Local Government Funding: Rural Areas

Debate between Baroness Hayman of Ullock and Marcus Jones

Monday 11th January 2016 Commons Chamber

[Mr Jones]

It is down to local authorities whether they feel it right to increase council tax. As I said, the increase that has been built into the figures is 1.3%, which is currently the rate of inflation, and that does not factor in, as I said, an increase up to the 2% referendum principles.

Let me deal with the issue that my hon. Friend the Member for Beverley and Holderness raised in relation to full business rate retention. I can assure the House that a number of consultations are still to be undertaken on full business rate retention. No details have been finalised on how that system will work. Obviously we need to ensure that no areas are left behind when we move to the new system, which has been welcomed, as hon. Members have said, and that includes safeguarding a number of rural authorities that are not in as strong a position as many urban authorities when it comes to raising business rates.

We also need to ensure that we incentivise local areas to increase their business rate base and increase growth and the jobs that come with it. We need to look at that in the context of balancing that reward with the risk associated with challenges on revaluations and when business rates are no longer collected. Such instances were mentioned earlier in the debate. I just want to reassure my hon. Friend the Member for Beverley and Holderness that the Government are considering that very carefully for the future.

My right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) made an extremely powerful case for county areas that include both rural and urban areas. The hon. Member for Workington (Sue Hayman) put the case for Cumbria and mentioned the challenges faced by rural authorities, particularly those affected by the recent flooding. The Government obviously have a great deal of sympathy for the people facing those challenges in Cumbria. We have put forward a significant support package of £60 million to help people in places, such as Cumbria, that have been significantly affected by the recent flooding.

My hon. Friend the Member for North Dorset (Simon Hoare) raised a number of issues. He said that he would like to see more opportunities for district councils to implement a £5 increase in their council tax, rather than the 2% referendum principle. He mentioned the challenge around local planning fees, which I am sure is something we will take on board. He also mentioned the importance of adult social care, as did my hon. Friends the Members for Thirsk and Malton (Kevin Hollinrake) and for St Ives (Derek Thomas) and a number of other colleagues. As I said earlier, the Government are putting forward an additional £1.5 billion through the better care fund. I would like to reassure hon. Members that, unlike the current iteration of that fund, the £1.5 billion will all be going to local government.

I completely agree with my hon. Friend the Member for South East Cornwall (Mrs Murray) that car parking should not be used, as she put it, as a cash cow. The figures we have prepared certainly do not take into account any increase in fees and charges that local authorities might wish to make.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) made a number of points, one of which was the need, in his view, for local government reorganisation. The Government are willing to listen to proposals, but I am sure that he will know that they must be local proposals that are brought to the Department.

My hon. Friend the Member for North Devon (Peter Heaton-Jones) made a number of points. He mentioned coastal deprivation, which is an extremely important point. He will be glad to know that the coastal communities fund has been extended for another three years, with £90 million. He invited me to visit Ilfracombe, and I look forward to doing so the next time I am in that neck of the woods. During the summer I spent several periods in Cornwall and Devon on visits. I was extremely impressed by the approach of many areas, particularly how local government was trying to deal with the challenges that are currently faced.

[Sue Hayman]

We have deprived coastal communities in west Cumbria as well. With regard to the retention of full business rates, one of the areas that we get the most funding from is the nuclear industry, from which we retain 50% of business rates, but the proposal for new build is that the Government would take 100% of business rates. Will the Minister confirm that that will be looked at as part of the funding formula?

[Mr Jones]

Obviously we are looking at the whole of the funding that comes from business rates. I hope that the hon. Lady will be supportive of the nuclear industry, because there seems to be some confusion about that. I hope that she will also support Trident, which is also an important part of industry in this country.

My hon. Friend the Member for Isle of Wight (Mr Turner) set out the challenges that the island faces. I thank him for bringing representatives of his council to see me last week.

The hon. Member for Croydon North (Mr Reed) set out a number of challenges that the Government face in this regard, but he did not say anything about the main reason we are in the position of having to make extremely difficult decisions—the deficit that his party left behind when last in government.

We have recognised the challenges faced in rural areas and agree with many of the points made today. We are committed to supporting our rural areas, even at this time when there are some differences in opinion about how that is achieved. We want to give rural areas as much power as possible to grow their local economies and support their communities. This is a time of big opportunity and expectation of reform in local government. I assure hon. Members that we are listening carefully as we prepare the final settlement and consider how the transition towards 100% business rates retention happens. As I say, we are in a period of consultation. We will add the representations made in this debate to that consultation. I encourage right hon. and hon. Members and their councils to make written representations by Friday. We are listening carefully to colleagues. I have listened carefully to what has been said in the House today, and we continue to listen carefully to our colleagues in local government.