, but I did not get around to it.

Might not a pooling arrangement lead to different problems popping up in different authorities at different times during the year? Exactly when and how will the safety net begin to operate in all those individual instances, and will authorities really want to share such a degree of risk?

[Mr Raynsford]

There are two different elements. One is the safety net system, which the Government have outlined without giving us the details, and which is designed to cope with circumstances in which there is a serious reduction in non-domestic rate revenue because of changes beyond a local authority’s control. That safety net exists, at least in principle. There might also be changes in benefit demand. Indeed, both of those elements might arise, as there might be a reduction in business rates because of the closure of a business and an increase in benefit claims because the people employed by that business are now out of work and therefore require help with their council tax. There could therefore be a double whammy. There is no safety net from Government to help local authorities with the second element. Instead, there is only the suggestion that there might be some pooling of risk, which is an unacceptable response to a very serious problem.

15:00

[Mr Kevan Jones]

I agree with my right hon. Friend. There is also no detail as to how the pooling of risk will work, such as whether it will be a voluntary system or enforced by the Government. In my region of the north-east, Newcastle and Sunderland would probably pool together only if they were forced to do so by Government diktat.

[Mr Raynsford]

I am not going to go into the relations between different local authorities. My hon. Friend the Member for Lewisham East (Heidi Alexander) and I are constituency neighbours and I am sure our local authorities would want to co-operate in the most friendly way, although I am not sure whether that attitude would be replicated by all authorities in other parts of the country.

I was responding to the comments of the hon. Member for Meon Valley by observing that this change is much more complex than just an annual change in the settlement. Substantial administrative change is involved, too. Capita is a company that provides a lot of revenue services and undertakes benefit work for local authorities so it might be expected to see business opportunities in this change, but it is sounding the alarm about the risks involved in trying to programme this major change on an impossibly tight timetable.

A lot of detail is involved in the specification of the scheme, and the Government will impose the requirements that there are to be no losses for certain categories of participant, no inconsistencies in respect of the universal credit, and no disincentives to work. It is difficult to see how that can be achieved if there is to be a 10% cut in the overall council tax benefit. Pensioners are to be entirely protected and they represent more than a third of recipients, so it is hard to see how the other recipients, those of working age who are in employment or looking for work, will not be subject to cuts. How can a commercial company, such as a software firm, that is helping local authorities to prepare to administer these schemes possibly get arrangements properly in place under such circumstances? That is the real challenge to the Government.

As I said on Second Reading, the Government are risking a repeat of the fiasco that occurred when the housing benefit scheme was first introduced by a Conservative Government in 1982-83. That was rushed. The detailed specification and implementation arrangements were not available in time and there was chaos across the country. There were appalling examples of people being left without money for weeks and months, and people facing eviction from private homes because they were not getting the benefit they ought to have had. There was huge hardship, and there were also serious problems in authorities throughout the country.

I say in all sincerity to the Government that they are taking a very serious risk in pressing ahead with these changes to a very tight timetable without giving Members the opportunity to scrutinise and question the detailed arrangements, such as the specification of the scheme and the safety net. We are not being given the opportunity to test the provisions so as to find any weaknesses, yet local government will be expected to implement them to an impossibly tight timetable.

I say to the hon. Member for Poole that the Opposition are not using the timetable issue as an excuse. There is a genuine anxiety that is shared across local government. We must remember that the change will affect not only local authorities but their residents. Some 6 million people receive council tax benefit, which is one of the largest numbers of recipients of any category of benefit in the country. All these people are being put at risk by the Government’s unwise timetable.

I urge the Minister to give further thought to that point, and to heed the Select Committee’s sound advice to defer implementation for a year. I also know that Liberal Democrat Members have reservations, and I therefore urge them to do the right thing by joining us in opposing this rushed and unwise timetable.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

It is a pleasure to see you in the Chair, Mr Amess. You and I know something of local government from our experiences of it over the years. We therefore know that the issue of local government finance has been around the houses, as we say in our part of the world, for a very long time. At long last, something is being done about it.

I say to the hon. Member for Warrington North (Helen Jones) that I do not accept the premise that underpins her arguments. Throughout this debate the Opposition have raised specious arguments and engaged in manufactured indignation. The reality is that the Government are bringing forward a serious and important reform, which the Opposition are seeking to delay. That is not in the interests of local government, who suffer under the thoroughly unsatisfactory, opaque and unfair system Labour bequeathed, which denied local authorities the opportunity to have a portion of the business rates localised for their benefit. The Opposition want to delay the introduction of a valuable growth incentive for local government, which would also encourage national growth, so be in the interests of the national economy.

[Helen Jones]

Will the Minister give way?

[Robert Neill]

Let me make a little more progress first.

It is a little cheeky of Opposition Members to say that this change is being rushed forward. Much of the first part of the hon. Lady’s opening speech was taken up with a complaint that somehow less scrutiny of a Bill is possible if it is considered on the Floor of the House, when every Member can participate, than if it is sent upstairs into Committee. Is there a precedent for that, however? Yes, as a matter of fact there is, and it was under the previous Government. Their Digital Economy Act 2010 had 50 clauses, three of which were taken on the Floor of the House. That did not happen in the early part of the Session either; instead, that contentious Bill was considered in the wash-up. I will not take any lessons from the hon. Lady’s specious arguments, therefore.

[Helen Jones]

As the Minister argues that it is important to get these provisions through quickly to provide incentives for economic development, what does he think local authorities would be doing after they are introduced that they are not doing now?

[Robert Neill]

The hon. Lady fails to grasp the basic principle underlying the Bill. The problem at present is that local authorities have no incentive to encourage growth. Instead, they potentially have a burden. They have no ability to grow the tax base.

[Mr Kevan Jones]

rose—

[Robert Neill]

I will give way again shortly.

Unfortunately, throughout this debate Opposition Members have articulated their old mindset. It is a mindset that does down local government, and I find that surprising given the experience some Opposition Members have of that. They do not seem to recognise that most local authorities want to advance their local economies even though they currently get no revenue benefit from doing so. We will make a key difference by giving them a tool to get such benefits.

[Several hon. Members]

rose—

[Robert Neill]

I give way to my hon. Friend.

[Mr Syms]

Is not one of the major changes that there will be an incentive for ordinary rate payers and electors to support a particular scheme? There is currently no incentive for them to do so because there is no financial benefit for people who contribute to local government.

[Robert Neill]

My hon. Friend is entirely right. Unfortunately, under the previous Government there was a belief that we had to create an increasingly centralised and complex system to deliver results. The party that is criticising us now brought in capping and the comprehensive area assessment, which trammelled local authorities rather than freed them. I can understand, however, why this is a sensitive topic for Opposition Members. In their 1997 election manifesto they said they would localise the business rate, and they spent 13 years not doing so. Some of the principal architects of that commitment are sitting on the Opposition Benches in today’s debate, so I can understand that they might have a bit of a guilty conscience.

[Heidi Alexander]

rose—

[Robert Neill]

I shall give way to the hon. Lady, as she may not have been here during that time—although I do not entirely exempt her from what I said.

[Heidi Alexander]

I certainly was not here when the previous Administration were in government, but I would like to give the Minister another opportunity to answer the question put to him by my hon. Friend the Member for Warrington North (Helen Jones) from the Front Bench about what exactly a local authority would be doing differently under these proposals from what they are doing now. If this is about planning policy, what evidence does he have to suggest that granting permissions for extra commercial floor space results in an increased business growth take?

[Robert Neill]

The hon. Lady must simply not have been listening to my hon. Friend the Member for Poole (Mr Syms), who made the point perfectly that our proposal is a desirable and a good thing. I know it is difficult for her to get this point, but two things are involved. First, we are giving an incentive back to local authorities. Secondly, we are giving local authorities an additional tool in the box of their financial levers. I would have thought that she would have recognised that from her long experience in local government.

[Graham Jones (Hyndburn) (Lab)]

rose—

[Robert Neill]

I will give way once to the hon. Gentleman and then I shall make some progress.

[Graham Jones]

The Minister talks about business growth, but given the changes in the national planning policy framework does he agree that this measure may be an incentive to develop commercial premises on greenfield sites, more so than in the past, and that it might override planning priorities?

[Robert Neill]

Absolutely not, and to see that the hon. Gentleman has only to think about two things, the first of which is planning policy. Any planning application has to be in accord with the planning policies that are set out—both in the local plan and in our new national planning policy framework—which give protection against ideas such as he mentions. Secondly, we cannot create a market and demand where there is none, although perhaps he does not get that fact, and so neither of the things he mentions would occur. Our approach enables and incentivises local authorities to work much more closely with their business communities on an ongoing basis.

It is very surprising to hear such a degree of criticism from Labour Members, because they need only look at what is done in most of the United Kingdom’s competitor countries to see that, in general, a closer alignment of local funding mechanisms with local business growth advantages the local economy. That is a basic proposition and they just do not seem to want to take it on board.

[Bob Blackman (Harrow East) (Con)]

Unfortunately, this debate seems to have got muddled and become a discussion of two lots of dates. One relates to the retention of business rates, a move which I wholeheartedly support; I believe that we should get on with it as fast as we can. However, we also need to address the issue raised by the right hon. Member for Greenwich and Woolwich (Mr Raynsford) about the implementation of systems to provide council tax benefit. Hon. Members from all parts of the House, and those in local government, have genuine concerns about that implementation and about the ability of local authorities to develop the systems to provide the localisation of council tax benefit. Will the Minister give an answer on that issue?

[Robert Neill]

I shall deal with both those points and give a little detail as to why the suggestion that we are rushing is not well-founded. It is worth remembering that the Government consulted widely on this proposal, and let me deal first with the point about business rate retention.

Last year, we set out a detailed consultation document outlining our proposals, and the local government information unit has recognised that we have amended a number of our proposals on tariffs, set-asides and top-ups to reflect those matters. We issued eight highly detailed technical papers, to which we received some 461 substantial responses. The idea that there has not been very full engagement with the local government sector simply does not hold water. Indeed, there have been collaborations and discussions between officials of my Department and the local authority organisations throughout the process. To deal with the design of the systems and the regulations that go with them we have set up an official-level working group, which includes representatives of the Department, the Local Government Association, the Society of District Council Treasurers, the Society of County Treasurers and the other financial bodies—so the point is specifically being worked on. The timetable is challenging, but the ability to return a proportion of the business rates to local government is a really important tool, not only to give local authorities greater resilience in their funding streams, but for ensuring national growth.

[Graham Jones]

rose—

[Robert Neill]

I have given way to the hon. Gentleman once already.

It is also worth remembering, in the context of other points made, that we are sticking to the existing timetable that applies to the local government finance settlement process. I understand the frustrations of my hon. Friends the Members for Bradford East (Mr Ward) and for Portsmouth South (Mr Hancock) about the suffering that everyone in local government has undergone in the past few years, but I do not think that keeping the current flawed floor blocks and formula grant model for another year would benefit anyone. I can certainly assure them that we will work with the local government sector and the professional members and officers as we go forward.

Before the new scheme is introduced in April 2013, local authorities will be consulted on their baseline funding at the end of 2012, and after a debate in this House, where scrutiny will be provided, they will receive their final settlement early in 2013. So there is no change to the current timelines that local authorities have to work on. Of course there is plenty of precedent for developing regulations as the Bill is taken forward, and they, in turn, will be subject to scrutiny in this House. This is an enabling Bill, just as the Local Government Finance Bill was in 1988; we are following the precedent.

00:00

[Helen Jones]

This interesting debate has had some detailed contributions from my hon. and right hon. Friends, many of whom have extensive experience in local government. All we have really heard from Government Members is the hon. Member for Poole (Mr Syms) saying, “These are the normal Opposition tactics.” It is quite right for an Opposition to highlight flaws in a Bill, and this Bill is full of flaws. The Minister gets very excitable but he has not provided an answer on these flaws. He will not provide an answer as to why it is so important to get these provisions up and running in 2013 and what local authorities would do differently in terms of economic development then from what they do now.

[Robert Neill]

Why did the hon. Lady’s Government never follow through on their election pledge and localise the business rate, when they had 13 years to do so?

[Helen Jones]

Coming from a member of the party that nationalised the business rates in the first place, that question shows real cheek. It is no good the hon. Gentleman getting so aggravated now when his party nationalised the rates in the first place.

The Minister will not answer questions on other points, either. He will not answer the question about the lack of certainty for local authorities in the provisions. He knows that it might not be possible to bring them in on time, and so does the Secretary of State, as clause 1 retains the power to delay implementation. If the Government were confident about being able to bring the provisions in at the right time, they would not need that power.

My hon. Friends have made the case very clearly for how complex and opaque the proposed change is, for the risks it poses to the whole local government system and for the unforeseen consequences that might result. I have heard nothing from the Minister to change our minds, so we will therefore seek to press the amendment to a Division.

Question put, That the amendment be made.

15:18

Division 424

Ayes: 246

---

Labour: 234
Democratic Unionist Party: 6
Independent: 2
Social Democratic & Labour Party: 2
Liberal Democrat: 1
Alliance: 1
Green Party: 1

Noes: 316

---

Conservative: 267
Liberal Democrat: 45
Democratic Unionist Party: 2

Question proposed, That the clause stand part of the Bill.

[The Temporary Chair (Mr David Amess)]

Before the debate starts, I should tell the Committee that I was fairly lax about the range of the debate that we have just had, so if hon. Members wish to contribute to the clause stand part debate, I hope they will bear that in mind.

[Robert Neill]

I will endeavour to deal with the clause stand part debate as swiftly as I can. Clause 1 sets up the necessary part of the scheme. As is often the way with a finance Bill, it establishes the framework, which is then covered in the regulations. Schedule 1, which we shall come to shortly, sets out most of the detail. I suspect that the issues between us have largely been debated in relation to the amendment and the principle. I am happy to respond to any points that hon. Members may wish to raise.

[Helen Jones]

The Minister is right to say that the clause sets out the framework for the Bill, and that earlier we debated most of the issues between us. I welcome the fact that the regulations will be subject to the affirmative resolution procedure in the House. That is helpful, but we stick to our view that the Government are trying to introduce the provisions in the Bill too fast and that there is still a great deal of uncertainty for local councils. We will debate those issues on further amendments so I shall not detain the Committee now.

[Annette Brooke]

I want to place on record, in the debate on clause 1, how important it is to reform local government finance, to do it in a timely fashion and to do it in such a way that it both incentivises and equalises. Those principles are firmly embodied in the framework. We have heard it said that the retention of business rates will not incentivise. I wonder why the previous Government introduced LABGI—the local authority business growth incentives scheme—which rewarded local government for business expansion, but not very efficiently. It was not a built-in system, which has to be better. I therefore found some of the comments odd, in the light of that recent policy.

[Mr Dave Watts (St Helens North) (Lab)]

There is general consensus that the local government system of funding needs to be reviewed, but does the hon. Lady agree that people will be suspicious if that has not been done through independent analysis and by people who can be trusted to make the right decisions? That is what previous Governments have done and is exactly what this Government are not proposing to do. They intend to impose a system that has not been scrutinised.

[Annette Brooke]

I believe the Minister explained earlier how the detailed proposals would be scrutinised later in the process of setting the 2013 terms of the revision. What I want to see in the end is a more transparent scheme. That is extremely important, so that local councils are not continually trying to find little bits here, there and everywhere that they can come up and lobby about. We need clarity. I am pleased with the framework.

[Robert Neill]

I agree with my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke). It is important that we move forward. The hon. Member for Warrington North (Helen Jones) is right. The affirmative procedure will apply to the matters that come under the Bill. It is worth saying that the degree of transparency on the one hand and fairness on the other is governed by, for example, the changes to the central and local share split, which will come through shortly, and the operation of the tariffs and top-ups. Those will be included in the local government finance report, and that too will be subject to parliamentary scrutiny in the usual way each year, so it is a clear and transparent system.

[Mr Raynsford]

What circumstances led the Government to include subsection (7), which allows the Secretary of State to substitute a later financial year for the implementation date of the Bill, and in what circumstances might they make use of it?

[Robert Neill]

That sort of belt-and-braces procedure is not at all uncommon. It is our firm intention to press ahead with implementation from 2013 so that local authorities and the national economy can benefit from the Bill. As my hon. Friend the Member for Mid Dorset and North Poole said, the desirability to move to a more transparent system away from the existing model was recognised by the Lyons inquiry, which was set up by the previous Government. It recommended a move towards a localisation of the business rate, and we are taking an important step in that direction.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Schedule 1

Local retention of non-domestic rates

[John Healey]

I beg to move amendment 46, page 11, line 31, leave out ‘may not exceed’ and insert ‘should equal’.

[The Temporary Chair (John Robertson)]

With this it will be convenient to discuss the following: Government amendments 1 and 2.

