Local Government Finance Bill (Ninth sitting)
Debate between Gareth Thomas and Justin Tomlinson(7 years, 9 months ago)
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Justin Tomlinson
That certainly has potential, particularly now that we will be incentivising local authorities to grow their business rate base. The key is to make sure that those that have a vested interest in making their town centre a success are equipped to do so. We have had some very good success stories with the BIDs, and this is a good move by the Government to further unleash that potential.
Mr Thomas
It is always a pleasure to see the hon. Member for Swindon North tempted to speak in this Committee. He gave an interesting southern example to complement the example given by my hon. Friend for Oldham West and Royton of the potential benefits of the clause.
We need to understand why we are having to discuss clause 37 and schedule 5. It appears to be because Ministers did not get it right when the Business Improvement Districts (Property Owners) (England) Regulations 2014 were made. That was an opportunity to solve the apparently odd situation whereby property owner-led business improvement districts could be established only where a business rate supplement was in place.
As the Minister hinted, the only place where a business rate supplement is in place at the moment is in London, where the Crossrail supplement is kicking in. The power of the success of the New West End Company, which has already raised £3.2 million just in its first year, is testimony to the potential strength of property owner-led BIDs. It is a sensible change, although it was brought on by Ministers having made a mistake with the 2014 regulations. Nevertheless, it does provide an opportunity to see whether we can do more to help property owners who want to establish a business improvement district.
I fear that one of the key constraints on property owners will be accessing the details of who owns other properties. Some property owners like to hide their ownership.
Justin Tomlinson
I rise just to confirm that Swindon is benefiting from huge economic growth and a fall in unemployment of more than 60% since 2010 and that 8,100 more people are in jobs. I would welcome any businesses that want to relocate to a growing, successful Swindon.
Mr Thomas
I welcome that. I can only hope, given what the hon. Gentleman has just said, that there are no businesses in Swindon that are worried about the revaluation of business rates, which is what he implies. Perhaps we can discuss that issue when we consider amendment 54.
We know that the social care system is in crisis. We do not want to make that worse, but we also know that a series of other statutory services are not being properly funded either. Full business rates devolution potentially provides the opportunity to close some of the £5.8 billion funding gap that the Local Government Association has identified. However, there is a “but” to that. One of the few things we do know as a result of the summary consultation document published last week is that Ministers intend to axe the £3 billion public health grant that currently goes to local authorities, plus the rural services grant, which may interest the hon. Member for Thirsk and Malton. They have also confirmed the abolition of the Greater London Authority transport grant.
Already, therefore, some of that potential additional £12.8 billion of business rates has been spent, just in the two weeks that we have been considering the Bill. Hopefully, by 2019, we will know exactly what additional responsibilities Ministers want to require of local government and whether there will be any section 31 grants to help to pay for those additional responsibilities. As a result, we will be in a better position to assess the long-term financing of local government.
There is also the question of whether the system of business rates is affordable. I will dwell on that issue in speaking to amendment 54. One of the benefits of amendment 52 is that it would delay the triggering of the majority of the Bill’s provisions, which would give us the chance to have a period to assess properly whether the business rates system is fit for purpose. In that context, I offer amendment 52 as a sensible opportunity to pause, to reflect on local authority financing and to consider whether the business rates system is entirely fit for purpose, or whether there are other ways that we need to think about in terms of the financing of local government.
There is huge concern across councils up and down the land—not only Surrey County Council, but across local government—about their finances. The last thing we want to do is to make the situation worse by getting wrong the implementation of this particular proposal.
Let me turn to amendment 54, which you, Mr Gapes, very generously allowed the debate to begin on. The question is: do business rates work for businesses, do they work for local authorities and do they work for public services? It seems to me, given the huge concern that exists about the business rate revaluations and given other concerns about how local government will be financed, that there should be a full review of business rates before this Bill comes into force.
