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The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Simon Hoare)
It is a pleasure to serve under your chairmanship, Sir Robert. I will not begin my speech in the usual way, because it was announced in the last quarter of an hour or so that my very long-standing friend, the Member for Rochdale, Sir Tony Lloyd, has passed away. As, I think, the first Minister on his feet following that news, on behalf of the Government I want to extend to his very many friends, to his colleagues across the House and, of course, to his family our very deepest sympathy and condolences on Sir Tony's final loss of the battle against a cancer that dominated his life for the last 12 months.
I thank my hon. Friend the Member for Morecambe and Lunesdale (David Morris) for raising this important issue and for the way in which he has done it—with his customary thoughtfulness and attention to detail. Given that I have known him for eight and a half years, I would expect nothing less, and we heard it again this afternoon.
The backdrop to the debate is the increase in all the costs that families up and down the land face as a result of inflationary and other pressures, which have come to be known collectively as cost of living pressures. I am always keen to remind local government of its role in delivering important services to communities. The total burden of council tax—regardless of whether that includes a town or parish council precept, or is set by a district council—is used to pay for social care, police and so on, all of which comes to a considerable sum for very many people. Councils should always take into account its broader impact.
My hon. Friend has set out a scene in his town of Morecambe that certainly causes me concern. In broad terms, he raises several issues with regard to the overall governance of town and parish councils. We are very hot on governance with regard to this place, and very hot on governance issues when it comes to upper-tier authorities, boroughs and districts; historically, because town and parish councillors do not receive remuneration for their service, they are slightly off the grid. I have been considering the situation with representative bodies of the town and parish councils. He has given me food for thought, and I shall continue my deliberations.
My hon. Friend also raises a question to which I am afraid I do not have the answer, but I shall seek it back at the Department and, if he will allow me, write to him about the use of a precept for works outside the jurisdiction that is raising the precept as part of the council tax bill. I shall check on that and seek advice. Also, I do not believe that when a precept is raised by the considerable level that my hon. Friend has told the House about this afternoon, it can be used, by sleight of hand, to—I do not use this term in a pejorative sense—fill the coffers of a higher tax authority. The precept is the precept, as I understand it, and that precept belongs to the raising body, which in this case is Morecambe Town Council. I do not think that it can be transferred—that a vast sum of money raised for a specific reason in a one-off increase could suddenly be transposed into Lancaster City Council or Lancashire County Council’s budgets. I do not think that can be done, but I will check on that and revert on that point to my hon. Friend.
My hon. Friend has set out an issue of concern, but I would like to take this opportunity to acknowledge the work of the almost 9,000 town and parish councils across England, and the work that councillors do free, gratis and for nothing to improve the quality of life and wellbeing of their communities and to help create and maintain places where people are proud to live. They are often the unsung heroes of our local government family. They are close to the communities they serve, they know them and they play a vital role.
As my hon. Friend will be aware, council tax is set by local authorities, including town and parish councils, which will decide what level of council tax they need to raise, taking into account their individual circumstances. As he will know, the Government set referendum principles each year for principal authorities, to ensure that where they set excessive increases, they must be approved by local voters through a referendum, the rules of which are clearly set out. Those referendum principles strike a balance between giving councils flexibility to raise council tax to meet spending pressures without overburdening council tax payers.
For 2024-25, the Government have consulted on continuing our approach of not applying referendum principles to town and parish councils. That carve-out comes with a clear expectation that town and parish councils will take all available steps to mitigate the need for council tax increases, and that the Government will see clear evidence of that restraint. We would also expect authorities to take the resources that they already have available into account before setting increases.
None of that precludes a town or parish council raising money for a specific purpose. I can remember having served as a parish councillor in Oxfordshire. We had a one-off increase of some considerable percentage points to buy a parcel of land that had become available in order to extend a graveyard in the village. It was a one-off chance to do it and we grasped it. We consulted the village community, they saw the benefit of it, and that is what we did. We are not seeking to preclude or clamp down on initiatives by town and parish councils to help make their towns or parishes better.