Amendment 44, page 11, line 32, at end add—

‘(5) Such an amount should only be paid in place of other grants to local government if the Secretary of State is satisfied that the overall needs of local government will be met.’.

Amendment 45, page 11, line 32, at end add—

‘(5) The amount debited under subsection (3) must not be greater than any amount debited under subsection (3) for the previous financial year.’.

Amendment 19, page 12, line 20, at end insert—

(c) in determining the central share and the local share for any relevant authority, the Secretary of State must have regard to—

(i) the level of need in that authority,

(ii) the likely capacity of the authority to benefit from business rate growth, and

(iii) the council tax base of the authority.

Any assessment of the level of need in the authority shall include—

(iv) the ranking of the local authority in the Index of Multiple Deprivation,

(v) the level of unemployment within the authority’s area,

(vi) the proportion of adults with a limiting long-term illness within the authority’s area,

(vii) the number of adults in receipt of social care within the authority’s area,

(viii) the number of looked-after children within the authority, and

(ix) the level of child poverty within the authority’s area.’.

Amendment 37, page 12, line 20, at end insert—

(c) The Secretary of State must for each year, and for the subsequent two years in relation to each billing authority in England, determine an indicative share for the subsequent two years.’.

Amendment 38, page 12, line 20, at end insert—

(c) the percentages referred to in (a) and (b) above shall be determined following full consultation with local government.’.

Amendment 36, page 13, leave out lines 1 to 4.

Amendment 39, page 15, line 17, leave out from ‘must’ to end of line 19 and insert

‘prepare and publish an assessment of the level of need in each local authority, as defined in paragraph 4(c) above. The Secretary of State must—

(a) lay the report containing the assessment before the House at least 14 sitting days in advance of the publication of the Local Government Finance Report, and

(b) notify such representatives of local government as the Secretary of State thinks fit of the publication of the report on need and the detail of the basis of calculation in the Local Government Finance Report.’.

Amendment 26, page 17, line 37, at end insert—

‘(4A) The Secretary of State must also lay before the House of Commons his or her assessment of the impact which any such report will have on the level of service provision in any local authority to which it applies.

[John Healey]

It is a pleasure to serve on this Committee of the whole House under your chairmanship, Mr. Robertson, and that of your colleague, Mr. Amess.

Amendment 46 is a probing amendment in an important group of amendments that the Committee will discuss. I have a number of questions for the Minister, which I hope he will be able to answer when he replies, but if not, I hope that he will answer in writing, as would usually be the case. I notice that two of the amendments are among the 17 that the Government have already tabled at this very early stage to their own Bill. In this case they correct not just drafting errors, but quite serious errors in basic sums. The Minister can speak to those himself when he contributes to the debate.

Amendment 46 and the rest of the group reflect four consistent concerns about this part of the Bill on business rates. First, it will create a greater uncertainty for local government in its flow of funding and its ability to plan financially, and therefore its capacity to cope with the funding squeeze now and foreseeably in the next few years. It undermines an essential stability in funding for sensible longer-term planning and sensible long-term service reform and change.

Secondly, the amendments reflect the distrust of central Government with regard to the use of the business rates funding stream as a cash cow to help to cover the cost of failures in economic policy when revenue streams from other sources fall off, as we have seen during the last 12 months.

15:45

Thirdly, they reflect unease that central Government will make decisions without local authorities, the people affected or this House being properly consulted or given an opportunity to make their views known as part of the process. Fourthly, they reflect a concern that many of the most important decisions in the operation of the new system will be made by central Government, rather than local government. I recognise that there is localisation in the Bill, but too much of it is the localisation of risk and responsibility, rather than of resources, and too much of it is central Government offloading blame for potential service cuts and service failures in future.

The all-party Local Government Association has stated:

“What councils, their residents and local businesses want is a fair and simple funding system that gives councils greater financial autonomy, supports local services and encourages economic growth.”

We all back that aspiration, but there are doubts that the Bill will achieve any of those aims effectively, let alone all of them. London Councils, which supports the changes in principle, is even more direct in its criticisms. Among its reservations, it states in a briefing for Members that

“the Bill as drafted creates a fiendishly complex system in which the level of the business rate incentive is uncertain and unpredictable—this undermines entirely the Government’s aims of promoting local economic growth via the business rate base and delivering a clear link between local authorities and local businesses.”

The concern at the heart of amendment 46 relates to the difference between the total payments from local businesses via local authorities in respect of the central share, set out in schedule 1 in proposed new paragraph 2(1)(c), and the central allocation of those funds for local government use, set out in proposed new paragraph 2(4). The concern is that the difference between those two totals will in future be taken by the Treasury. The concern is shared by the normally cautious LGA, which states:

“Local Government will not have access to the full real terms growth in business rates in 2013-14 and 2014-15 through the mechanism of the ‘set-aside’ even though they will now use proportional shares rather than a government forecast.”

However, my concern is about what will happen beyond 2014. On that point, the LGA states:

“The Government’s proposals indicate that the set-aside will continue beyond 2015. There is little rationale for this, as the main justification for the set-aside was to ensure that the scheme functions within the spending control totals issued in 2010”—

meaning the Government’s spending review—

“and therefore works alongside the deficit reduction programme. Continuing the set aside beyond this point reduces the incentive to grow business rates and acts as a form of central government control in a system which is designed to do the opposite.”

That means that in future a locally raised revenue stream will be appropriated centrally to cover costs currently borne by the national Government. In other words, it will create a slush fund for the Chancellor for the first time in 2015, which incidentally is likely to be a general election year.

I have several further questions for the Minister. What is the projected yield from business rates in 2015 and for each of the following five years? Secondly, what falls within the definition of

“for the purposes of local government in England”?

Those are the purposes for which the Bill allows the Government to use any surplus yield. Thirdly, what guarantee is there that the Government will not use this funding stream as a substitute to cover the costs of their current funding responsibilities in policing, employment support services, skills, national housing investment, universities, particularly to support innovation and research and development, health, in particular to cover the costs of elderly people, or housing benefit? What guarantee is there that local business funding, via local authorities, which is designed to pay for local services in the first instance, will not be used to substitute for those central Government costs?

The Bill contains a big change that is being forced through too fast. It is a reform that builds unfairness into the system like a ratchet. It means that in future, essential local services such as care for the elderly and for vulnerable children, street cleaning, waste collection, road maintenance, and fire and rescue services will no longer be funded on the basis of need or population, but on the basis of the ability to raise tax and pay for the costs locally.

[Mr Watts]

If an area faces the wholesale closure of some of its industries, that obviously creates demand for the local authority’s services. Is it not a fact that such a local authority will lose money by the transfer to central Government and through the loss of business rates, and will therefore be less able to respond to the needs that are created by the wholesale closure of those industries, which we have seen in parts of the country?

[John Healey]

My hon. Friend, as a former leader of St Helens council, knows a great deal about the local government finance system and the pressures on local government. He may not have heard my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) in the last debate refer to what has just been described as a double whammy. In other words, there may be a loss of potential income at the same time as, and as a result of, the event that causes a greater need and demand for the services that have to be funded through that revenue stream. That is a concern.

I want to ensure that the Committee is clear that this is a fundamental shift in the basis of our funding calculations and in what local councils in England have to spend. The system will no longer work on the basis of need. It will not take account of the fact that there are three times as many looked-after children in South Tyneside as in Surrey or that there are five times as many children in poverty in Middlesbrough as in Wokingham. It will not take into account the capacity of a local area to raise resources, in particular through council tax. It will not take into account the fact that Bexley and Barnsley have a similar population, but that Bexley raises £37 million more in council tax each year. It will take no account of the fact that Brent has a similar population to Rotherham, but raises £22 million more each year in council tax.

[Mr Kevan Jones]

Is my right hon. Friend surprised that we are returning to having a Conservative Government who are quite clear that they will reward the areas that vote for them and write off whole swathes of the country, including the north-east?

[John Healey]

Like my hon. Friend, I am not surprised by that. I seriously question whether the scheme will work even on its own terms, but I support the principle of a system that provides some rewards and incentives to local authorities so that they better support growth in business, jobs and the economy. The cost of doing that in the Bill and under the new system is very great given that they take no account of need or resources, and do away with the decades-old principle of equalisation.

[Mike Freer (Finchley and Golders Green) (Con)]

The right hon. Gentleman knows the high regard in which I hold him from when he was in his former positions in the Treasury and the Department for Communities and Local Government. We had fruitful conversations when he was a Minister and I was leader of a large council. However, I must tell him that Bexley has to raise so much more money than Barnsley because when he was a Minister, he fiddled with the equalisation formula to force affluent southern councils to raise council tax to subsidise northern councils. That is why there is such inequality.

[John Healey]

The hon. Gentleman has a lot of experience of local government and was a distinguished leader of a council in north, not south London. However, no one could tell that from the comment that he has just made. As to my fiddling the figures in the local government formula, my goodness, many people say that Labour should have learned many more lessons more clearly from the extent to which the Tories did that before 1997.

[Bob Blackman]

Before the previous intervention, I think the right hon. Gentleman was comparing council tax raised in the London borough of Brent with that in the unitary authority of Barnsley. Has he got figures for looked-after children in those two boroughs? I assure him that the London borough of Brent includes some of the most deprived areas in the whole country and, sadly, huge numbers of looked-after children.

[John Healey]

The very point that I am making is that the current system, complex as it is, takes account of resources—an area’s capacity to raise revenue, especially through council tax—as well as the needs of the population in that area for the essential services that local authorities provide. The formula covers both and is based on the principle that I outlined.

[Mr Watts]

If the Government were truly serious about taking need and the ability to raise funds into account, they would have had an independent assessment, outside the political arena, to ensure that grants for local authorities in future reflected need. Comments from the Government Members are always about how much one local authority gets compared with another, and always ignore need. The reason for higher funding is that the need exists.

[John Healey]

Whatever side of the House we are on, we should endorse the principle that objective, sometimes independent, assessment is the basis for better decisions. I have never been one for saying that important decisions, which should be taken by politicians, who then are accountable for them, should necessarily be outsourced to independent experts who do not have the direct accountability that we and members of the Government have, but my hon. Friend makes an important point that is relevant to our discussions. It is impossible to make any sensible assessment, let alone a sound, independent assessment, of what the system will mean for the future. That makes our discussions and the decisions that we are required to make as members of the Committee difficult. We are making big decisions, largely in the dark, and we are being asked to give members of the Government significant regulation-making powers that will define the most important dimensions of the way in which the system works and what is available for people in different areas.

I want to underline the point that spending to meet increased need in future will have to be funded by the business rates increase. The council tax freeze and referendum start to remove that as a realistic alternative source of additional funds.

15:59

[George Hollingbery]

I am in the Committee as much to learn as to speak to the amendments and would welcome a refresher. The right hon. Gentleman makes the case that there is no accounting of need in the future funding system. My reading of the Bill is that there is. He can argue that the reset period is too long, but there is a reset period—of 10 years—and therefore, need will be reassessed. Likewise, there is a safety net, such that if the business rate increase in a certain area goes a certain amount below the retail prices index, the Government will intervene. Is that not the same as a needs assessment?

[John Healey]

The hon. Gentleman is right—there will be resets—but we do not know after what period or on what basis, so there is no guarantee that the accounting of need in the current system, which will be frozen at the point when the new system starts, will be reflected in a formula for, assessment of, or decisions on resetting. He might want to pursue that point with his hon. Friend the Minister.

[Andrew Gwynne]

My right hon. Friend makes an excellent point, but does he share my concern that, if, as is suggested, the reset period is set at 10 years, the gap between the poorest and the most affluent authorities will widen and the disparities will worsen in that period? Does that not reinforce his argument that need must be a fundamental part of the overall formula, as does the capacity to raise additional income using the council tax and the council tax base?

[John Healey]

My hon. Friend is right—I am about to make a similar point on relatively affluent areas becoming relatively more affluent under the proposed system.

The Government’s declared intention is for a 10-year gap between resets. I have my doubts about whether a reset after that period will be capable of restoring a proper reflection of need or a proper fairness in the system. We will speak later to amendments that would create much shorter reset periods, but they would not change fundamentally how the system will work to build in an advantage for already affluent areas with a higher business base. That advantage will just get bigger over the period between resets.

[Mr Clive Betts (Sheffield South East) (Lab)]

It is very easy to talk about resets here and now as an academic exercise, but when the time comes to do something that fundamentally alters the tax take of different authorities up and down the country, Governments of any persuasion might think twice. We should perhaps think of the history of council tax revaluations. They are not easy, but they have an impact on individual councils, and they are sometimes dismissed.

[John Healey]

My hon. Friend is really saying that we have not had a council tax revaluation. The problem he describes is a problem for any Government, but Governments will experience a similar problem with business rates as a result of the Bill.

[Andrew Gwynne]

My right hon. Friend rightly talks of the unfairness of the possible reset in 10 years’ time exacerbating the problems for local authorities, particularly those such as mine, which need the ability to raise income locally and for acute local needs, such as those in Tameside and the Reddish part of Stockport, to be reflected.

In fact, is it not worse than that for such areas? There is almost a double whammy. For those authorities, we must not only get the reset procedure right, but set the initial baseline correctly. All of that is based on the unfair funding settlements and cuts to local authorities such as Tameside and Stockport, but if we get the procedure and the baseline wrong, 10 years down the line, the real unfairness will set in.

[John Healey]

My hon. Friend makes a powerful point. It is certainly clear from how the cuts to local government have fallen in this Government’s first two years that certain areas, including his and mine, have borne a much greater burden than others.

The other part of the double whammy, to use my hon. Friend’s expression, is designed into the system, and it should give the Committee cause for concern. It is that the local distribution of the business rates is very uneven. For instance, Kensington and Chelsea has a much smaller population than Rotherham or Barnsley—I represent part of both those boroughs—but raises five times as much in business rates as Barnsley and three and a half times as much as Rotherham.

The opportunities to grow the business base are also uneven. I have looked back at the latest gross value added statistics published by the Office for National Statistics just before Christmas. Last year’s figures showed a difference of more than 3% between growth in London and that in Lincolnshire, Cornwall or Merseyside. In other words, it is clear that from year one the gap between affluent and less affluent areas will grow. The business rates base, and therefore income for councils, will grow faster in some areas than others, as it has in the past.

Even if there were the same rate of growth in all areas, the relative size of the business base income, which is higher for some councils than others, would mean a greater actual cash income for some councils. The top-up and tariff system that the Government are designing will reduce, but not remove, that disparity. If it did remove it, it would remove the incentive element that they want to build into the system.

Having been a local government Minister for two years, introduced the first ever three-year settlement for local government and altered the formula to better reflect needs and resources, I know that there are always winners and losers from any change. The whole House knows that. However, the councils that have a big business rates base, a strong council tax take and high levels of growth will be win-win-win councils, and those that do not will find that they are lose-lose-lose councils. That is the unfairness that is built into the design of the new system. It will increase divisions and tensions in our country.

[Mark Field (Cities of London and Westminster) (Con)]

Does the right hon. Gentleman not recognise that the current system also has a whole lot of disincentives for local authorities built into it? Over years gone by, it has disincentivised many local authorities. It is perhaps all too easy to make comparisons between relatively affluent central London authorities and those in relatively long-term impoverished areas of the north of England, but the scheme that is being put in place is intended to challenge those disincentives. Although I accept that elements of it will not provide as much transparency as many of us would like, it is at least a step in the right direction.

[John Healey]

The extent to which it is a step in the right direction remains to be seen. There is an element of its direction that is right, which is the desire to see greater incentives for local councils to support the growth of their business base, and greater rewards for doing so. How those incentives will work is weak and potentially perverse, but the principle is nevertheless in the right direction. The potential practical problems that we are beginning to tease out are part of the debate that we need to have.

[Andrew Gwynne]

My right hon. Friend is being incredibly generous in giving way. Is there not another problem that has not been properly addressed in the legislation? It takes no account of the complexities of sub-regional economies. For example, many of my constituents in Tameside and Stockport work in the city of Manchester or other local authorities. The scope for economic development in Greater Manchester is concentrated in the city centre, around Manchester airport, Trafford park, the Trafford centre, the media city and Salford quays, and not necessarily in Tameside or Stockport to the same extent. Although there are facilities for pooling business rates where local authorities agree, if they do not agree, will not authorities such as mine be disadvantaged?

[John Healey]

They will indeed. As my hon. Friend states, there is a double disadvantage to areas such as his. He paints that picture and concern very vividly.

[Graham Jones]

My right hon. Friend is being generous with his time. I want to add a third whammy and take up the point made by my hon. Friend the Member for Denton and Reddish (Andrew Gwynne). Large parts of the country will have no incentive at all because they are in shire and district areas, where the district authorities will probably be the planning authorities that will make the business decisions, yet the shire authorities deliver 85% of services, including fire and police services, and might have little say in how much they take from business rates in terms of business growth. It will be difficult for them to increase their base if district authorities act unproductively or do not co-operate.