Given that six of Amazon’s nine distribution warehouses are set to have a fall in business rates, given how little it pays in corporation tax and given how high the business rate bill is going to go up by for many small and medium-sized businesses in our high streets, we have to wonder whether we have the system as correct as we might. The British Retail Consortium has repeatedly voiced the concern—and so did we, earlier in the Committee’s consideration of the Bill—that online retailers have an advantage in terms of costs over businesses that rely on bricks and mortar, not just because their liabilities are lower but because they can offer cheaper prices compared with those on the high street who have to pay business rates. What does that mean for the long-term future of our high streets up and down the country? My hon. Friend the Member for Oldham West and Royton and, to be fair, the hon. Member for North Swindon alluded to the importance of our high streets as community centres and the sense of place that we all value.
Reputable media outlets such as The Times have suggested that online retailers are rated at less than one eighth of the valuation per square metre of some small shops. That is a huge cost differential. Whether it is fair is an open question but, as our economy begins to change significantly and technology moves forward rapidly, we need to think about whether we are levying tax on business in the most appropriate way.
Business rate revaluation hits businesses hardest in areas that have seen rapid property price increases. London is one of the most severely affected areas. It is not just London, though, that is severely hit. I want to come on to Southwold in Suffolk, just south of the Waveney constituency. Sadly, the hon. Member for Waveney is not with us today. He might usefully have reflected on that story. However, we do know that many businesses in Suffolk have raised their concerns.
How significant are the increases in London? You will be interested in this, Mr Gapes, given the constituency you represent. I am sure that the hon. Member for Thirsk and Malton will take this particularly seriously, even if he does not like London very much. The FSB says that business rates in the capital are set to increase by 11%. In some parts of London, the increases are much more significant than that. For example, in Islington, rates are set to increase on average by 27%, and in the City of London, by 25%. In some areas of Mayfair, the increase will be as high as 415%. In the constituency of my hon. Friend the Member for Lewisham, Deptford, the business rate is set to increase by an average of 36%. My hon. Friend the Member for Eltham, who could not be here this morning, will see business rates increase on average by 21% in his borough of Greenwich. Forgive me for being mildly parochial, but in Britain’s most important borough, Harrow, business rates are likely to rise by an average of 14%. In Hillingdon, which is next to Heathrow airport—set to benefit from a third runway—rates will increase by an average of just 1%.
Local Government Finance Bill (Seventh sitting)
Debate between Gareth Thomas and Justin Tomlinson(7 years, 9 months ago)
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Mr Thomas
I think that this amendment will come to be known as the Mackintosh-Hollinrake amendment part 2. I again draw your attention, Sir David, to the excellent report by the Communities and Local Government Committee on what 100% business rates retention might mean. I can assure you that present when the report was agreed was the hon. Member for Northampton South. The report makes very clear his support for the recommendation that the power to raise the multiplier for business rates should be introduced. He wanted, as did the rest of the Select Committee, rises capped so that they were limited to the increase in the average council tax. I do not know whether at that point he foresaw Surrey County Council wanting to increase council tax by 15%. Clearly, a 15% hike in business rates would be completely unacceptable, but it is interesting that members of the Select Committee propose that local authorities should have the power to raise business rates as
“an effective lever to stimulate and foster local economic growth.”
The reason I supported our tabling these as probing amendments was that it is important, during the passage of the Bill, to consider the sources of revenue that local authorities will have to pay for the vital public services that the people of England get from their councils. Given the huge reduction in revenue support grant that we are all familiar with English local authorities having experienced, the two principal sources of income will be business rates and council tax.
The power does exist in law to increase council tax. If that goes beyond a certain threshold—well, Ministers are varying the threshold up and down at will at the moment. There is the power to increase council tax, however, and one can go higher than the threshold if one can get the consent of one’s local residents. There is no similar power for business rates.
In the new Jerusalem that we heard the hon. Member for North Swindon set out at an earlier sitting—I am sure that by now, Sir David, you have had the chance to read his speech—he foresaw business rates being reduced and, across every local authority area that did that, great big new warehouses, out-of-town shopping centres, large businesses moving in and business rates income rising as a result. Unfortunately, in the course of—
Mr Thomas
Let me finish this point and then I will happily give way to the hon. Gentleman, whom I am delighted to see I have woken up. I hope that in the course of the consideration of the Bill to date, he and other members of the Committee have begun to understand that there is a whole series of barriers to economic growth taking place in particular local authority areas. Actually, an individual local authority may not have much scope, if any, to increase its business rates income.