The point that my hon. Friend has raised, as I understand the mathematics of it, is that last year Morecambe Town Council set a precept increase of £105.14 on the band D bill, which represents a fairly significant rise of 231% on the previous year. That was for the purpose of buying an asset, which my hon. Friend has advised was not on the market; whether it was on the market or not, however, the council has pulled away from that and decided not to buy it.
The question, therefore, has to be: what happens to the precept that the good burghers or Morecambe have paid, which is now sitting, at least notionally, on the balance sheet of Morecambe Town Council? Well, my hunch would be that, if it is not able to pay it back—I think that trying to work out each household’s bill and whether the person who paid the precept is still in the house, as they may have died or moved, could be extremely onerous administratively and possibly counterproductive —it does not take huge genius to think that one could bank that money and explain that the town council precept would be frozen to the point of zero, until that exceptional nest egg accrued from that large 231% increase had been spent.
David Morris
The precept was raised last year by a certain amount, but then there was the special amount as well; in other words, there were two precepts. That is what happened, and the £1 million precept has just been set to one side and carried forward this year. There was an increase in the precept itself, which is very hard to explain because it has all been mixed together, but there was a separate precept for this £1 million to buy the land that was not for sale.
Simon Hoare
I am grateful to my hon. Friend for that clarification. I think, given the fact that there now appears to have been two precept streams, one of which could be described as an extraordinary precept for a specific purpose, I would certainly be suggesting to Morecambe Town Council that the precept there—the element of the precept for the 2024-25 council tax year—be frozen to zero, because clearly it has significant resources still in the coffers. I will also tell my hon. Friend that I shall be writing to the town clerk of Morecambe Town Council to get a much clearer picture of the history of this activity and of what the council is proposing to do with what anybody would describe as a fairly large slug of money sitting in the accounts which was raised for a specific purpose that has become obsolete because the opportunity to purchase has been changed.
This case speaks to an important point about transparency and accountability. It is so important to ensure that all of our councils, irrespective of the level they are operating at, are accountable—principally and primarily accountable to their electorates and the communities they serve. There is no greater need for transparency than in the use of income raised from council tax. Town and parish councils must comply with the requirements of transparency legislation, just like the principal authorities. I highlight to my hon. Friend the local government transparency code 2015, which requires all local authorities with annual income or expenditure exceeding £200,000 to publish all payments exceeding £500 in value and all payments made via a government procurement card. It is also mandatory for parish councils with sufficient turnover to meet the requirements of the code. Of course, where there are concerns, we would recommend that the authority is contacted directly in the first instance. I know my hon. Friend has bent over backwards to try to secure some clarity regarding the numbers at hand.
We support, champion and applaud the work that town and parish councils do up and down the land. When setting council tax and precept, we expect the sector to show restraint and to be able to justify increases to those they expect to pay it. We reserve the right to introduce referenda principles for them should they breach that restraint. Our 2016 consultation on the topic made that position clear, as does our stipulation in the recent consultation on the provisional settlement. The Government and I will keep this under review, and action will be taken if necessary.
We believe that our current approach is the right one, but we are always open to change when or if the canon of evidence persuades us that that is the right thing to do. My hon. Friend the Member for Morecambe and Lunesdale has, if I may put it in these terms, shone a light on a rather cloudy story—one that requires further investigation. As I say, I shall revert to my hon. Friend on the two technical points. I shall contact the clerk of the town council with some degree of urgency—certainly before the precepts are set and the council tax bills are issued—to try to finally get to the bottom of this issue, which has clearly concerned my hon. Friend to the extent that he has raised this with the Prime Minister and also here this afternoon. It is also clearly causing much distress and concern to the many residents who have the great luck to live in Morecambe, but who are not so lucky to pay such an enormous town council precept.
Question put and agreed to.