[John Healey]

My hon. Friend is right, and I suspect that it will be one of the Minister’s biggest headaches in the system. I doubt whether he will come to the conclusion—although perhaps he should—that the real answer is unitary authorities across the country. [Interruption.] But I sense that I may be tempted into territory that falls well beyond my amendment and the whole group of amendments.

[Heidi Alexander]

My right hon. Friend was talking about the principles and practicalities at the heart of the Bill. Does he agree that the real problem is that because the proposed system is so complicated—with central and local shares, top-ups, tariffs, set-asides, safety nets and levies—the incentive for a local authority to do anything differently could be marginal? Even if we accept that the incentive is there, it is so complicated that councils will not be sure whether it will be worth doing something differently anyway. Is that not the real problem?

[John Healey]

My hon. Friend is right. She made that point powerfully last week in her Second Reading speech, which was one of the best that the House heard. Whether for children or councils, incentives need to be simple, and the rewards and rules need to be clear, but the system that the Bill will introduce falls far short of those basic objectives for any system of rewards and incentives.

[Mr Watts]

Is there not another issue here for the local authorities with the lowest business rates take? The Government have indicated that they believe that those local authorities have low business rates take because they are not interested in developing businesses and do not do all that they can to attract businesses to their areas. Does my right hon. Friend consider that perverse, given the problems in areas such as St Helens and many others, including his own? The major concern of local authorities in those areas is to bring in as many jobs as possible, but because of their location, the skills base and other things, it is extremely difficult. It is insulting for the Government to pretend that it is because of a lack of effort by local authorities.

[John Healey]

A number of colleagues have made that point, about local government in general and their local authorities in particular. It is hard to point the finger at any council and say that it has not bust a gut in recent years to see its economy grow and jobs created, because that is to the benefit of their local area and the local people they serve, and that would also be the view of most Members. I still think there is a case for trying to design a system that rewards local people, via their local councils, where they are successful in that. Under the last Government, we attempted to do that through the local authority business growth incentive scheme. The system that we are now discussing is clearly a new way of doing that, but its fundamental flaw is that it tries to fix the whole funding system for local government at the same time as using the same, single tax stream to create that incentive. The new system is trying to do too much with that one funding system, creating contradictions and tensions, which lead to the sort of complexities that the Minister is trying to counter in the design of the system.

16:15

[Bill Esterson]

My right hon. Friend makes the point about the new system trying to do too much, which goes back to what my hon. Friend the Member for St Helens North (Mr Watts) said. The evidence is that the potential economic impact of local councils in trying to develop business locally is perhaps only 20% of the total impact, with far more of the impact coming from the private sector. The new system is putting an awful lot of responsibility on to local government for generating new business, therefore putting a huge responsibility for the generation of business rates on to local authorities, when there is relatively little that they can do, particularly in areas such as St Helens or Sefton, or my right hon. Friend’s area.

[John Healey]

My hon. Friend is right. One of the strengths of this debate, as shown by contributions from all parts of the Committee, is exemplified by what he has just said. He has served as a councillor in north Kent and brings that experience and perspective to this debate. He now serves as the Member for Sefton Central, in the north-west of England, and also brings that perspective, reinforcing his point.

I want to draw the Minister’s attention to the future position of fire and rescue services. Can he provide me and other Members who are interested with details about his modelling and assessment of future revenue streams? Can he say how many and which fire authorities will be top-up authorities in future, and how many and which will be tariff authorities? There is concern among senior fire staff that if the incentive that this system is designed to deliver works as the Government say it will, the top priority for councils in the future will be those functions for which they are responsible that help to build business growth. However, those who serve in our fire and rescue services—services that do not directly contribute to economic and business growth—are concerned that a consequence of that will be that in future they will not get the priority for funding that the proper protection of their area may deserve because they do not contribute to business growth. Let me quote a chief fire officer who fears that that may—but not necessarily will—happen. He says:

“I am concerned that the proposed funding model could foster an antagonistic relationship between the fire authority and the local authorities if they begin to see us as a service which takes money from the business rates but does not actively participate in the business growth agenda.”

There is a strong case for fire and rescue services to be funded in future on the same basis as the police, with a very clear, consistent and comprehensive assessment of risk, need and resources built into the allocation of funding for fire services in England. What we start to see with the fire and rescue services, in common with the rest of local government, is concern about the uncertainty—what it means, what the funding is likely to be and how hard it makes it to plan sensibly for the future, particularly the ability to plan and manage within diminishing resources, which by and large is accepted. As another senior fire officer told me, stability is the most important factor. The Minister could do the Committee and many in local government a favour by giving a clear and strong reassurance this afternoon about the stability and predictability of the system in future.

I am conscious that there are a number of other amendments in the group and that other right hon. and hon. Members want to speak to them, so let me return to my starting-point of amendment 46. It is a probing amendment, but it contains a proposal that all revenue raised from what is a tax on businesses designed to pay for local services should provide funds for local government—not for national priorities or services around which the cloak of local government can be loosely thrown at their funding streams and categorised as local government. Post-2015, this will build in a real localising ratchet. Post-2015, when the business rates take is projected to be bigger than the sums distributed to local councils, it will mean that where central Government want to use funds to cover non-council services, they will have to transfer the responsibility and devolve the power and control for those services to local government in order to use the business rates revenue to help fund them. Thus my proposal will mean Ministers truly putting their money where their mouths are. It will mean putting into reverse the post-war centralisation of government that this country has seen, and it will mean making the localist rhetoric a reality.

[Mark Field]

I am not entirely convinced that we are debating quite as revolutionary a change in local government finance as the right hon. Member for Wentworth and Dearne (John Healey) would have us believe. As he rightly says, there has been periodic centralisation of local government finance in the post-war period; this Bill is a step, but only a relatively small step, in a different direction.

I am concerned that some provisions will not provide the overall transparency that all of us desire for local government finance. The worry, as we all know, is that council leaders across the country who get and understand the system will then work it to the benefit of their own local authorities, while neighbouring authorities with similar sets of needs will not reap the same benefits. I believe that has been the case since time immemorial, and I suspect it is a problem that exists in any political system. However much we try, it is difficult to discount the articulacy of those who understand and work a system. As I say, I am not as convinced or as concerned as the right hon. Member for Wentworth and Dearne. I hope he will forgive me if I focus my comments on issues that have come from the lobbying of one of the two local authorities in my constituency, and in so far as we work here, we all have a vested interest in this authority—Westminster city council.

[Mr Watts]

Is not the real worry that unless a duty and responsibility are placed on Ministers to ensure that needs are assessed and catered for within the grant system, which under these proposals they will not be, the worst aspects of the hon. Gentleman’s worst fears might come to fruition?

[Mark Field]

There is a duty, although it will apply to potentially different sets of needs. I think one of the most destructive elements of local government has been the almost constant lobbying—whether it be for three-year settlements or the annual settlements of the past. Although we might return, well before 2022, to specific concerns about elements of need that have rightly been referred to, the idea of having a 10-year period is a positive route forward in providing certainty for local authorities.

Westminster city council strongly supports the principle of allowing local authorities to retain a proportion of the business rates generated in their area—no one seriously suggests that either of my two local authorities should retain all their business rates, although there are common councilmen in the City of London, and members of Westminster city council, I am sure, who would rather like the idea, but even I would not suggest that that would necessarily be an entirely sensible way forward. As other Members have rightly pointed out, local authorities have played an increasingly important and integral role in supporting and growing businesses locally.

[Bill Esterson]

I am grateful to the hon. Gentleman for acknowledging that the most wealthy local authorities, in terms of business rates, could not possibly keep all those rates. What sensible balance can be struck to ensure that some local authorities do not struggle because of loss of income and that local authorities who are worried, for good reason, have their fears allayed?

[Mark Field]

I will be coming to that later, and will be asking the Minister to clarify the matter.

I would like the Minister to address a number of concerns. Why have the Government decided to cancel out any natural inflationary growth in the business rates programme? Why are increases in what might be described as revaluation growth not included in the Bill? A major revaluation has particularly affected London local authorities in recent years. Why does the Bill fail to provide for an adjustment in the growth calculation, in order to remove the negative effect of valuation appeals, which might become much more prevalent once the Bill is on the statute book? Under the proposed reforms, every local authority, as has been pointed out, will become a tariff—contributory—or top-up recipient authority, relative to its annual grant. In that regard, I take on board the comments of the right hon. Member for Wentworth and Dearne in relation to the responsibilities on fire authorities. One key question considered through the consultation was whether tariffs and top-ups should be uprated annually by the retail prices index. As the Minister knows, the Bill proposes that business rates will continue to be uprated annually, but taking the same approach to tariffs and top-ups would cancel out any natural inflationary growth that might otherwise have been expected by local authorities.

Why have the Government decided to cancel out natural inflationary growth in business rates? The clauses in the Bill that are subject to consideration today do not allow for revaluation growth, which is regrettable. Inevitably, all Members will use the examples closest to our hearts—our own local authority areas. Westminster city council’s total rateable value at the last five-year revaluation—18 months or so ago—rose by some 60%, but the proposed reforms would allow for none of that increase to count towards growth. In many ways, that is a disincentive to doing a lot of the hard work that went on in the second half of the last decade. As a result, local authorities would receive no benefit for enhancing their commercial environment or making their area a more attractive location for businesses. Having pacesetter authorities with business improvement districts in place at the outset was one of the most important elements of the previous Government’s work in that regard. Such authorities will be almost disincentivised and penalised under the proposals, which does not make much sense.

Given that rental and rateable value growth reflect the relative profitability from which central Government benefit through VAT, corporation tax and income tax, will the Minister clarify the reasons why increases in revaluation growth have not been included in the Bill? On physical growth, one key principle of the scheme, as I understand it, is to enable local authorities to benefit from new building and construction. However, as the Minister knows—although he represents a suburban London constituency—here in the capital, the high levels of rateable value reductions that are granted on appeal often wipe out the physical rateable value growth that has been achieved through new build. A great many appeals may be heard following revaluations, and as they are accepted the total rateable value in a billing may be reduced over time. Since those reductions result from errors made by central Government valuation officers, it seems unfair to penalise local authorities for such mis-valuations. We should also note the uncertainty that would be injected into the final settlement, given that one of the main aims of the scheme is to iron out such uncertainty.

16:30

Despite earlier assurances, the Government have failed to provide for any adjustment in the growth calculation to remove the negative effect of appeals, although—dare I say—given the difficult economic constraints that we are experiencing, I fear that there will be an exponential increase in the number of such appeals. It is estimated that Westminster city council has achieved an annual physical growth of about £30 million in rateable value per annum over the last five years, but failure to remove the negative effect of appeals will mean the loss of much of the benefit of that growth, and I suspect that we will hear similar stories from other Members. It is also possible that a significant number of appeals will be processed in 2013-14 and 2014-15 once the valuation office has completed its appeals programme for the 2010 revaluation, and that too could have a significant impact on the final settlement. I believe that the only option for local authorities will be to achieve growth through the adjustment of business rate allowances. The only allowances that authorities are currently permitted to control are discretionary reliefs for charities and non-profit-making bodies, and hardship relief.

[Graham Jones]

When authorities suffer a significant loss in business rate revenue, there will surely be a downward pressure on what the Prime Minister would describe as the big society, in which rate relief is given to charities, sports clubs and all sorts of other organisations that do social good. In the poorer, more deprived areas that will lose out under the new system, will not those organisations lose out as well?

[Mark Field]

The hon. Gentleman has almost taken the words out of my mouth. Given the Government’s commitment to the big society and to empowering the organisations about which he has expressed concern, removing discretionary awards would be controversial, and—given that they account for only a small proportion of the business rates that are collected—of little use. I hope that we can be given some clarification about why the Bill fails to provide for any adjustment in the growth calculation to remove the negative effect on valuation appeals.

I do not wish to sound too negative myself. Obviously we are trying to make the legislation better, and I think that the principle of allowing local authorities to retain a greater proportion of the business rates that they generate in their areas is a positive step. Nevertheless, the detailed proposals relating to RPI increases, revaluation and physical growth fail to offer the incentives for growth in high-yield areas for which we had all hoped, and I fear that they may result in excessive penalties for such areas. I realise that Opposition Members may view the issue from the point of view of relatively low-yield areas, but I think there is a risk that high-yield areas will not receive benefits for themselves and that, as a consequence, the Exchequer will not receive them either.

Encouraging economic growth at any level is critical to the national economy. Local authorities are uniquely placed to provide incentives for growth in their areas, recognising what will work even in specific parts of a single authority area—I observe a great variance within the 6.5 square miles of my own constituency—and that creates a bedrock for the national economy. I hope that serious scrutiny will be given to the reasons for the Government’s proposals, in the light of some of their potentially negative implications for areas that would be expected to generate the most significant growth.

Let me take up the point made by the hon. Member for Denton and Reddish (Andrew Gwynne) about pooling. We are living in a climate in which it will become the norm. I do not wish to pre-empt discussion of an issue that I am sure will be subject to much criticism and debate on the Floor of the House in the years to come, but I suspect that there will also be a reorganisation of local government. I foresee that in particular for London. It currently has 32 local authorities as well as the City of London, and that situation may well be subject to radical reform in the near future.

I hope the Minister gives serious thought to encouraging the pooling of resources. As he will know, in my area the tri-borough arrangements among the City of Westminster, Kensington and Chelsea, and Hammersmith and Fulham have worked well in a number of respect, and it is to be hoped that that continues.

It is in the interests of central Government for there to be pooling, but I fear that the proposals in paragraph 9 of schedule 1 will serve to remove any form of incentive for it. I accept that there will be some additional costs, but pooling is the way forward for many local authorities and the Government should encourage it in this Bill.

I am broadly in favour of the proposals, but I hope the Minister gives serious consideration to the points I have made.

[Helen Jones]

It is a pleasure to follow the hon. Member for Cities of London and Westminster (Mark Field), who always has something interesting to say even though I might disagree with him.

My right hon. Friend the Member for Wentworth and Dearne (John Healey) gave an excellent speech, in which he set out the reasoning behind the amendments. Our amendments attempt to deal with important omissions in the Bill. There is no mention of levels of need, of the different capacities of local authorities to benefit from business rate growth, or of the different council tax bases of local authorities.

The Government present their case in a way that suggests that there is no difference among authorities, in that they all have the same capacity to raise income and have the same demands on them, and that if a local authority is struggling, it is its own fault and a result of its being lax, rather than of the conditions it has inherited. Everyone knows that that is a myth, but some people are deeply attached to it.

We must acknowledge that the current, admittedly complex, system of local government finance does at least try to take into account the relative needs of different communities and their differing abilities to raise revenue. The Government have sought to erode that in their current local government finance settlement, and the consequent significant reduction in resource equalisation has led to local authorities no longer being able to provide the same level of service by charging the same band of council tax. As a result, the delivery of core services in poorer areas has been hit particularly hard. Despite the Prime Minister’s repeated reassurances, we are not all in this together.

The point I have made is very important, because it is about the base from which this scheme starts. Let me make it clear that we are not against incentives for local authorities to grow their economies.

[Mr Watts]

Does my hon. Friend agree that her point is one of the reasons that the Government do not want any independent assessment of the implications of what they have already done and of what they now propose to do? An assessment would demonstrate that poorer authorities have got poorer and that the richer have got richer.

[Helen Jones]

My hon. Friend makes a valid point. When discussing the first group of amendments we said that the fact that this Bill is not going into Committee upstairs means that we cannot take evidence on anything. The Government mindset seems to be, “Let’s get it in, push it through and not bother to have any proper assessment of it.”

[Mark Field]

The local government finance system may not be quite as complicated as the Schleswig-Holstein question, but is it not a concern that it is none the less very difficult to find anyone who could seriously be said to be independent in this regard? Although I can understand some of the concerns outlined by the hon. Member for St Helens North (Mr Watts), having an opportunity to discuss this on the Floor of the House means that more Members can have their say, and that must be a positive step forward.

[Helen Jones]

The hon. Gentleman makes a fair point, although I do not believe it is impossible to find independent people in the sector and of course the Government could have taken the Bill into Public Bill Committee and taken evidence, and then had a long Report stage on the Floor of the House to enable Members to participate.

To go back to my point, we are not against providing incentives for local authorities, but we do not believe that this Bill goes about it in the right way. We believe that any system has to be fair and equitable, and must recognise that weaker local economies find it harder to achieve growth and need help to do so. The Government have signally failed to recognise their responsibilities in that regard and we are faced with a “Leave it to Pickles” Bill. The Secretary of State is going to decide who gets what on the top-ups, the tariffs and so on. That is all being left to regulations, with no indication given as to the factors that he will take into account. As I keep saying, there are no draft regulations for us to look at.