Justin Tomlinson
I suspect that the hon. Gentleman drifted off during my speech, because the key point I made was about the growth of small businesses to medium-sized businesses. That not only generates business rates income and does not require big out-of-town warehouses, but crucially creates yet more jobs that are vital to local residents.
Mr Thomas
I was sufficiently shocked by the sight of a Government Back-Bench Member rising that I did pay attention, but it is possible that, as events have moved on, I cannot recollect every aspect of the hon. Gentleman’s contribution. As punishment, I will go back and re-read it. He makes a partially interesting intervention—if he will forgive me for saying so. He is right: the challenge across the country for future businesses and economic growth is to take the entrepreneurial spirit that leads to the establishment of small businesses in the first place and to turn those into medium-sized businesses and, ultimately, bigger businesses.
Increasingly, as my hon. Friend the Member for Oldham West and Royton made clear, we are seeing more of those small businesses that are successfully transitioning into medium-sized and bigger businesses not needing the size of property that would lead to the increase in business rates income in the way that this Bill implies will be the only way for councils to generate increased business rates income in the future. There is that constraint, plus those that the hon. Member for Waveney alluded to and the barriers that I set out when I took the Committee to Allerdale Borough Council in Cumbria, with the mountains and lakes of the Lake district being natural barriers to economic growth.
We are now privileged to have the hon. Member for Thirsk and Malton with us. He will be delighted that, in a spirit of tribute to him and the hon. Member for Northampton South, I am moving a probing amendment that grants—as he and other members of the Select Committee wanted—the power to raise business rates so that that is included in this legislation. I look forward to hearing the case for raising business rates from the hon. Gentlemen.
As my hon. Friend the Member for Oldham West and Royton alluded to, one can foresee the social care crisis being so severe, and the worry about individual families’ circumstances being so great, that council leaders and councillors up and down the country will not want to go beyond a 1%, 2% or even 0% increase in council tax. However, they might want to look at the big businesses based in their area and potentially increase business rates as a source of income to pay for vital public services.
In the evidence given to the Committee by the chairman of the Federation of Small Businesses, we heard of his desire to see local authorities properly funded, so that the range of discretionary services that councils can offer when they have the resources, and that help businesses, can be available. The Minister’s most recent intervention on car parking charges was interesting. The chairman of the FSB noted in his evidence to us that one reason local authorities raise parking charges is that they have few alternative ways of raising revenue.
Local Government Finance Bill (Eighth sitting)
Debate between Gareth Thomas and Justin Tomlinson(7 years, 9 months ago)
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Mr Thomas
I am not doing down devolution at all; I am merely representing the concerns of the hon. Gentleman’s council, in a way that he is not doing, about its exclusion from the ability to levy the infrastructure supplement. I would applaud his representing his constituents and his council’s concerns properly, and his wanting to see the devolution deal that his council has negotiated enhanced in the way that we are suggesting.
The Minister has made an attempt to justify the exclusion from the measure of all authorities that do not have a combined authority and a Mayor. I have to say that it was not a convincing performance. Given the number of representations that we have heard from county councils and district councils that are frustrated with the insistence of the Secretary of State and the Minister that there has to be a Mayor before they may have this power, we will speak for them in a way that the hon. Member for St Austell and Newquay will not speak for his constituents. We will speak for councils in Swindon in a way that the hon. Member for North Swindon will not. We will speak for the residents of Torbay, who need investment in infrastructure, in a way that the hon. Member for Torbay will not.
Justin Tomlinson (North Swindon) (Con)
To be clear, Labour does not speak on behalf of the people of North Swindon, because I gained the seat, and Labour lost control of the council when it put up council tax by 43% in only three years. That disgraceful situation has meant that we have had a blue town since 2003.
Mr Thomas
When the residents of Swindon hear that there was the opportunity for investment in infrastructure but the hon. Gentleman voted against it, I suspect that a red Swindon will be closer. We will vote for equality—we will press for a Division on this amendment.
