Local Government Finance

Baroness Quin Excerpts

Monday 18th July 2011 Lords Chamber

[Baroness Hanham]

My Lords, my noble friend was a much respected Secretary of State. I still remember the reasons why business rates were centralised. There is no intention of allowing local government to set the business rate; businesses will in effect see no change. The business rate itself will be set nationally, as it is; the discounts, the valuations and the rates that are paid will be the same, so in effect they will be unaffected. However, the area in which we hope and expect to see change is in encouraging local authorities to make sure that they are well in tune with their local businesses, that they try to see their businesses grow and that enterprise and employment follows from that. If business grows, local authorities will be able to benefit from that. I hope my noble friend will understand that the business rate will be as he put it—set nationally.

[Baroness Quin]

My Lords, given the responsibility of Governments to promote balanced economic growth across the country, will the Government give a commitment that the north-south divide, and indeed the gap between the less well-off and better-off areas, will not be allowed to widen as a result of these measures? Could I tempt the Minister to disagree with the Secretary of State in another place, who is reported as saying that at the moment there is no motivation for councils to support local firms or to create new jobs? Gateshead, the council that I have had the closest involvement with in recent years, has been a splendid public entrepreneur in working with private industry to do precisely that. There is therefore a great motivation simply to promote the economic well-being of the area that local councils represent.

[Baroness Hanham]

My Lords, with reference to the noble Baroness’s last question, of course there are local authorities that have been working assiduously to promote economic growth all over the country. Authorities both north and south have worked very hard. On the other hand, they are not really benefiting from that because they are getting nothing back from the business rate. The spending totals remain the same; the control totals stay the same. If they can encourage more enterprise, or more firms into their areas, they will get some of that growth back above the tariffs. That will be helpful because they will be able to reinvest that and to promote the economy better. There is an advantage, but I would certainly not underestimate the amount of work that local authorities have already done. I have seen quite a lot of it during my year as a Minister, so I am grateful for it.

Within the spending review, the control totals will remain the same, although, as I have explained, between the tariffs and the top-ups there will be a switch of resources from those that have more business rate to those that have less. I do not think anyone will be any worse or better off as a result for the time being.