[Mr George Howarth (Knowsley) (Lab)]

I apologise for not being able to be here for the earlier part of the debate. My hon. Friend knows my constituency well. Does she agree that unless we make a provision along the lines of amendment 19, which deals with need, the capacity to benefit from business rate growth and the council tax base of the authority, areas such as Knowsley are likely to be badly penalised?

[Helen Jones]

My right hon. Friend, who has been a doughty champion of his constituency for many years, hits on exactly the point that we are trying to make: unless the distribution of the central and local share is based on a number of factors, inequality will be built into the system—indeed, it is built in already because of the starting point. We do not believe that this approach is good enough. The future of communities and of the services available, particularly to the poorest people in this country, cannot simply be left to chance. If the Government believe in fairness and really believe that they would take into account the factors we mention in any case in determining central and local shares, I cannot see why they would have a problem in accepting our amendment. After all, the Prime Minister and the Deputy Prime Minister told us during their now forgotten love-in back in May 2010, before the romance had gone and they started squabbling, that they

“will ensure that fairness is at the heart of…decisions so that all those most in need are protected.”

That is all we are asking for in this amendment and the others that follow it.

Unfortunately, the Bill does not provide that fairness. If it goes through as drafted, service provision will, as my right hon. Friend the Member for Wentworth and Dearne said, increasingly be based on the ability to raise local business rates and council tax. As council tax increases will often be subject to a referendum, most of the demand will be put on local business rates.

[Mr Kevan Jones]

Does my hon. Friend also recognise that, for authorities such as South Tyneside council, which has nearly 50% of its properties in band A—that compares with a figure of 2% for Kensington and Chelsea—the existing system makes it more difficult to raise any additional money from the domestic side of the rates?

[Helen Jones]

Yes, my hon. Friend is absolutely right. That is one of the reasons for including the council tax base as one of the measures that ought to be taken into account. I shall say a little more about that later.

[Graham Jones]

My hon. Friend is very generous in giving way and I am grateful for that. Let me extend that point and return to those made about shires and districts. Where is the incentive in a scenario in which there are a large number of band A properties, for which council tax cannot be used, and in which the receipt will be only 15%, such as in my district authority? It seems to me that the system has not been thought out.

16:45

[Helen Jones]

My hon. Friend has hit on another flaw in the Bill and that is one reason for our complaining earlier about it being rushed through. Such matters need to be considered in detail.

If service provision is to be increasingly based on the ability to raise local business rates and council tax, this Bill has nothing to say about the levels of need. For example, parts of the area I represent used to be heavily industrialised. It is now a mixed area because a new town was built, but part of it was a mining community and we had heavy industry. Many other local authorities have much worse problems than my area, but all those areas are still dealing with the long-term health issues linked to heavy industry and poverty. That is why in an area such as Halton, a neighbouring authority to mine, one in five of the population has a limiting long-term illness. That is why the north-east has higher levels of deprivation, child poverty and poor health than the English average. Sunderland, for example, has 34 neighbourhoods that are in the top 10% most deprived areas of the country. The legacy of poor health, deprivation and poverty is what many local councils are constantly striving to deal with. There is no lack of effort on their part or lack of will. The failure is not theirs, but results from a long industrial heritage followed by the collapse of much heavy industry in the ’80s and ’90s.

[Graham Jones]

My hon. Friend is making a very good point; there is a risk in the system. She mentioned Sunderland—not my area—and Nissan is a very large employer in that region. Who is to say that in five years’ time the company will still be present there?

[Helen Jones]

Indeed—my hon. Friend makes a very good point. Later, we will debate the provisions for safety nets and how the Bill can cope with risks.

[Andrew Gwynne]

Will not some of the disparities about which my hon. Friend is talking be exacerbated by the new system? The analysis from the special interest group of municipal authorities—SIGOMA—shows that there will be an absolute decline over the next two years in funding across all local authority areas, that by 2015-16 some of those authorities will have recovered their position and that by 2020 there will be a huge disparity between the most rich and the most poor.

[Helen Jones]

My hon. Friend highlights a real risk of the Bill. All the modelling shows that the gap between rich and poor will become wider. That is a problem because, in my experience, local authorities have worked relentlessly to tackle these issues and to regenerate their communities. It is a long-term project, however, and it is much more difficult in some areas than in others for a whole host of reasons, including poverty, a local authority’s inheritance, its location and so on.

[Pat Glass (North West Durham) (Lab)]

Some years ago, I was an assistant director of education in the city of Sunderland and, despite its massive challenges, the attainment of the children was well above that of their statistical neighbours and was close to the national average. That demonstrates that such places can have massive challenges but still deliver well for their communities.

[Helen Jones]

My hon. Friend highlights the role of local authorities in achieving such gains. I believe that those authorities are constantly working to improve things for their communities and that the assumption underlying much of this Bill—that they do not want to do that—is simply untrue.

Returning to the issue of need, Durham council spends more on older people than a similar council such as Surrey because it has higher levels of deprivation and ill health. That means not only that it faces a greater requirement for social care but that it has fewer people who are able to finance their own care. Fifteen times as many people per 1,000 population receive a community service in Durham compared with Surrey, and 2.4 times as many receive a home care service. That kind of variation in need exists right across the country.

A similar pattern can be seen with children’s services and the level of child poverty, which all experts estimate will rise as a result of many of the Government’s actions. In Hartlepool, 29% of children are in poverty, whereas in Newcastle the figure is 27%, as it is in Liverpool—more than 91,000 children. In comparison, the figure in Wokingham is 7%. I defy anyone to argue that there should not be some resource equalisation to deal with that, but nothing in the Bill requires the Secretary of State to take account of the level of need when he determines the central and local share of non-domestic rates.

[Heidi Alexander]

My hon. Friend is talking about the growth in demand for council services that might occur in future and about the need to have some way of assessing that growing demand. It is relevant to services such as adult social care, particularly elderly care, that the geographical distribution of older people in our country is not the same across every local authority. In the shires, for example, there will be more of an ageing population than in my local authority. Does my hon. Friend think it is important to find a way of assessing those differing growth rates in need, which are often for services that are highly resource-intensive?

[Helen Jones]

My hon. Friend makes the valid point that the need for all these services varies across authorities; more to the point it is not within councils’ control. A council cannot control how many elderly people are going to need social care, or how many children are going to need intervention from their children’s department. That is the real problem. There are huge variations in demand for children’s services and educational services across the country, and that is often linked with poverty. Middlesbrough, which is the ninth most deprived local authority area in England, has almost seven times as many children receiving free school meals as Wokingham. Almost all councils showed a huge increase in referrals and in the taking into care of children following the tragic baby Peter case, which we all know about. That was not under their control, but the differences between the numbers of children in care across the country are still stark. Surrey has 32 looked-after children per 10,000 population, whereas Wokingham has 22. In Middlesbrough, the figure is 104 and in Newcastle it is 100. In Liverpool, there has been a 60% increase in child safeguarding referrals since 2009-10, whereas the average national increase is only 10%.

[Bill Esterson]

I keep being struck by the tension between, on one hand, the Government’s stated support for localism and the retention of business rates that they want to bring in and, on the other, the retention of powers by the Secretary of State. My hon. Friend is describing extremely well the growing gap among different local authorities and it seems to me that unless the Secretary of State addresses the issues in amendment 19, he will not be able to avoid that growing gap. I cannot understand why the Government would not want to support amendment 19.

[Helen Jones]

My hon. Friend is right. His intervention highlights the fact that no matter how much we want to make local government finance simple, it is never going to be simple because of the variation in need and the difference in resources. There is a balance to be struck between simplification and unfairness, and we do not think the Government have got that balance right in the Bill.

Some councils are coping with huge demands on their resources. Some form of equalisation will be necessary if, for example, children in poorer areas are not to be placed at risk. The idea that children’s services or the care of the elderly should depend on the number of businesses persuaded to relocate to a particular area is difficult to get to grips with.

[George Hollingbery]

In the debate on Second Reading the shadow Secretary of State said that there were far too many points in the Bill where the Secretary of State could interfere. As I said earlier this afternoon, there are mechanisms built into the Bill that ensure that revaluation and re-rating will take place. We can quibble about the date, but there are provisions to do that. There are safety nets built in. There is also at the first setting of this level of support a built-in bias towards communities that need more, as there should be. A calculation that I did showed that there was one public sector worker for every 88 people in Hampshire, because there is much less deprivation there, and I understand that, but one public sector worker for every 19 people in Manchester. Where we start clearly reflects the level of need.

[Helen Jones]

I know the hon. Gentleman made a thoughtful speech on Second Reading, but he is wrong on both counts. First, there is nothing on the face of the Bill about resets. Secondly, resetting the whole system is different from the way in which the system is run in the meantime. The baseline has nothing to do with the number of public sector workers anywhere. The baseline is the current local government financial settlement, which we argue is completely unfair to many local authorities anyway.

[Andrew Gwynne]

Because many of the children’s services that my hon. Friend mentioned are statutory, is it not the case that local authorities will have to find the money to provide them? The real pinch will come in the budgets for non-statutory services. There will be huge differentials from local authority to local authority, with some able to provide libraries, parks and other wonderful things, and other local authorities barely able to make their statutory arrangements.

[Helen Jones]

Indeed. My hon. Friend hits on a point that is important to local government as a whole. Local authorities cannot avoid their statutory responsibilities, so other services are squeezed. In future we may well see richer authorities developing a Pickles park here and there and naming public libraries after this beneficent Secretary of State, but it will be very hard for other authorities.

We have included unemployment in the factors that the Secretary of State must take into account. There are a number of reasons for that. Unemployment increases ill health, it forces more families into poverty, and it is an indicator of the state of business in an area. But high levels of unemployment also increase the demand for local authority services. As one of my hon. Friends said earlier, it will increase the demand for council tax benefit, for example. As more people become unemployed, many more rightly receive discounts on other services, such as leisure services. So unemployment increases demand at the same time as locking the authority into a cycle of falling revenue.

The theory behind the Bill is that local authorities can resolve that problem simply by expanding their business rate base and attracting more jobs. This was the theory that the Deputy Prime Minister set out when he explained the Government’s proposals to council leaders. He said:

“The new system will start on a level playing field—where you progress from there is up to you.”

It is a wonderful thing to be a Liberal Democrat. They can conduct politics exactly as if they are writing a “Focus” leaflet. But in the first place, there is no level playing field. We have debated endlessly what we see is the unfairness of the current local government financial settlement, which forms the basis for rate redistribution and penalises the poorest local authorities most. The simplest statistic is the most telling and it bears repeating. The 10% most deprived authorities lose four times as much as the 10% least deprived. The cumulative cuts in per capita spending hit the poorest hardest.

17:00

I quoted some statistics on Second Reading, but let me quote a few more now. By 2012-13, South Tyneside will have lost £183 per person in spending power and Middlesbrough £156. The national average is £47. The average in the south-east is £31. A few councils actually gain. Basingstoke and Deane gains more than £6 per person. But the Government simply refuse to look at local council resources as a whole, and inexplicably they refuse to consider the varying council tax yields from local authorities, which is why we want to put that in the Bill.

In the north-east, 85% of properties are in bands A to C. In Surrey, 75% of properties are in band D and above, compared with just 9% in Sunderland, which means that it will raise a lot less from the same level of council tax. For example, South Tyneside has 66% of its properties in band A, and its council tax base per person is 0.2966. In Kensington and Chelsea, fewer than 2% of the properties are in band A, and the council tax base is 0.5524. From a national standard band D tax of £1,439, Kensington and Chelsea would raise £795 per person, South Tyneside just £427.

Earlier, my right hon. Friend the Member for Wentworth and Dearne picked up the Bexley and Barnsley problem, where Bexley and Barnsley have a similar population, but Bexley raises about £37 million a year more in council tax. As I said, resource equalisation used to try to compensate for that up to 2010-11, but it is now being eroded. Inequalities will be entrenched unless these things are taken into account when the central and local shares are decided.

I come now to the second of the Deputy Prime Minister’s assertions, which was that once the scheme had started, how far a council progressed was up to it. I do not believe it is, and that is why we would like to put the ability to benefit from business rate growth as one of the factors to be taken into account in the Bill. First, such a statement ignores the Government’s responsibility for promoting growth. It has been estimated that 80% of growth is down to Government actions, and only 20% down to what the local council does.

But it also ignores the fact that many areas need infrastructure investment in order to grow. For example, Northumberland, the most beautiful county in England, has a sparse population, a large part of its area is national park, thus restricting the kind of development it can have, and it has a poor infrastructure. It needs national investment in that infrastructure in order to grow. That some local authorities find it easier to grow than others has to be recognised and provided for in any system of distribution.

It is no good the Government simply pointing to their proposals on tax increment financing as a solution. TIFs cannot provide a high-speed rail link to the north-east. They cannot give it a big new road system. Yet transport is the key to unlocking some of the regional inequalities in the economy.

Secondly, we have to acknowledge that for a number of reasons it is much easier to attract new businesses to some areas than to others. Westminster is a prime example. It has a multi-million pound base of national and international company headquarters. It is much easier for them to attract new investment than, say, Consett.

Cambridge has a wonderful high-tech hub centred on its university. Because in business like tends to follow like, attracting more businesses is much easier for such places than it is for local authorities starting from scratch. My hon. Friend the Member for Lewisham East (Heidi Alexander) gave a good example in her excellent speech on Second Reading. She suggested that Catford was less likely to develop in the way that Old Street had because Catford was not on the tube map, and that makes things more difficult.

The Government say that this issue will be dealt with by their proposed levy system, but they suggest that the levy will take back only a proportion of disproportionate growth, rather than compensate for it completely, so inequalities will grow, and they will grow even if the top-ups and tariffs are uprated by the retail prices index, as was noted earlier. It is estimated that, even with the uprating, the cash funding growth over four years could be 139.6% in the City of London, but 21.1% in Bury. It could be over 90% in Westminster, but 21.9% in Knowsley. The reason is obvious: a highly geared authority with an existing large tax base, relative to its funding levels, will do better from a business rate retention scheme than an authority with a lower tax base even if the rates grow by the same percentage.

The Government have recognised that in part through their proposed levy, but it will not compensate for all the unfair growth. We believe that it would be fairer and better if the local and central shares were decided on the basis of all the things listed in the amendment, especially an assessment of need.

[Bob Blackman]

I am listening with interest to the hon. Lady’s explanation of the amendment. It suggests a whole series of different factors that the Government would have to take into account in deciding how much money a local authority would be given. Who would conduct that assessment? Would it be the Government, some independent body, the Opposition or the whole House? Otherwise, the amendment would simply put into the Secretary of State’s hands the power that she is accusing him of taking already in the Bill.

[Helen Jones]

The hon. Gentleman makes an interesting point, as an independent assessment would be a good idea. However, assessments of local authority need are already done by the Department for Communities and Local Government, so I see no reason why they should not be done in future. As he will hear when I move on in my speech, we have tabled further amendments requiring the report to be laid before the House so that it can be debated.

Amendments 37 and 38 would require the Secretary of State not only to announce central and local shares for each authority for a year, but to give indicative totals for the following year after consultation with local government. Despite the Government’s rhetoric, the Bill is a hugely centralising measure, as the Opposition have said several times. We are seeking to mitigate that by inserting a requirement that the Secretary of State consult local government before making his decision, which seems fair and proportionate and reflects the fact that what we are engaged in is a partnership between central and local government.

Amendment 37 would require the Secretary of State to give an indicative announcement for the subsequent two years to allow local councils to plan their services and make the right preparations, rather than working from year to year. Recently, all parties seemed to have accepted that it is much more sensible for local government finance announcements to cover a number of years. The previous Government introduced three-year settlements, and even this Government announced a two-year settlement, knowing that they expected to change the system.

Amendments 37 and 38 simply attempt to introduce a little more certainty into a very uncertain system. They would not change the power of the Secretary of State to decide the shares and they seek only indicative shares, not shares set in stone. In our view, that would produce better governance in local authorities and help them to plan. As it is, the Secretary of State can change the shares from year to year with little warning for local authorities. As we require local authorities to deliver statutory services, as has been said, we ought to allow them to plan the support that their community needs. Local authorities are constantly lectured by Ministers about the need to manage their resources, yet how can they manage their resources properly without any indication of how their finances will change from year to year?