Question put, That the amendment be made.
Local Government Finance Bill (Fourth sitting)
Debate between Gareth Thomas and Justin Tomlinson(7 years, 9 months ago)
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Justin Tomlinson (North Swindon) (Con)
It is a pleasure to serve under your chairmanship, Mr Gapes. Through your leadership, we have had a very positive beginning to the Local Government Finance Bill.
I am mindful that I am following a very good speaker, someone who has significant powers and influence: first, the hon. Member for Harrow West magicked up a written answer over lunchtime; and, secondly, he was so persuasive when challenging my hon. Friend the Member for Northampton South to engage with South Northamptonshire Council that that meeting also took place over lunchtime. Therefore, I fear that our very able Minister may be tempted to accept some of the amendments and I feel a need to step up and defend the thrust of the principle behind the debate.
The whole principle is that of incentivising and trusting local authorities, as we heard in evidence on Tuesday. From the Local Government Association briefings, it is clear that councils would like to have the 100%. That is vital in my opinion. I served as a councillor for 10 years and I have been lobbied by and have spoken to a number of local authority representatives. They are interested in seeing further details—I am sure we will be going over things in great detail in coming weeks—but the principle is that they wish to be trusted. They are best placed to make those decisions and to take those actions. On Tuesday, I challenged the witnesses about that. I asked whether there was sufficient business capacity. Understandably, the witnesses were quite defensive, but I was encouraged by their enthusiasm for the challenge and the opportunities being presented.
We must not forget the residents; that is also vital. Often, when we talk about growth in business rates, it means new businesses, expansion and development. That is not always universally welcomed by local residents, as anyone who has ever served on a planning committee would know. It is right that the principle is that, if they are going to be inconvenienced as a community, they should also be rewarded for that.
That also provides a focus for local authorities. I am very fortunate. My local authority is very proactive in this area—our local plan was agreed very early on and it does its best to encourage growth—but it does not necessarily have sufficient focus to speed up the process sometimes. I am lobbied by people trying to bring new development to my constituency, who say, “We would like it to be quicker.”
Mr Thomas
I am delighted that the hon. Gentleman has been encouraged, no doubt by the Minister and the Whip, to speak in defence of the Bill. As he will remember from Tuesday’s sitting—I think he was present—one of the witnesses, one of the voices of business, said that, because of the scale of the cuts in funding to local authorities, many of the services labelled as discretionary which help businesses have been substantially cut. Does that not underpin the concern that we on the Labour Benches have about the need for proper redistribution?
Justin Tomlinson
First, to be absolutely clear, I do not need any encouragement by the Whips to engage. I was elected in my own right. That intervention actually strengthens my point. Whoever is in government, difficult decisions have to be taken about public spending, and elected representatives are mindful of the people they are accountable to. It is often easier to focus decisions on some of the services—perhaps those that will directly affect businesses, since they will not necessarily queue up at the ballot boxes. However, under the proposed new system, protecting business income through business rates will become a greater priority for local authorities. We have rightly focused on new opportunities, but the change will also protect existing businesses and give them a greater ability to get an audience with decision makers and say, “By working together, we can not only grow but protect existing jobs.”
Justin Tomlinson
The hon. Gentleman pre-empts some of the things I am coming to. I made it clear that I am very lucky to be the MP for an area with a local authority that is proactive in this respect, but that is not a given across the rest of the country. I do not disparage other councils, because all councils have to decide their own priorities. I represent a high-growth area where, for those who are interested, 8,100 jobs have been created since 2010. I know it is hard to believe, but that is greater than the average gate at the County ground. That is because the council recognises that it should be proactive. Could we have done that faster? Yes. We are landlocked by several local authorities that are less keen on additional development and growth. They have their reasons for that, and I respect those.
We will deal later with the pooling of some decisions and the sharing of some benefits. I was particularly taken by the point about Heathrow, which I will come back to, because I see further potential in that area.
Mr Thomas
Before the hon. Gentleman flies away to Heathrow, may I take him back to the example that I gave this morning of Allerdale Council? Its one major town is Keswick and it is surrounded by natural barriers to growth, so it is highly unlikely that there is substantial space for the type of property-based development that I accept the Bill could encourage in some areas.