Amendment 36 is merely a probing amendment. It is designed to tease out an explanation for the wording in the Bill. The Government intend to determine the baseline for non-domestic rate income in an authority by using the total that would be payable if it had “acted diligently”. We would like clarification from the Minister of what is meant by that. We all accept that an authority has to have an efficient collection system and that it should pursue debtors vigorously. However, what happens if an area finds itself in difficulty and its businesses are struggling because of the Government’s policies? Many businesses are in that position now and are finding it difficult to pay their rates. Is an authority expected to pursue such businesses to the limit? Will a council be penalised if it offers more discretionary reliefs? We would like clarity on that. We would also like clarity on the position of councils generally in offering discretionary rate relief. For example, will a council be penalised if it offers rate relief to too many non-profit organisations? Will “too many” be defined somewhere by the Secretary of State? What will be the position on hardship relief, which is also discretionary? Will a council in a difficult situation that tries to help local businesses be penalised because its baseline is set much higher than its actual income?

If I move on to amendment 39, I might be able to answer the point made by the hon. Member for Harrow East (Bob Blackman). We believe that it is vital that the Secretary of State not only makes an assessment of need before setting the central and local shares for each authority, but publishes that assessment and lays it before the House. That would bring transparency and openness to the system. We want the debate on the local governance finance report in the House to be informed by information on the level of funding for local authorities and the level of need within them.

There are, of course, variations in services because there are variations in circumstances. The main difficulty in dealing with local government finance is the belief held by many people that they should get roughly the same from certain services wherever they are because, as they see it, they are taxpayers and ratepayers. Elderly people who need care in their own homes have a reasonable expectation that they will get a certain standard of care wherever they live. If anybody was told that they could not have that standard of care because businesses had not grown enough in their area, we would soon hear from them. It cannot be right for looked-after children in Middlesbrough to receive a different standard of care from children in another authority.

By requiring the Secretary of State to prepare and publish a report, the House would be able to take account of the needs of groups that are not the most vocal, especially children and the elderly. Those groups do not always have access to journalists to argue their case. When they are written about, it is sometimes as if they are a different species. Many such people do not come to our surgeries or write to the local newspaper. After all, a society is judged not by how it treats its most affluent people but by the way in which it treats those most in need and those without a voice. We tabled amendment 39 to ensure that those matters are debated, and we hope that the Government will accept it.

17:15

We tabled amendment 26 to ensure that the level of service provision is taken into account when any amending finance report is placed before the House. We accept that all Governments need amending reports from time to time. Local authorities make representations about the basis of calculation, and sometimes simple errors are discovered—we have all experienced that. Yet we also believe that the system that the Government propose is so complicated that it has an in-built capacity for error. There is a real possibility that those errors could be substantial. London Councils called the proposed new system “fiendishly complex”, and there are good reasons for believing that, in many ways, it is more complicated than the current system. That complexity, coupled with the lack of any consideration of need in the Bill, makes it possible for any amending report to have a real impact on services in a local authority. There will be more volatility in the system, and we believe that the House should have an opportunity, when it receives an amending report, to debate it along with the impact on services. We hope that the information would be put before the House in advance of any debate. The two reports taken together would provide Members with the information they needed to debate the subject sensibly.

I hope that I have explained the thinking behind the amendments. It might be useful if I notify you now, Mr Robertson, that we will seek Divisions on amendments 19 and 39. I commend the amendments to the Committee.

[Bob Blackman]

It is a great pleasure to serve under your chairmanship again, Mr Robertson. It is also an honour to follow the hon. Member for Warrington North (Helen Jones).

The key issue is that local government finance has changed radically and dramatically in the past few years. I congratulate the previous Government on introducing three-year settlements. Having served in local government for some 24 years before becoming a Member of Parliament, I know that the certainty that gave local authorities was extremely welcome. However, the financial arrangements have changed dramatically and will do so again.

I can speak for London authorities. The average London authority has £1 billion in revenue going though its books. It has discretion over probably only a quarter of that because roughly a third goes on housing benefit and 40% goes on education spending—schools and colleges. Now, that 40% for education passes through with the local authority doing virtually nothing but act as an agent of the Government in putting the money into the hands of the schools. Equally with housing benefit, under the proposed change to universal credit, local authorities will no longer administer that money. However, there will still be the surfeit of discretionary or statutory services that local authorities provide and that need to be funded by them. There will be different streams of income—council tax, other charges that local authorities levy for their services and, importantly, the business rates.

The key issue, which the Opposition have not started to understand or appreciate, is that there is a deliberate and perverse incentive for local authorities to retain deprivation in their areas. If there is deprivation, money flows from Government for that particular purpose.

[Several hon. Members]

rose—

[Bob Blackman]

I will give way in a second. I will cite an example from the past few years, when the previous Government decided to change the rules on the amount of money that was given through the formula for local authorities with large concentrations of black and minority ethnic communities. All of a sudden, funding for local authorities throughout the country with large BME populations would have been decimated because it was one of their great income streams. Huge lobbies took place and the Government backed down.

[Mr Kevan Jones]

I am interested in what the hon. Gentleman is saying. Can he give a specific example of a council anywhere, irrespective of its political persuasion, that has wanted to turn prosperity away from its area?

[Bob Blackman]

The key is not that local authorities turn away business or prosperity; I am pointing out that there is an in-built presumption that areas of deprivation follow extra grant from Government. As a direct result, there has been hardly any change in areas of deprivation across the country. Despite the fact that local authorities—of all political persuasions—with areas of deprivation have had huge amounts of money put in over 30 or more years, those areas of deprivation remain the same.

[Heidi Alexander]

I am interested in what the hon. Gentleman is saying, because the implication is that local councillors and local authorities want to maintain deprivation in their areas because they get more money into their coffers. Is he really saying that? In my experience, local authorities and local councillors do the jobs they do because they want to make the lives of the people whom they serve better; they are not interested in getting money into their coffers to serve their own purposes.

[Bob Blackman]

I am not saying that councillors, council officers or local authorities of any persuasion deliberately decide that they want their areas to be deprived. I am saying that there is a perverse incentive for those areas to be deprived. The Bill changes that presumption. It will be for every local authority where there is deprivation to encourage and promote prosperity and businesses to set up in their areas, so that there is a deliberate move to create economic growth in areas that have been unfairly deprived for far too long.

[Graham Jones]

The hon. Gentleman is being very generous in giving way on that point. I realise that he is under a lot of pressure given the comments he has just made. Does he accept that what we actually see in deprived areas is better partnership working between local authorities and businesses? That is certainly the case in Lancashire. Relationships and partnership working between the business sector and councils are not as good in west Lancashire, which is an affluent area. Councils in the east of Lancashire have an exemplary record, because there are deprived areas that need business. The answer in those deprived areas is not grants from the Government, but businesses, which is why those local authorities pursue that avenue.

[Bob Blackman]

I recognise that partnership working has almost been forced on local authorities. Some embraced it; others were forced.

[Graham Jones]

I was talking about deprived areas.

[Bob Blackman]

That did not happen only in deprived areas. I come from somewhere that had areas of great deprivation and which formed local strategic partnerships and other such organisations. However, those areas still have huge deprivation and are among the most deprived parts of London and the country, even though they have had huge amounts of money pumped into them by Governments of all persuasions. The key issue remains: there has been no incentive for economic growth in those areas.

[Graham Jones]

The hon. Gentleman makes a self-defeating point, because he reminds the Committee of local strategic partnerships, which were mandated only in areas of deprivation, and to which the previous Government handed out grants. His point is that the previous Government instructed local authorities in deprived areas to work, through LSPs, with the business community and the private sector, and the supply and education chains.

[Bob Blackman]

I take the hon. Gentleman’s point, but we have to consider cause and effect. I do not decry what the last Government instructed local authorities to do, but the key point is that it failed. The areas of deprivation then are still the areas of deprivation. This Government are trying to introduce a direct incentive to business growth and economic growth in those areas and right across the country. They are giving local authorities an opportunity to change their view and see the direct incentive to have economic growth. Local authorities will keep the money, which they can then invest in the local services that people need. That does not mean that there is not a need for national investment in local areas when infrastructure improvements and regeneration are needed, but that is very different from creating economic growth.

[Mr Betts]

There is a danger that we will get locked into a discussion in which we simply assume that the current system has always been in place. Prior to the poll tax local authorities kept all their business rates, yet since 1945 and probably before, the difference and disparities in deprivation have continued to grow. Local economies in different parts of the country have performed very differently, despite local authorities having had the incentive of business rate retention prior to the poll tax. The hon. Gentleman’s argument therefore lacks a little if it is taken beyond the particular complications of the current system.

[Bob Blackman]

One of the key historical points is that local authorities used to set their own business rates, but then pressure from the House changed that situation for the simple reason that large local authorities saw the opportunity to milk businesses and set exorbitant rates, because business did not have a vote. They could then keep local tax low because they had increased business rates to milk businesses. That was why the national business rates were introduced.

I do not believe that there is an argument for changing the position so that local authorities determine the level of business rates, but there is a very strong argument, which the Government are advancing, for their retaining the money that is collected locally. I believe that the Government are being a bit timid in their approach, because I would like more money to be retained locally, possibly with a slightly less complex formula to make it more transparent. However, I recognise that the Government are taking the first step along the way.

[Mr Betts]

I intervene briefly on a factual point about what happened prior to the poll tax. Probably one of the reasons why it was brought in was the very large rate increases made by some authorities, such as the one in Sheffield of which I was a member at the time. It is not true that authorities sought to pile all the pain on businesses and keep their other taxes low. Actually, the domestic and non-domestic rates were linked and could be increased only in line with each other. It was not possible to increase one without increasing the other. Domestic ratepayers had a vote, of course, and in many cases were prepared to vote for large increases to protect services.

[Bob Blackman]

That, of course, is local democracy—if people want to pay higher taxes, they are welcome to do so. I am personally a great advocate of annual elections to local authorities instead of referendums, so that if councillors want to raise local taxes exorbitantly they will be voted out at the ballot box. I therefore take the hon. Gentleman’s point.

[Heidi Alexander]

The hon. Gentleman has argued that incentives have not previously existed for local authorities to stimulate economic growth in their area. He is a distinguished former leader of a large London local authority, Harrow. Given that those incentives did not exist, did he not do anything in his time as leader to stimulate the local economy in Harrow?

[Bob Blackman]

I was actually the leader of Brent council, not Harrow, but I thank the hon. Lady for making that point. I was the chairman of a city challenge company that was part of the London borough of Brent, and for five years we had Government money flowing in. We retained every job that we had and expanded the number of jobs in the area, but by the end of the five years unemployment in the area had increased, not reduced. We had had huge amounts of money but, perversely, unemployment had risen, which meant that we could go back to the Government and say, “We need more money.”

17:30

I will cite another example given to the Communities and Local Government Committee when it considered the matter. When the mayor of Newham was challenged over this cycle of deprivation and investment, he said, “We’d love to be out of the cycle of deprivation. Just not yet. We need another 25 years of money coming in from the Government to enable Newham to grow and develop.” But despite the huge investment—because of the Olympics and investment from Governments of different persuasions—it remains one of the most deprived areas in London and the country. My hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw), who used to lead Hackney council, will attest to the fact that every year in Hackney the local authority was required to identify areas of deprivation and amplify them so that it could appeal to the Government for yet more funding.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

My hon. Friend is making an important point. Was not one problem that there was almost an incentive for a whole band of an officer class to prove deprivation rather than an incentive to prove and create success? That is how we ended up in this appalling game in London of trying to prove who was the poorest borough.

[Bob Blackman]

I completely agree with my hon. Friend. I return to my central argument, which is that there was a perverse incentive for deprivation to continue. Here, in the Bill, we are taking the first step—it is not perfect by any means—towards saying, “Instead of failure, success will be rewarded.” That is the approach that we seek to take, and it is the right approach to take.

I ask the Minister to consider two final points. First, there is concern about how the scheme will be administered and about its fairness and transparency. It is right that we consider the elements of the scheme and undertake to conduct a review to ensure that it is working appropriately, fairly and transparently, so that not only the House but every local authority in the county can say, “Yes, this system works.”

[Graham Jones]

The hon. Gentleman is being exceptionally generous in giving way. I thank him for that. He referred to success. What does he mean by “success”? Does it mean a local authority that leans back in its chair as a large employer turns up, or a local authority—presumably like the one he ran in Brent—that fights to defend and save jobs? There might not be growth, but an awful lot of work goes in to maintain the position. Which model would he describe as successful?

[Bob Blackman]

That is exactly my second point. In large parts of the country, particularly in suburbia, there has been a gradual leakage of businesses, as business land—areas designated for business land and investment—have been turned over to housing. There is an incentive for local authorities to do that, because it increases the council tax base and makes it easier for local authorities to get new homes bonus money. It does, however, reduce the business rate income. At the moment, those local authorities suffer no penalty for doing that.

Under the new system, there can still be a leakage of land and employers. I am talking not about a catastrophic failure where one major employer closes down—that would obviously be a huge loss to the local authority—but a gradual process, over a number of years, under which industrial land has been turned over to housing, resulting in a leakage in business rate income. Has the Minister considered that point? How will it be looked at in the round? I raised the matter on Second Reading but so far we have not had an answer.

Finally, one thing that will be true in this brave new world is that there are risks associated with both the income and expenditure of local authorities. We know that there are huge numbers of demand-led services that every local authority must provide—they have been mentioned already: adult social care, children’s care, and so on—and I recognise that. It is also the case that income levels can sometimes be unpredictable. The more predictable they are, the better. However, there is the pooling approach. I wonder whether the Minister can say what directions will be given if certain local authorities just sit back and say, “We’re alright, Jack. We’re fine. We’ll just keep the money. We’re not going to pool our risk. We’re not going to pool our opportunity. We won’t co-operate with our neighbours.” That is an important point, which the hon. Member for Hyndburn (Graham Jones) raised. How will the Government direct local authorities to pool resources, in order to spread risk across a number of authorities?

[Mr Betts]

I want to speak about set-aside—the principle and the calculations—and, in particular, to draw attention to my amendments 44 and 45. This is the first opportunity that I have had during the Committee stage to talk about the new, simplified system of local government finance that the Government are proposing. [Interruption.] Is that a smile from the Minister? We have to have a laugh about the terminology, but it was the terminology that the Secretary of State used when introducing the consultation proposals. He called it a simplified system, but I do not think that anybody, even—

[Robert Neill]

rose—

[Mr Betts]

Perhaps the Minister is going to talk about the new, simplified system.

[Robert Neill]

Perhaps the hon. Gentleman will be glad to know that I was smiling just to say how pleased we are to see the Chairman of the Select Committee on Communities and Local Government among us.

[Mr Betts]

It is very nice of the Minister to say so, so I will smile in return. However, even he could not rise now and say that this is a simplified system. It is a new system—it is a radical departure—but it is certainly no less complicated than what went before it; rather, it is complicated in a different way.

Let us talk about transparency. By that I mean the possibility that when a development is put forward in part of a local authority area, it is possible to say to residents, “If that development is granted, these will be the financial consequences.” There is no chance of that happening with this piece of legislation. It will be very difficult for local authority treasurers to explain to their members collectively what the implications of the new legislation are, let alone for a local councillor to tell residents looking at a planning application, “These are the financial consequences of accepting this proposal.”

I have no problem with the principle behind the Bill; indeed, I think there is a shared principle across the Committee. We all realise that there must be more incentives in the system to reward local authorities for encouraging and promoting growth in their areas. There is no problem with that principle at all. The difficulty, which is reflected in the responses to the consultation on the legislation that we are considering today, is that the authorities with a relatively high business rate base, or the potential to develop one and grow their business rate relatively easily, are obviously all arguing for lower tariffs and top-ups, whereas those that have lower business rate bases and more difficulty in attracting growth to their areas, perhaps including those with the greatest need, are arguing for more top-ups and tariffs.

As I said on Second Reading, the Government have a fundamental problem. Because of the effective removal of Government grant to local authorities from 2013-14, they are now trying to use the business rate to do two potentially contradictory things. They are trying to use the business rate as a mechanism to encourage growth and development, rewarding authorities by allowing them to keep the business rates that are raised from development and growth, but they are also trying to use it as a method of redistribution to help authorities that cannot achieve development and growth easily, and that have problems of deprivation. The Government are trying to do two things with one tax, which is a problem. That is why we have such a complicated arrangement.

If there was a separate element of Government grant that could be used for redistribution and if authorities were then allowed to keep their business rates, separately—as was the case with the old system, which we have just discussed with the hon. Member for Harrow East (Bob Blackman)—that would be relatively easy. There would be a business rate that was an incentive and a Government grant for redistribution. The fact is that we do not have the second of those; complications thus arise.

Some of us can remember the GREAs—the grant related expenditure assessments—the SSAs or standard spending assessments and other complicated arrangements like regression analysis that used to be done on all these matters. On every consultation, local authorities in various parts of the country would have different views about the allocation of resources and the finance system—of course they did, and the same applies on this occasion. What the Secretary of State and this Government have managed to do this time, however, is to unite the whole of local government on one fundamental issue—a feat that I do not think has been achieved before by any Government or any Secretary of State in relation to local authority finance.

Every local authority association and every local authority in the country has united against the principle of set-aside. They all view this as central Government putting their hands into the local authority pot and taking money out of it for themselves. When we used to debate local government finance, as we still do, most people rightly assumed that it was a debate about finance for local government. Now the debate is going to be about finance from local government, as local government will be contributing to national Government and the national Treasury. We will no longer talk about a business rate that is collected locally and distributed nationally, but a business rate that is collected locally and spent nationally. That does not strike me as a terribly localist move.

The Government have created a fundamental problem for themselves with set-aside. One can see the Secretary of State sat in his office, snaffling local government resources and getting into the Chancellor’s good books by passing those resources over and saying, “Look, I’ve done it again, Chancellor. I’m the good guy in all this; I’m giving you lots more money to spend.” Perhaps it is more like good cop, bad cop. We generally see the Secretary of State coming along to join the Minister for these debates, with the Secretary of State doing the broad sweep and the Minister knowing the detail. Perhaps they will go along to the Local Government Association in future when the pantomime season is in bloom. The Minister will go along as the wicked uncle, describing how much the set-aside is going to be worth in that year and how much is going to be taken away, while the Secretary of State will come along as the fairy godmother to say, “Look at all the goodies I’m going to give you back when I spend the set-aside. The problem is that when I wave my magic wand, what you get might not be what you thought you were going to get, because the money is going to be spent on things for which you would previously have had a grant.” This is the delusion being created.

The reaction on the part of local government is obvious. It says, “You are asking us to accept 28% cuts to Government funding over a four-year period and to cut our fundamental services.” Despite what the Minister said to the Select Committee today, there is not a local authority in the country that is not having to cut social services and social care. That is what is happening. At the same time as local authorities are being asked to make profound cuts to front-line services—it is happening to authorities of all persuasions up and down the country—the Government are saying, “By the way, we are now going to take away from local government resources that could be spent on local services, by means of the set-aside.”

All this explains why I tabled the amendments. Amendment 44, for example, is an attempt to make the point that something must be wrong when a Government say that they are going to take the set-aside away—irrespective of the real needs of local authorities, which they are clearly unable to meet in the current financial situation.

[Graham Jones]

On the same argument, would my hon. Friend add to that the housing benefit and council tax cuts, which are on top of the 28% and have a disproportionate effect on deprived areas? Does this not mean that we are talking about cuts of 28% plus—and they are growing rapidly?

[Mr Betts]

My hon. Friend is absolutely right that we should look at the totality of the effects of the cuts on local authority budgets. Before the Secretary of State takes this set-aside from local authorities, he should look at what is happening to social care and with council tax increases, which authorities will have to impose after the freeze or deferment comes to an end. He should look at what is happening to concessionary travel for young people, which gives them their independence and mobility, and to care for the elderly and to road safety schemes, which cannot now go ahead. He should look at what is happening to proper protection for private sector tenants from rogue landlords, which authorities will probably not be able to fund, or at the diminishing possibility of providing weekly bin collections across the country—something close to the Secretary of State’s heart. Before looking at set-aside, surely the Secretary of State ought to consider how far local authorities have been able to meet such needs.

17:48

[Annette Brooke]

As a genuine point of discussion, let us imagine a situation in which set-aside is used for reasons that everyone could sign up to, and directed to local government services—an ideal world, I admit. Despite our desire to march towards localism, would not holding back on full localisation in the first few years be a prudent approach that would reduce uncertainty?

[Mr Betts]

I am not sure, because how the set-aside ends up being used is fundamental. Will it simply go to the Treasury, and we never see it again? Alternatively, will Department for Communities and Local Government or other Ministers say, “We used to fund certain council services, and now we will use set-aside for that.” It will save central Government money. A classic example is the requirement on local authorities to fund 10% of the cost of council tax benefits in the first year—that will almost certainly rise if unemployment rises. What will stop Ministers saying in future, “We have already established 10%, so next year it will be 20%, 30% or 40%”? That will bring no benefit in council services or to local taxpayers or councils; it is just a saving to the Treasury. From a Minister’s point of view, however, it is a neat way of linking two parts of the Bill together.

[Graham Jones]

Another Treasury or DCLG idea could be to use the set-aside to pay for wasteful weekly bin collections.

[Mr Betts]

It could be; we are not sure where that funding is coming from. In future, a whole variety of things, such as police grant, could be paid for out of set-aside. Things that Government would have paid for through another source could be paid for out of set-aside, saving the Treasury money. We do not know, because the Bill does not contain the detail. All that we can say is that there will be no power at local level, or among local government collectively, to decide such things. Will there be any power in the Chamber to decide such things, or will it all be up to Ministers?

[Mr Ward]

The hon. Gentleman makes a crucial point. We discussed earlier the uncertainty around incentivisation—we do not know what that will lead to—but we can completely remove the uncertainty around the levy account and the safety nets in the central share if the Minister makes a clear statement about what they will be used for.

[Mr Betts]

We could, but I am not sure that Ministers will be able to give such an assurance. I say to the hon. Gentleman that it is his Government who are taking these measures, so he may have more influence over Ministers than those of us on the Opposition Benches do.

[Mr Watts]

Is it not possible for a future Government to say, “We will use that set-aside money to reduce council tax”? If so, that money would disappear from local authorities’ spending level, and overall they would have less money to spend on vital services.

[Mr Betts]

Absolutely. We just do not know. All the power and the decision making are going to Ministers in a completely opaque way. We have a right to ask certain questions.

The Government initially introduced the principle because the comprehensive spending review, in placing limits on local government spending as a whole, created a problem for them. It was and is quite possible, with the rise in business rate linked to inflation, for the business rate and council tax collection after 2013-14 to amount to more than the spending control totals. The Government had to find a way of dealing with that problem, but there is no reason why it need continue after the current comprehensive spending review round. In future, the Government could make an assessment of the likely increases in business rates on the basis of their new system and accommodate that within the spending control totals, thus removing the need for set-aside altogether.

I understand the difficulties that the Government have got themselves into in the current spending round, but why continue the principle after that? In amendment 45, I have tried at least to raise the possibility of not allowing the set-aside to become an ongoing, potentially increasing amount of money that is decided by Ministers for ever and a day.

[Heidi Alexander]

London Councils describes the existence of the central share beyond the current comprehensive spending review period as

“a cynical attempt by the Government to limit the extent to which local government can benefit financially from the growth it will drive through its economic development activity and engagement with the business community.”

Does my hon. Friend consider that to be a fair assessment of what the Government are doing?

[Mr Betts]

What the Government are doing is twofold, because two problems are being exacerbated by the set-aside. By limiting the amount of money in the local government system, they are reducing not only the incentives for councils but their own ability to do some redistribution. If they did not use the set-aside and allowed more money to remain in the local government system, they might be able to resolve the conflict caused by their attempt to do two things with one tax. The less tax that they have in the system and the more restrictions they impose, the more that conflict will come into play—the conflict between the retention of money to encourage investment and more growth, and the need for redistribution and the mechanism enabling it to take place.

[George Hollingbery]

I thank the hon. Gentleman for giving way. He is being extremely generous with his time.

A number of Members have pointed out, both today and on Second Reading, that there is a relatively limited amount that local government can do to encourage business growth. It occurs to me, from a more philosophical viewpoint, that economic growth can be a public good, and that Government investment elsewhere in the economy can allow that growth to go ahead. Is it therefore entirely unreasonable for central Government to keep some of that business rate growth?

[Mr Betts]

I think it would be considered so by a localist who wants it to be possible for money that is raised at local level to be spent at local level. The complicating factor is that there must still be some element of redistribution. In the past that would have been dealt with by means of a Government grant, but it is now being dealt with through business rates. If central Government take away any element of that business rate growth, by definition they are reducing the incentives to encourage development and reducing the amount of money available for redistribution, thus worsening the problems that they are creating for themselves.

Let me issue a challenge to the Minister. Will there be any limits to, or criteria for, the determination of set-aside in a future comprehensive spending review, or will the Chancellor simply come up with a figure? Will business rates grow according to the level of the RPI, and will the difference between them constitute the set-aside? Will no more thought be given to it than that? Will there be any criteria on the basis of which the Government may review the system annually, or will the Secretary of State simply say, “I am not giving enough to the Chancellor this year, so we will have to amend the set-aside arrangements”?

I return to the question asked the hon. Member for Mid Dorset and North Poole (Annette Brooke). Will there be any criteria governing what the money can be used for? Will it be possible for it simply to go to the Treasury, or will there be some understanding that it will be spent on local initiatives? Will there be some understanding that if it is transferred back to councils to do certain things, they will be given power to do them? It may well be that there are things to be done by local government in the future that are not being done now. We have seen no evidence that any of that will happen.

Will we be given an assurance that the set-aside will not mean a further dispensation of largesse from the Secretary of State and the Minister in the shape of more specific and ring-fenced grants? The Government have almost completely abandoned ring-fenced grants, and I support that as a principle. May we have an assurance that the set-aside will not be used as a mechanism enabling the Secretary of State to say, “Look what I am giving you: more ring-fenced grants and more specific grants”—thus providing a photo-opportunity for a Minister to draw attention to what good things are being done with them by every council in the country?

May we also have some assurances that the Local Government Association and local government in general will be properly consulted on this each year? They should be consulted about the criteria, the proposals and the arrangements by which set-aside will be used and the amounts will be determined. Will there be transparency about where set-aside funding comes from and how it is spent across the country and which local authorities will benefit?

Finally, will we have assurances that this will not be simply a Government matter? This is the House of Commons of a sovereign Parliament. The annual decisions about set-aside and how it will be spent must be subject to discussion, debate and a vote in this House. We must have assurances that the ultimate power will remain with Members of Parliament, not Ministers.

[Mr Kevan Jones]

It is a privilege to follow my hon. Friend the Member for Sheffield South East (Mr Betts), who is not only a distinguished Chair of the Select Committee, but had a long and distinguished career in local government.

Today’s debate reminds me of the Second Reading debate in that, as my hon. Friend said, Members on the Government Benches are trying to have their cake and eat it. They want the nirvana of councils keeping all the business rates while also recognising that there should be some redistribution. The hon. Member for Harrow East (Bob Blackman) made some strange comments about perverse incentives for councils to remain poor. I am yet to meet such a council, but he tried to get his colleagues to help him come up with an example. Councils in my area work very hard to attract business and prosperity, as they want to make their areas not only pleasant places to live in but economically active. The Government talk about localism a lot, but this Bill centralises more powers in the hands of the Secretary of State than any other local government reform of recent years.

On fairness, if we are to have a system whereby the contribution from national Government to local government is wiped out and we rely on business rates to provide the gap in funding, we must address the fact that different parts of Britain have different needs. Amendment 19 is important as it would ensure that that is reflected in the system.

From listening to some Members on the Government Benches, people would think some parts of the north are responsible for their own unemployment. Those Members fail to remember what happened in the late 1980s, when huge swathes of industry in the north-east were wiped out. Many areas are still recovering from that today.

There are also issues to do with population movement, which can lead to extra demands on local councils such as Durham county, where there is a large elderly population and many people who worked in heavy industry. Health needs in such areas are inevitably greater. Moreover, as County Durham is quite a rural community, even those in work often cannot move from place to place as easily as people in large cities.

I give credit to councils of all political persuasions throughout the country that have tried to encourage business into their areas. I am not convinced that keeping a small slice of the business rate is going to have a major impact, however. We should consider what the Conservatives and Liberal Democrats have done in the north-east in doing away with One North East. It was very effective at working with local councils and other partners to get inward investment and business growth. The hon. Member for Cities of London and Westminster (Mark Field) is not in his place at the moment, but he admitted that it is much easier to get business growth in his constituency than it is in mine or in those of many other hon. Members from the north of England.

18:00

[Graham Jones]

My hon. Friend raises a crucial point that has not been mentioned—the role of local enterprise partnerships. Lancashire has had a terrible problem with LEPs, which are skewing investment in certain areas and not interested in other areas—those who have been involved have said as much. The role that LEPs play across these district areas is not promoting business in certain parts, and that is having an adverse consequence. How can business be promoted and how can success be obtained in those conditions? Again, the Government are accountable for this.

[Mr Kevan Jones]

Again, that is part of the contradiction in the Government’s thinking and policy. As we have seen, LEPs are toothless tigers. They are not going to produce much growth or investment, as I know from the ones in the north-east. Certain people in the business community are becoming increasingly cynical and feel that LEPs are just going to be talking shops, rather than organisations that will do things to regenerate areas or attract growth.

Amendment 19 refers to “need” and, as my hon. Friend the Member for Warrington North (Helen Jones) said, it sets out the important issues that we need to take into consideration. I know from my north-east constituency that unemployment is a very important issue to take into account. The level of unemployment stands at 11.7% in the north-east of England, which is 3.5% above the national average. As my hon. Friend said, unemployment means that additional services are required and it puts further strains on local councils, which is why it is important to take it into account.

This debate is also about where we start from, which is why it is important to take the council tax base level into account. In the north-east, 50% of properties are in the lowest band, band A, whereas the corresponding figure for Surrey is just 2%, with 75% of properties there being in band D and above. It is very difficult for councils in the north-east to raise extra finance outside the business rate, so we are not starting on a level playing field. Mention has been made of South Tyneside, where 66% of properties are in band A, and that must be compared with the figure for Kensington and Chelsea of less than 2%.

[Andrew Gwynne]

My hon. Friend is making a superb point about the ability of local authorities to raise income from council tax. Is not a major issue for local authorities such as his and mine the fact that the formula grant for 2013-14 will lock in those very real cuts that such local authorities will have had to face from 2011-12 onwards?

[Mr Jones]

I am grateful to my hon. Friend for mentioning that, because I was about to discuss the baseline, as it has been set at 2011-12 levels. Durham county council had a grant reduction last year of some £10.9 million, which represents about a 4% loss, and that is now going to be set in stone for the next 10 years. Let us compare that with the situation in Wokingham, in Berkshire, whose authority actually had an increase in its grant of 0.2% and each person living there got an extra 30p in grant.

As I said on Second Reading, it is quite clear—I take my hat off to the Conservatives and do not know why the Liberal Democrats are turning a blind eye to this—that the Conservatives are looking after their own. They used to accuse the Labour party of doing so, but the Secretary of State makes no bones about the fact that he will help the people who voted for him. Does he give a stuff about the north-east and other places? No, I do not think he does.

It is important that we consider need because, as I said and as my hon. Friend the Member for Warrington North said earlier, with unemployment, a more elderly population and deprivation, people use council services more in such areas. Some 31% of the people living in County Durham, for example, live in the top 20% of the most deprived areas in Britain and 21.8% of children in the county live in homes that are classed as in poverty. In Wokingham, that figure is under 7%. The demand for local services in Durham is obviously a lot higher. Likewise, eight people go for every job in County Durham. A good example is looked-after children: in Wokingham, there are 22 per 10,000 children whereas in Middlesbrough, in the north-east, there are 104 per 10,000.

It is not just about the numbers but about the types of services. Elderly care and services for looked-after children are very expensive to provide. There is no cheap way of looking after elderly people or vulnerable children in care, so that puts added pressure on those councils. That must be taken into account in any assessment, as otherwise we will do exactly what my hon. Friend said that we would. We will start from the premise that this Government like to put out, which is that irrespective of where a local government organisation is in this country, there is a level playing field. There is not. Any system must take need into account and that is why amendment 19 is important and why I do not understand the Government's not being in favour of it.

Another issue that we heard about on Second Reading and that we have heard about again tonight is the idea that by retaining a certain percentage of the business rate councils will be able to incentivise and develop business. That might well be the case in some areas, but councils must cater for other factors, one of which is location. My hon. Friend mentioned Consett. Consett has actually done very well in attracting businesses, but it is a damn sight harder attracting jobs there than it is in parts of the south-east and London.

[Graham Stringer]

Does my hon. Friend agree that a local authority cannot possibly be incentivised to do more—most of them want to do quite a lot—by reducing the overall level of resources? The contention that a little incentive on one hand and a huge loss of grant on the other will mean that they work harder is extraordinary.

[Mr Jones]

I totally agree with my hon. Friend. It is a double whammy for local authorities, really, as even if they could keep some of the money and use it for incentivisation, the huge proposed cut through the 10% reduction in council tax benefit that they will have to administer will fall disproportionately on areas with large numbers of unemployed people and the elderly. Absorbing that will be very difficult for a lot of councils, certainly in the hard economic times we are in at the moment. As unemployment goes up, the pressures on the councils will increase, too.

[Mr Watts]

Is it not the case that if a deprived local authority gets less grant, one way or the other, it will still have to provide the key services that my hon. Friend refers to, which will mean that it will have less money for economic development initiatives in its areas? That will go counter to the Government’s stated intention for this proposal.