Justin Tomlinson
I was coming to that point. As a broad principle, we are looking at not only new opportunities but protecting established industries, which is obviously topical. Local authorities can lobby the Government to ensure that such industries are protected, particularly if there is ever a change in the country.
Justin Tomlinson
May I ask the shadow Minister to be ever so slightly patient? I am being tempted to fly in various directions. I will finish this point, then turn to that one.
Why does this matter? We all talk about new income opportunities and providing incentives, and trusting local authorities as the best vehicles to deliver those. That is incredibly important, but we seem to be missing the emphasis on creating jobs. As I said, 8,100 new jobs have been created in my constituency and unemployment has fallen by 60%, in part because new regeneration and development projects have attracted businesses from other local authority areas that have not supported the business community so proactively. Those things matter to the people on the ground, because they benefit directly. As I said, the 60% fall in unemployment is making a genuine difference to people. We have to protect the maximum potential of the incentives on offer.
Justin Tomlinson
Absolutely. I only focused on Heathrow because that was the one that was mentioned; there are lots of national infrastructure projects. The reality is that Heathrow will be expanded, so those residents are going to be inconvenienced.
At least this proposal would have allowed an opportunity for the respective and closest local authorities to do those deals and say, “We can see the inevitability, but we could speed up the process if we were to gain some more of the reward for the inconvenience of this national infrastructure project that happens to be sited in our area.” I would think that was a reasonable ask of my local area, if there was a demonstrable and tangible gain for that area.
Mr Thomas
The hon. Gentleman is advancing an interesting argument and I can see how, in certain circumstances, pooling might enable the benefit of a big infrastructure investment to be shared more widely.
Let us come back to the third runway. That is a national piece of infrastructure that will benefit the whole country. Therefore, the pooling point is surely less applicable than that about ensuring that the business rate growth that the third runway generates can be redistributed across the country. Amendments 1 and 23 would help to achieve that; I suspect pooling would not mean that every local authority in England would benefit.
Justin Tomlinson
I understand that, but that is saying to the local authorities, “We don’t trust you to lead on those sorts of negotiations.” I was incredibly impressed by the witnesses who gave evidence on Tuesday. I wanted to challenge and push them; I expected them to say that they were not up for this, but their enthusiasm and capability to deal with such matters was crystal clear. I am excited by these opportunities. There are lessons to be learned. We have seen some of this take place with LEPs. They are not perfect—they are still in their infancy —but there have been examples of good practice.
For me, the clause is about giving local authorities power, and a savvy local authority council leader would be leading conversations. I do not say that randomly. I have been an MP for six years and a councillor for 10 in a fast-growth town that has taken more than its fair share of housing development—in fact, it has been one of the fastest-growing towns, year on year, for the last 20 years. We have learned that it is better to lead those conversations, do the deals and talk to our less inclined neighbouring authorities to try to find ways to speed up the process, because, while I appreciate that there is inconvenience for local residents, it is good for the economy and good for people to be given jobs and housing. There is no better way of doing that than by releasing income.
Mr Thomas
The hon. Gentleman makes an interesting point. I agree that councils are often better at grasping the opportunities—be they for housing or infrastructure—that come in the wake of big decisions, and there are many examples of Labour leaders having taken a similar approach, Manchester’s being a classic case. However, that is not an argument against amendments 1 and 23, or indeed amendment 2. What does he have against the substantial redistribution that the amendments would achieve?
Justin Tomlinson
That neatly ties into my conclusion, which is purely about blunting the maximum incentive potential. If we are to focus minds, we should say to those innovative, great local authority leaders, “We will give you the tools to generate income and growth, and create new jobs, and to be rewarded for the inconvenience of growth and development.” We have to give them every single opportunity. If we have redistribution, local authorities will keep knocking on the door repeatedly to plead with the Minister for their special cases.