[Mr Jones]

Indeed. When local businesses in my constituency want to expand, the first thing they will ask is, “Where are the grants?”, but there are none any more because One North East has gone and the amount that the council or anyone else has to give to help is usually small. There is a perception that this change will make a real difference to most areas, but it will not; the effect will be marginal at most. My hon. Friend is also right that councils cannot just stop providing elderly care and other services. In the present round of cuts, the problem is trying to explain to people what is statutory and what is not. This Government know exactly what they are doing—[Interruption.] My hon. Friend the Member for Blackley and Broughton (Graham Stringer) chuckles, but what I mean is that they know exactly what they are doing politically on this issue.

[Graham Stringer]

My hon. Friend was going a bit too far.

[Mr Jones]

A bit far, perhaps. The Government know exactly what they are doing. As I said on Second Reading, their strategy is quite clear: they want to give freedoms to local councils, push decision making down as far as possible and then, when they have cut grants, as they will with council tax benefit and others, they will say to local people, “Well, it’s your local council that has to decide how and where the cuts come.” The Government will stand back and say, “We’re sorry, but it’s nothing to do with us.” That is the clever side of it. Part of their strategy is about making sure that they save money and cut it out of the system but that local councils, rather than themselves, get the blame for implementing the cuts.

[Andrew Gwynne]

Does my hon. Friend agree that an unforeseen consequence of the Bill could be that local authorities become overly dependent on one type of economic development—the type they can generate the most from in business rates? In an area such as mine, that would mean an overdependence on retail.

[Mr Jones]

My hon. Friend makes a very good point. In terms of economic development, local authorities might go for what will generate income rather than what will create the right mixture. Although retail shopping and warehousing produce business rates, they do not produce large numbers of local jobs, but there might be a growth in those types of business in some areas.

We should not be fooled into believing that the Government do not know what they are doing, because they do know. They are passing legislation down to local government and making sure that those in central Government do not get the blame. We need to be saying that these cuts have been implemented because of the Government—including the Liberal Democrats. It amazes me that Liberal Democrats in Durham can complain about the closure of leisure services or a leisure centre while stepping back and saying, “It’s nothing to do with us,” even though their representatives on the Front Bench in government and others are going through the Lobby to vote for such measures, as they will tonight. Without amendment 19, and without some assessment of need in the Bill, I have little faith that the Government will not do what they have a track record of doing: rewarding the areas that vote for them.

[Robert Neill]

The debate on these amendments has been lengthy and wide-ranging, and I shall do my best to do justice to the points raised. Some of them were specific, technical and helpful, whereas others seemed to seek to reopen elements of the Second Reading debate and, perhaps, the debate on the finance settlement. I am afraid that sometimes they were rather wide of the mark. In general, I regret to say that I shall ask the Committee to reject all these amendments if they are not withdrawn because they seem to miss some fundamental points. First, the system already recognises a balancing of need and resources: that happens now and will continue to happen. Secondly, if we are to move away from a system of excessive dependency by local government on central Government grant in order to reduce reliance on central Government grant and create incentives for growth at a local and national level, we have to move away from the current, highly centralised system. Nothing has been advanced to suggest that the current system produces the transparency—

[Mr Watts]

Will the Minister give way?

[Robert Neill]

The hon. Gentleman has been very vocal, so I shall make a little progress and perhaps give way in due course. Serious points were raised in debate, and I will do my best to respond to them, if I may.

18:15

I accept some of the points made by the hon. Member for Sheffield South East (Mr Betts) and the right hon. Member for Wentworth and Dearne (John Healey) about the objective of, and a desire for, greater localisation, but that has not happened under the current system. Sadly, despite the fact that some Members would deny it, there is force to the point made by my hon. Friend the Member for Harrow East (Bob Blackman) and others that perverse incentives in the current system sometimes lead to perverse behaviour, with more emphasis placed on ticking the boxes that can demonstrate need than harnessing the undoubted energies that local government has—[Interruption]—and in which I have faith to drive forward economic growth. [Interruption.] The hon. Member for North Durham (Mr Jones) is, as usual, very vocal from a sedentary position, which is his more usual form of contribution to debate.

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

Order. Mr Jones, please stop shouting across the Chamber. Either try and intervene or please be quiet.

[Mr Kevan Jones]

rose—

[Robert Neill]

Before I give way to the hon. Gentleman, he might like to reflect on this. He has been very vocal about the Second Reading debate. I remind him of this passage, when my right hon. Friend the Secretary of State, following this very point, said:

“Economic success is not a southern phenomenon”,

and the hon. Gentleman intervened and said:

“Yes, it is.”—[Official Report, 10 January 2012; Vol. 538, c. 81.]

Would he like to explain that?

[Mr Jones]

The Minister does not quite understand. It is for me to ask him questions in interventions, not the other way round. He said that there were perverse incentives in local government. Can he name one council where that is the case? The hon. Member for Harrow East (Bob Blackman) could not.

[Robert Neill]

My hon. Friend specifically gave the example of his own council. The point that the hon. Gentleman and many other Opposition Members do not get is that the Bill is not just about dealing with the short-term issues of one-year funding settlements. It is about creating a system that certainly has an element of equalisation in it, because as we all know, all local government finance systems going back many years have always had a degree of equalisation. The hon. Member for Sheffield South East, the Chairman of the Select Committee—

[Graham Jones]

Will the Minister give way?

[Robert Neill]

I will make a little progress before I give way again.

The hon. Member for Sheffield South East took us a little way down memory lane with GREAs and SSAs. There has always been an element of equalisation and that will continue. The rather complicated and highly prescriptive process that is built into the amendments does not improve on what is set out in the Bill. Indeed, it would undermine some of the key objectives of the Bill.

The hon. Member for Warrington North (Helen Jones) and her hon. Friends are seeking to place what we regard as an unnecessary requirement on the Secretary of State to undertake multiple and frequent assessments of needs. That undermines the key objective of long-term certainty which provides the incentive and also stability in a local authority’s funding. As it is, the needs and resources elements are taken into account at the setting of the baseline. The baseline is set and then it runs forward. They are taken into account. Some people say, “Go back to a previous year on the baseline”, even though that would involve more out-of-date data and formulae. Many would say that that was not fair.

[Several hon. Members]

rose—

[Robert Neill]

Let me finish the point and hon. Members may find that their intervention falls into place better.

Local authorities’ baseline funding levels are set on the basis of the 2012-13 formula grant. The calculation of the tariffs and the top-ups will then ensure that the funding at the outset of the scheme is in line with that assessment of relative need and resource. That is in our system. After that, the baseline levels, tariffs and top-up funding remain fixed and the budgets grow in line with the incentive.

If the system is reset too frequently, that undermines the incentive that we wish to achieve, and in particular it severely diminishes the value of the important introduction in the Bill of tax increment financing. For tax increment financing, which the local government world has wanted for a long time and which the Lyons review advocated introducing, it is important to have a reasonable degree of certainty about the income stream against which we can securitise. That is undermined if interference and change in the system are too frequent.

I understand the point made by my hon. Friend the Member for Cities of London and Westminster (Mark Field) about uprating in line with the RPI, and I accept that there has to be a degree of trade-off in this. It means that top-up local authorities will have a degree of assurance throughout the period of the reset that their income levels will grow by inflation. That is particularly important in the case of two-tier areas, where the county councils responsible for a large number of personal services will be predominantly top-up authorities. Much the same will apply to other precepting authorities, such as the combined and stand-alone fire and rescue authorities. I accept that arguments were made on either side, but, as is always the case, a balance has to be achieved, as I know my hon. Friend will recognise.

[Mr Watts]

I accept that revaluation too often can cause a problem, but does the Minister agree that the valuation process has not been changed for many years and the longer the period without a revaluation, the more likely it is that no Government will do it because it will make such a difference and there will be winners and losers? There has to be some sort of judgment between how long is too short and how long is too long for a review, and is not 10 years too long?

[Robert Neill]

I do not think that 10 years is too long. We think that it gives a sensible balance. But it is a good reason not to put such matters in primary legislation and to say instead that they should be developed through regulations, which, as we know, will be subject to scrutiny by the House. I should have thought that that meets the hon. Gentleman’s point. An assessment is built into the system, which is then taken forward. That is why the updating report is there.

A second point concerns the question of the central share and the set-aside. I am sure that when hon. Members reflect upon this they will realise that we have always made it clear that over time, particularly when we have put the public finances back on track, we would hope to increase the proportion of business rates to the part of the rates retention scheme. But it would be imprudent to suppose—Opposition Members would not have done so when they were in government—that there might never be an occasion when the central share might need to be maintained, or on occasion, heaven forbid, increased. I believe that the economic policies of the Government will mean that it is not necessary, but legislation has to cater for various eventualities. As I say, it is our aspiration that that should increase, but equally, as hon. Members will know, the Government have, and will always have, an interest in the totality of public spending. To expect the Government to have no control over local government finance, when it is such a significant percentage of public expenditure, would be unrealistic. That is not the case under the current scheme, and it would not be realistic in future. In that regard, some of the amendments would constrain the Government unrealistically, and I hope hon. Members will understand why.

[Mark Field]

I accept that the straitened financial times make things very difficult, but do I take from what my hon. Friend has said that there is a longer-term aspiration, if not necessarily a fully fledged commitment at this stage, that we should look to allow local authorities to raise the council tax in future to ensure that there is a little more of a balance; that some more of the money that they are expending comes from local residents? I accept that this is not a short-term measure given the financial constraints that we are under, and I understand why the Government have tried to provide such incentives to freeze the council tax at the moment, but in the longer term, the rebalancing to which he refers should ensure that local government has other full sources of income possibly to rely upon.

[Robert Neill]

I understand my hon. Friend’s point. He refers to the council tax, which is a separate part of the income stream from the business rates. Of course, we have ourselves removed capping and substituted the ability, even under current circumstances, for a local authority to go to its voters by way of a referendum, which is a move in the direction of giving greater flexibility. It is the authority’s local call. In relation to the business rates element of its income, I restate that it is our desire to ensure that there is flexibility for the future. This is not intended to be a system that lasts for two or three years. I am in favour of multiple-year funding settlements, which I think we all agree on, but our system is intended to last for a much longer period. I hope that that reassures hon. Members.

[Mr Betts]

I thank the Minister for the slight reassurances about his thinking on the future of the set-aside, but will he reflect on the fact that many countries manage a different relationship between central and local government with more flexibility for local government? Can he think of any other advanced western democracy where local government taxes are used by central Government for their own purposes, rather than for those of local authorities?

[Robert Neill]

It is perfectly fair to observe that the local government finance system in this country is highly centralised, and many of us have often said that we want to make it less so. The Bill will do precisely that. I am reminded of the old phrase, “Half a loaf is better than none.” As the hon. Gentleman will know, the Lyons inquiry into local government, which the previous Government established, found that the system was too centralised, but Opposition Members conveniently ignored that when in government. We are doing something about it, so his ambition is being met at least in part.

I will say something about how this will operate. The central and local shares will have to be set out in the annual local government finance report. We will consult local government on the draft report, as we currently do, which will then be laid before the House and subject to the rigour of parliamentary scrutiny. A statutory consultation, as proposed in amendment 38, is unnecessary, as that will happen as a matter of course. We do not envisage that the shares, once they have been set at the outset, will be changed from year to year. That gives certainty that the uprating for the top-ups and tariffs will be protected until we come to a reset. We have already debated what will be the most appropriate period before a reset. That is why amendment 37 does not give any greater clarity.

The Government’s intention is that the money that comes into the central share will be returned in its entirety to local government, as currently required by the Finance Act 1988. We will do so by funding local government by grant that is outside what is currently formula grant and will now be in the rates retention scheme. There are plenty of examples of localised grants that are made in that way—for example those relating to neighbourhood policing and homelessness grants. The suggestion, from the authors of the current system, that that is centralising should win the award for chutzpah of the year so far, although it is only 18 January.

These changes are an important step towards localisation. There is a great deal of detail and we have undertaken to consult on the regulations, and I assure hon. Members that they will be subject to the scrutiny procedures of the House. As I said earlier, we have set up a working group at official level to talk through the details with the local government sector.

I have a great deal of respect for the right hon. Member for Wentworth and Dearne, who is no longer in his place but, for the reasons I have set out, I do not believe that amendment 46 is necessary to achieve a degree of fairness in the system. It would have a perverse effect, as it would prevent any of the central share money from being used to fund transitional protection arrangements under the transitional rate relief scheme. Schedule 1, as drafted, permits that, which means that transitional payments under the rate relief scheme would not fall on local government. Central Government would be in a position to pick up the cost if disparities arose. Under the amendments, the costs would have to fall on local government, which is not his intention. I hope that he will consider withdrawing the amendment before we come to vote.

I will turn briefly to the two Government amendments in the group. They relate to seriously technical parts of the schedule. I apologise for that, but they are important. First, they increase the amount that can be debited from the main rating account to include payments received in respect of central list contributions and payments that are made as contributions in aid. Those payments are made directly to the Secretary of State.

18:30

The central list relates essentially to occupiers of network property. That is entered not on any individual local authority’s rating list, but on the central rating list. Contributions in aid relate to certain property that is exempt from rating and is occupied by central Government, such as that for visiting forces, international headquarters and so on. We want to ensure that that is not counted in a way that is to the detriment of local government in determining the appropriate shares. By allowing those sums to be included, the amendments will reduce the central share and allow local government to keep more of the local rates that they raise. They are technical amendments, but they work to the advantage of the local authority sector as a whole.

Secondly, the amendments will ensure that central Government cannot debit any sums that need to be repaid in respect of an earlier year. It sometimes happens that in the course of a year, authorities are expected to pay their central share contribution on the basis of an estimate made at the start of the year. That happens to some degree now in the calculation of business rate payments and there is a reconciliation at the end of the year. The amendments will simply ensure that reconciliation works in a way that allows payments to be made back to local authorities. Again, that will ensure that local authorities keep a bigger share of the local rates that they collect. These are both benign amendments that, in a modest way, strengthen the position of local authorities even further. I accept that this is a marginal part of the system, but it is none the less important to get it right.

I urge Members to support the two Government amendments and hope that they will reject the amendments of Opposition Members if they are pressed to a vote.

Amendment 46 negatived.

Amendments made: 1, page 11, line 31, after ‘exceed’ insert ‘—(a)’.

Amendment 2, page 11, line 32, leave out ‘(1)(c)’ and insert

‘(1)(a), (b) and (c), minus

(b) the total amount debited for the year under sub-paragraph (2)(a)’.—(Robert Neill.)

Amendment proposed: 19, page 12, line 20, at end insert—

(c) in determining the central share and the local share for any relevant authority, the Secretary of State must have regard to—

(i) the level of need in that authority,

(ii) the likely capacity of the authority to benefit from business rate growth, and

(iii) the council tax base of the authority.

Any assessment of the level of need in the authority shall include—

(iv) the ranking of the local authority in the Index of Multiple Deprivation,

(v) the level of unemployment within the authority’s area,

(vi) the proportion of adults with a limiting long-term illness within the authority’s area,

(vii) the number of adults in receipt of social care within the authority’s area,

(viii) the number of looked-after children within the authority, and

(ix) the level of child poverty within the authority’s area.’.—(Helen Jones.)

Question put, That the amendment be made.

18:32

Division 425

Ayes: 232

---

Labour: 229
Democratic Unionist Party: 1
Independent: 1
Social Democratic & Labour Party: 1

Noes: 318

---

Conservative: 269
Liberal Democrat: 46
Democratic Unionist Party: 1

Amendment proposed: 39, page 15, line 17, leave out from ‘must’ to end of line 19 and insert

‘prepare and publish an assessment of the level of need in each local authority, as defined in paragraph 4(c) above. The Secretary of State must—

(a) lay the report containing the assessment before the House at least 14 sitting days in advance of the publication of the Local Government Finance Report, and

(b) notify such representatives of local government as the Secretary of State thinks fit of the publication of the report on need and the detail of the basis of calculation in the Local Government Finance Report.’.—(Helen Jones.)

Question put, That the amendment be made.

18:49

Division 426

Ayes: 228

---

Labour: 225
Democratic Unionist Party: 1
Independent: 1
Social Democratic & Labour Party: 1

Noes: 318

---

Conservative: 269
Liberal Democrat: 46
Democratic Unionist Party: 1

19:03

The occupant of the Chair left the Chair to report progress and ask leave to sit again (Standing Order No. 9(3)).

The Deputy Speaker resumed the Chair.

Progress reported; Committee to sit again tomorrow.