I have never found an MP or local authority who does not feel that their area is hard done by in some way. We are all skilled in looking at the statistics and saying, “We have a unique, special case for additional funding.” We need to allow like-minded local authority leaders who work well together, who lead with the LGA and share best practice, to have those sensible conversations. Fundamentally, we are not a million miles apart; it is just that the Government side are probably a bit more confident and trusting of the abilities and enthusiasm of local authority leaders.
Justin Tomlinson
That is a very interesting intervention. By pure coincidence, I happen to have the Honda factory in my constituency. Another MP raised that point on the Floor of the House during the Brexit debate. I gently remind the hon. Gentleman that Honda operations, which used to supply 100% of its cars to Europe three years ago, was ahead of the Government and public opinion and switched to global exporting of the cars: 80% of the cars now go globally. The impact of the referendum does not cause any issue at all, now or in the future, to the major employer in my constituency.
We could look at this hypothetically. There will always be issues beyond local authority control, because the world changes. Industries and technologies will change. That is why there are protections in the Bill. There would also be an incentive for local authorities to start planning and looking ahead. Local authorities and MPs get lobbied regularly by employers telling us either that things are going great and they are looking to expand, or that things are potentially going wrong. When we are told that things are going wrong, there will now be an extra incentive to engage with them to find a way forward.
I remember when Honda was struggling during the financial downturn. It was still producing all those cars but could not sell them. The local authority—this is a good example—found the company significant amounts of land to store those cars on. Again, I was lucky that we had a forward-thinking, proactive local authority. Every local authority is different and they have competing priorities; this is about ensuring that that priority is absolutely at the top.
Mr Thomas
I have been listening keenly to the hon. Gentleman. He was going to come to the example of the council that has a series of natural barriers to growth: the Allerdale Borough Council, which Keswick sits in. I have not heard him talk about how the Bill will generate massive new incentives for it, but as the hon. Member for Waveney is now present, perhaps he might allude to the problems facing coastal authorities, where there is an obvious natural barrier to economic growth.
Justin Tomlinson
I would not dare to incur the wrath of the Chair of the Committee, Mr Gapes, who has made it clear that this is not the time to discuss coastal matters, although I am sure that by the end of the 10 sittings we would all welcome a day trip to some of those coastal constituencies to see them at first hand.
I felt I had addressed the point about landlocked areas. Although some areas will find it easier to attract additional large-scale developments, such as the warehouses I mentioned, this is also about maintaining and protecting industries that are already there. That may be a case of lobbying national legislators not to make changes, in order to protect them. It is also about expanding microbusinesses to tip them into a size at which they have to pay business rates, having grown sufficiently and increased their headcount. Not every element of additional revenue will be raised purely by big expansion; it will also be done by speeding up organic growth that delivers income and jobs.
Mr Thomas
My hon. Friend makes a good point. I will come back to the issue of new responsibilities, if he will forgive me, because it is better covered in our debate on clause 1 stand part than on amendments 1 and 23.
It was lovely to have the hon. Member for North Swindon get up and take part in this debate. I hope he will not be intimidated and will be a regular contributor on other occasions. I had a sense of Don Quixote and his trusty, loyal servant Sancho Panza as the hon. Gentleman defended the Bill’s principles without really getting into the issues of redistribution that we touch on in the amendments. It was rather revealing that he talked about the blunting of incentives if redistribution continued to be a significant factor; that rather gave the game away and will worry many in local government as to what this measure will mean in practice.
I was fascinated by the hon. Gentleman’s recollection of witnesses’ enthusiasm for the incentives in the Bill. Let me draw him back to the evidence we received on Tuesday from Mr Dominic Williams of the Federation of Small Businesses. Commenting on the incentives that Ministers suggest are in the Bill, he said:
“our view is that that is not really an effective incentive, for a number of reasons. First, it only applies to the development of new physical property. It is an incentive to permit more development; it is not necessarily an incentive to look after your existing business community. Secondly, throughout much of the country, particularly over the last few years, there has been very little development”.
That would suggest that the current system of 50% distribution has not produced evidence that 100% business rates retention will offer any more of an incentive. He went on:
“Thirdly, where there has been development, it has tended to be out-of-town shopping centres. The way that the system has worked since the last reform has given local authorities an incentive to give consent to out-of-town shopping centres, which take away trade from the existing town centre.”