Business without Debate

Wednesday 18th January 2012 Commons Chamber

delegated legislation

Wednesday 18th January 2012 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

European Union

That the draft European Union (Definition of Treaties) (Republic of Korea Free Trade Agreement) Order 2011, which was laid before this House on 2 November, be approved.—(Greg Hands.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Environmental Protection

That the draft Commission for Architecture and the Built Environment (Dissolution) Order 2012, which was laid before this House on 29 November, be approved.—(Greg Hands.)

Question agreed to.

Business of the House (23 january)

Wednesday 18th January 2012 Commons Chamber

Ordered,

That at the sitting on Monday 23 January paragraph (2) of Standing Order No. 31 (Questions on amendments) shall apply to the Motions in the name of Edward Miliband as if the day were an Opposition day.—(Greg Hands.)

Business of the House (25 january)

Wednesday 18th January 2012 Commons Chamber

Motion made,

That at the sitting on Wednesday 25 January, notwithstanding the provisions of Standing Order No. 20 (Time for taking private business), the Private Business set down by the Chairman of Ways and Means shall be entered upon (whether before, at or after 4.00 pm), and may then be proceeded with, though opposed, for three hours, after which the Speaker shall interrupt the business.—(Greg Hands.)

Hon. Members: Object.

Welsh Grand Committee

Wednesday 18th January 2012 Commons Chamber

Ordered,

That—

(1) the matter of the UK Government’s agricultural policy as it relates to Wales be referred to the Welsh Grand Committee for its consideration;

(2) the Committee shall meet at Westminster on Wednesday 8 February at 9.30 am and 2.30 pm to consider—

(a) questions tabled in accordance with Standing Order No. 103 (Welsh Grand Committee (questions for oral answer)), except that questions shall be addressed to, and answered by, Ministers in the Department for Environment, Food and Rural Affairs;

(b) the matter referred to it under paragraph (1) above; and

(3) the Chair shall interrupt proceedings at the afternoon sitting not later than two hours after their commencement at that sitting.—(Greg Hands.)

[Sir Bob Russell (Colchester) (LD)]

On a point of order, Mr Deputy Speaker. In the past two hours, Members of Parliament have been denied access to an internet site, www.ipsa.shadow.com, which is supportive of Members of Parliament. The official print-off states, “Access is denied to the website you have selected because it belongs to a category that is blocked.” Can we have an investigation into who within the House is blocking Members of Parliament accessing anything, and in particular something to do with the Independent Parliamentary Standards Authority, especially when it is favourable to Members of Parliament?

[Mr Deputy Speaker (Mr Nigel Evans)]

There is a rarity. Although that is not a point of order for the Chair, my recollection is that a phone number is usually given when access to a site is denied. My suggestion to the hon. Gentleman would be either to telephone that number, or if no number is given, to phone Parliamentary Information and Communications Technology. I am sure that PICT will be able to give the reason why Sir Bob is not being given the answer he wants.

Tees Valley Spinal Unit

Wednesday 18th January 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

19:06

[Phil Wilson (Sedgefield) (Lab)]

I want to highlight the work of the spinal unit at the University Hospital of North Tees and the charitable support group established in 1999 by patients who have used the spinal unit for surgery to relieve chronic back pain, allowing some patients to walk again and many others to get on with their lives pain-free. I speak with first-hand knowledge of the unit and its support group because of the major spine surgery performed on me in November 2008, after years of pain.

At a time of controversial change to the NHS, I want to put on record my belief that the spinal unit at the University Hospital of North Tees and the volunteer network that supports patients before and after treatment is a shining illustration of all that is good about the NHS, and should be an example of how other acute care and chronic pain services should operate elsewhere. Recent advances have made spine surgery safer and more effective and now there are safe and effective surgical options to treat back pain. It is no longer accurate to tell patients that nothing can be done and they just have to live with it. The North Tees spinal unit specialises in the holistic treatment of spinal pain—from physio to surgery, with surgery being the last option.

The spinal unit at the University Hospital of North Tees is in the constituency of my hon. Friend the Member for Stockton North (Alex Cunningham), who is a good friend of the hospital. It serves the Tees Valley and South Durham area, including my constituency, but its reputation has now reached far and wide, with patients travelling from all parts of the country for treatment. The spinal unit was set up in 1997 by consultant spinal surgeon Manoj Krishna, who operated on me. The unit was originally staffed by two spinal surgeons but is now staffed by three dedicated consultant spinal surgeons supported by associate specialists and middle-grade doctors, nurses, allied health professionals and other support services such as radiology. The unit offers a number of leading therapeutic, non-surgical and surgical procedures. My understanding of the procedures used is only surpassed by my complete inability to pronounce many of them, but they include lumbar disc replacement, neck surgery and other surgery on the spine.

The spinal assessment team’s specialist nurses carefully examine patients’ medical history to establish the best course of treatment for each case. Patients who require non-operative treatment are then channelled to the appropriate department and patients requiring surgery are referred for treatment in the spinal surgical unit. The unit’s consultants see about 2,000 new patients a year, usually from the musculoskeletal service but sometimes directly from GPs both in and out of the area. Patients come from as far as London and the south-west to have their surgery at North Tees. Fifteen major spinal operations are carried out in the unit each week. The average length of stay in the unit is two and a half days. The unit is a training centre for specialist registrar and spinal fellowship programmes. It is active in research and development, represented on the national and international stage.

I suffered from back pain for years. Initially, the periods between incidents of pain were long, lasting several months. Then the pain became constant. The by-election that I fought in 2007 was not pain-free, but was something that had to be coped with of necessity. One does learn coping techniques—for instance, exercise and physiotherapy are essential—but the more the pain intensified, the stronger the painkillers became. Heat wraps and ice packs were bought in abundance as a short-term remedy.

Coping mechanisms included wearing slip-on shoes because it was too painful to bend over to fasten shoelaces. Books, television remote controls and clothes would be left on the backs of chairs or on shelves at a particular height so it was not necessary to bend or stretch. Working in the office meant standing at the filing cabinet, using it as a desk, or walking around the room reading papers or documents. Sitting for any length of time could be torture. Standing in the Chamber attempting to catch the Speaker’s eye would be a welcome relief for a few seconds, and speaking would be a relief in more ways than one. The pain would be in the legs rather than the back, because the damaged disc was catching the sciatic nerve.

My back was continuing to deteriorate. I was referred to Manoj Krishna, who treated me for about a year with physiotherapy regimes and epidurals that bathed the base of my spine with anaesthetic. All the treatments worked for a time, but the underlying problems caused by discs that were disintegrating meant that I needed surgery. The surgery meant removing the two offending discs and fusing the three vertebrae. Years ago that technique meant recuperating in hospital for many weeks, but in November 2008, when I had the operation, I hobbled into the hospital on a Wednesday morning and walked out on Thursday afternoon, less than 48 hours later. I have not looked back since. Nevertheless, surgery is not a silver bullet. People must continue to exercise, and must not take for granted the new lease of life that the operation has given them. Mr Krishna told me that I had an 80% chance of being 80% better, and I am, I think, more than 80% better. I experience the odd twinge, but the pain that I had before is gone.

My story is not unique; far from it. The cost to the individual, the family and the nation of chronic back pain is massive. Back pain is common in the UK. In any given year, about 30% of the population suffers from it, and 20% of the population—12 million patients—visit their GP with it. Between 3% and 4% of the population are chronically disabled by back pain, and 52 million work days a year are lost because of it. The chance of someone’s returning to work after being off work with it for two years is less than 5%. Research shows that, for the individual, sudden severe and then chronic back pain is debilitating and can result in low mood, loss of libido, disturbed sleep, poor appetite or weight loss, fatigue, feeling worthless, problems with concentration, and even thoughts of suicide.

Back pain can also threaten the stability of the sufferer’s family, possibly leading to marital and family breakdown. Because it often strikes during a person’s maximum earning period, it can threaten the economic survival of the family unit. A person’s back pain and associated side effects can become very draining for the family, as an inability to remain in one position for any length of time threatens normal daily activity as well as leisure. The extent to which the whole family is affected when one of its members has back pain cannot be underestimated. The economic consequences to the nation are also apparent. The individuals concerned are often at the peak of their earning capacity, and months and years of not being able to work and to contribute to society add to their feelings of worthlessness.

For those reasons, I want to pay a special tribute not only to the work of the spinal unit at University Hospital of North Tees but, more specifically, to the voluntary workers of the Tees Valley spinal support group. In 1999 Victoria Fenny, a patient waiting for back surgery, approached Mr Krishna and asked what support there was for patients with this debilitating condition. She wanted to talk to someone who had been through the experience, but no support group existed, and as a result the Tees Valley spinal support group was formed. The group, which now attracts at least 100 people to its quarterly meetings at the hospital’s teaching centre, includes former patients and those awaiting surgery, and provides an invaluable source of learning and support for the hundreds of people who have back and neck surgery each year.

The feedback from the group is used to improve the service further. Health professionals attending the support group say they learn as much from the patients as they teach them about how quickly they can get back to normal after surgery. North Tees and Hartlepool NHS Foundation Trust supports the work of the charity by providing a counselling room for patients where they can meet volunteers and talk about their concerns, and rooms at the teaching centre where the quarterly support groups are held.

The Tees Valley spinal support group is a registered charity and it raises funds to support the work of the spinal unit. I have visited the support group on a couple of occasions and it is good to speak to people who have suffered from the same symptoms—people who coped by wearing slip-ons, used the filing cabinet as a desk and left the TV remote on the back of the chair. I would like to place on record my recognition of the voluntary work undertaken by Victoria, and also Linda Botterill, Claire Poulton, Peter Evans, Peter Allan and Gordon Marron.

In 2011 the support group held its first fun-walk to raise funds for educational equipment for the unit. I met former patients who had spent years in wheelchairs but can now walk. I agree with Mr Manoj Krishna when he says that it is no longer accurate to tell patients nothing can be done for their back pain and they have to live with it. The skills are there. The support is there too. What can the Government do to ensure the excellent example of the spinal unit and its support group can be replicated around the country so that the millions of our citizens who suffer from back pain can receive the treatment they need instead of being told they just have to cope with it?

Is the Minister aware that Britain has 18 spinal surgeons per 100,000 head of population, whereas the Netherlands has 30 and the USA has 76? Back surgery rates in the UK are 30 per 100,000 head of population, as against 52 in Sweden, 115 in the Netherlands and 158 in the USA. What more can be done to improve Britain’s position, because we obviously have the talent, skills and expertise to be world leaders in this area?

What will the Government’s proposed reorganisation of the NHS do to ensure that patients who need the treatment will get the treatment, especially as spinal surgery techniques are rapidly improving and becoming ever more sophisticated? Finally, will the Minister join me in congratulating the management and the surgical and nursing staff at the hospital on the work they are doing to ensure chronic back pain is being treated with such professionalism? In particular, will he join me in congratulating the volunteers who run the support group, and who ensure that the service provided is holistic in its approach and helps secure the good will of patients to help other patients, in order to give them hope and address their fears? All specialties in all hospitals would do well to have their own support groups. I know from personal experience how important they are.

19:17

[The Minister of State, Department of Health (Paul Burstow)]

I congratulate the hon. Member for Sedgefield (Phil Wilson) on raising this important set of issues. The subject is close to my heart as well, as a result of my previous experiences as a Back Bencher raising similar issues about how we can deal with chronic back pain and ensure that pain is not an afterthought and the forgotten issue in the NHS, given how much it can blight the lives of so many people. Before saying a little more about that, I want to do what the hon. Gentleman asked me to do at the end of his remarks and pay tribute to both the excellent work the NHS staff working in his area do, sometimes under trying circumstances, and the work Victoria and the other people he mentioned do through their contribution as volunteers and supporters of other patients.

The hon. Gentleman vividly described his own experiences, and in doing so he has helped to turn a spotlight on these important issues. We must keep in mind the excellent care and consideration he received—and has rightly praised so highly—from Mr Krishna and that team’s other specialists. Their work has made a difference to his life, as well as to the lives of many of his constituents and many other people. This is a clear example of the NHS at its best, and I join the hon. Gentleman in paying tribute to all concerned.

Often it is a patient asking how they can get involved that provides the spark that leads to the sort of voluntary activity the hon. Gentleman has described. I certainly have no difficulty in paying tribute to Victoria for asking that question of Mr Krishna, which became the spark that has ignited so much good work since.

I am aware of the hon. Gentleman’s ongoing engagement with the group since his surgery in 2008. His remarks again highlighted the value of patients who have finally found relief after long-term chronic back pain having the opportunity to talk to others who are still going through the misery of their condition, as that can reassure people about what can be done. The support group’s work shows the extraordinary value of having the voluntary sector and volunteers working within our NHS. He asked what we can do to strengthen that approach and replicate the idea further. The first question at last week’s Health questions was about what we can do better to support volunteering in the NHS. I said then, and I repeat now, that we are working closely with the association of hospital volunteer co-ordinators to make sure that NHS boards have the information they need to make the right decisions about the investments they need to make to support voluntary organisations. These may be small investments, such as providing a bit of time or a room where people can provide the valuable emotional and other support that he describes. That approach is very much at the heart of the vision in our report on volunteering in the NHS. One way we can see that go further is by ensuring that local NHS organisations sign up to the compact agreements on the voluntary sector, so that they are fully engaging with their local voluntary and community sector and making full use of that way forward.

I understand that the Tees Valley spinal support group holds quarterly meetings and I am told that they are attended by hundreds of people, which, again, underscores how important these groups can be. Perhaps most important is the fact that charity volunteers who have received spinal surgery are available to talk about these issues, as that can be hugely reassuring. There is also enormous value in developing this whole area of hospital volunteer schemes. As the hon. Gentleman rightly said, this support group provides an excellent example, and I will want to use it to illustrate the benefits of such approaches. That is why I am keen to make sure that these volunteering opportunities go further.

I wish to reflect a little further on some of the points that the hon. Gentleman made, and there is broad agreement about many of them. He rightly highlighted the huge impact that back pain can have on people’s lives, saying that we can do better on treating and preventing it. This is a serious issue for the NHS, for the people affected and for the economy and our society as a whole, and it is not just about the most extreme cases where surgery proves necessary. He rightly says that surgery is no silver bullet, but when one rehearses the statistics, as he did, one finds that in the number of working days lost to illness, musculoskeletal conditions come second only to mental health problems, with a price tag for the economy of £5.3 billion a year. That occurs through lost work days, poor productivity and, in the most serious cases, people being shut out of work altogether and facing a lifetime of incapacity and difficulty.

In the shadow of the statistics that the hon. Gentleman has rehearsed there are hundreds of thousands, if not millions, of people who have to cope with chronic back pain for many years. As he has said, some of these people are not given the opportunities they need to get the right support and the right treatment at the right time, so he was right to talk about the impact on the individual and about his personal experience, but there is also an impact on families, on relationships, on mental health and on a person’s well-being. For me, that points to the fact that when we think about health and well-being, we need to think bigger. He talked about holistic services that have an impact on poor health and tackle health conditions. That is very much part of what we are trying to achieve through some of the reforms to which he referred, so that improving mental health outcomes or issues to do with pain, for example, becomes not just about the Department of Health or the NHS but about what the Government, employers and many other organisations can do together. Occupational health is a key component of that.

I hope we can agree on some of the elements of the vision of what a society that actively promotes health and well-being looks like. Local communities, councils, the NHS and the voluntary sector, which has extraordinary power, should work together to begin to make a difference to the health and well-being of local people, and everything in the health system should point towards prevention. We should be able to say that the NHS is as good at preventing poor health as it is at treating it.

Let me say something about the need to ensure the integrated package of care mentioned by the hon. Gentleman. He listed some numbers and I would like to write to him about the numbers of spinal surgeons and so on, to give him a bit more detail on our thinking about how we can develop the NHS in respect of musculoskeletal conditions. There is a good story to tell and I want to set that out in more detail for him.

I also want to answer the hon. Gentleman’s important question about how reforms will support improvements in surgery services. In our view, the Health and Social Care Bill creates a number of the tools that will support continuous quality improvement in the service. The outcomes frameworks published for the NHS on social care and public health provide a greater opportunity for clarity and accountability and have been widely welcomed across the clinical community.

Let me answer the hon. Gentleman’s questions about what reform can do. Reform must allow much greater transparency so that we can see differences and variations in the service in different parts of the country. The publication of the health atlas is already driving commissioners to benchmark themselves against the best in the NHS. The use of tariffs will drive best practice in the services, too, and front-line staff will be empowered to use the clinical evidence—they know that this is the best practice—to deliver and commission the best possible services for their populations.

I thank the hon. Gentleman again for bringing this matter to the House tonight. He was right to want to praise the work of the spinal support group and the valuable contribution it makes to the lives of so many people in his community. I also praise the professionalism of the NHS staff who treated him and who treat his constituents. I am pleased to have the opportunity to put those remarks on the record and to endorse and underscore what he said.

Question put and agreed to.

19:27

House adjourned.