He also said something rather revealing on incentives to work with business:
“What I think is more important is that if local authorities are correctly funded to do what they are meant to do, they will be supportive of business. If they are underfunded—I do not blame them for this—they have to put the money towards their statutory obligations and cut back on some of their discretionary activities.”––[Official Report, Local Government Finance Public Bill Committee, 31 January 2017; c. 45, Q81.]
Justin Tomlinson
It was very kind of the FSB to strengthen my case. First, 50% clearly was not enough; that is why we need the maximum incentive. On the town centre principle, I addressed in my speech how councils are only looking at car parking revenue, not the business rates collection within town centres; that strengthens my point. My final ask is that the FSB rallies its members to stand for positions in local authorities, so that they can directly influence how effective local authorities are.
Mr Thomas
As I said, the hon. Gentleman’s contribution was inspirational in terms of recalling great literature of the past and the tale of Don Quixote and Sancho Panza. The evidence from the FSB was revealing: the economic incentives will not be anything like as significant as Ministers hope and the measure will help to drive further reductions in spending power, it would appear, without any evidence from Ministers to the contrary.
Justin Tomlinson
Surely if developers were converting employment land into residential land, the council would still receive income, but through council tax rather than business rates.
Justin Tomlinson
I do not have all the figures immediately to hand, but I would be very excited about the new homes bonus money that would be released very quickly following the decision to transfer that land.
Local Government Finance Bill (First sitting)
Debate between Gareth Thomas and Justin Tomlinson(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Mr Thomas
Q The deletion of the revenue support grant, which funds social care among other things, is one of the key aspects of the Bill. I gently ask again: does the Minister expect social care to be better funded as a result of the abolition of the revenue support grant and the 100% devolution of business rates, or not?
Mr Jones: Indeed, you are right, the revenue support grant will be rolled in to the quantum of the funding and the business rates retention. But I would also point out that the Bill puts in place a framework for the retention of business rates by local authorities. It does not go into the detail of what additional responsibilities local government will take on as a result of the additional funding. That is being brought forward alongside this through further work. We are also doing further work in relation to the fair funding review, which will certainly take into account the pressures of adult social care. We will be bringing forward that work, further consultation and a response to the initial consultation alongside work that is ongoing in relation to the Bill.
Justin Tomlinson
Q I spent 10 very happy years as a councillor and I get lobbied regularly by council leaders and experienced councillors. Minister, you are widely respected for having a good command of this area and for recognising that there is huge potential within local authorities.
I have a number of questions. The first is: the heart of the Bill is about encouraging and incentivising local authorities, but what more can we do to ensure that there is the capacity to take advantage of that? In Communities and Local Government questions, I raised the point about attracting more business-minded people. One of the challenges is that we will be expecting more of local authorities. When we go out, all of us, with our respective parties recruiting potential councillors, we will be asking more of their time. How can we attract sufficient numbers who have the expertise to be able to understand and deliver on what will be very large budgets? It is about looking at business-minded people and at councillors of all backgrounds to have that capacity.
Mr Jones: Thank you for your kind comments. You are absolutely right. The Bill is all about incentivising growth and incentivising local authorities to bring forward growth, so that a particular local authority area can benefit from the extension of its business rates base. Post-implementation of the system, it will be an exciting time to be a member of a local authority. We already have some excellent councillors up and down the country who are very focused on supporting business and growth in their areas, but you make a very good point about attracting new councillors who are business-savvy and entrepreneurial.
What we are doing here with the reforms will attract more business-savvy people in that sense, but we also have to help those people. My Department has to work with organisations such as the Local Government Association on councillor development and also on how councils work. One of the challenges when I was a local councillor and a council leader was that many council meetings were at times that were not appropriate for people who are running businesses. So councils will need to be mindful, if they want to attract high-quality people, about how that works and about how the officer team at the council works. For example, officers used to attend the council for briefings with me at six o’clock at night to reflect the fact that I had a full-time job. Those are things that certainly need to be considered, but I think that this will be a more attractive proposition for the type of people we all want to see in local government.