Oral Answers to Questions

Jim McMahon Excerpts

Monday 30th April 2018 Commons Chamber

[Jake Berry]

We are already investing some £67 million in the Humber and the Greater Lincolnshire local enterprise partnership, and I note that £20 million of that is going into my hon. Friend’s constituency. He will be aware that we committed in the industrial strategy to work on a business case for a Grimsby and Cleethorpes town deal. I hope that, in demonstrating that success, we can put our northern power towns at the heart of the northern powerhouse.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

There is no surprise that the lived experience of people in Shields is of growth not happening, because when the northern powerhouse was launched in 2014, Government capital spending per person was £543 higher in London than in the north-east. London has seen its investment increase to £1,352 per person but, instead of the Government’s closing the gap, the north-east saw a cut in capital spending that increased the gap by 17% to £634 per person. How can the Government credibly claim to be the champions of the northern powerhouse when the evidence says that the money has not followed?

[Jake Berry]

I am certainly not going to take any lectures on the northern powerhouse from the hon. Gentleman, because after his election he described it as the “northern poorhouse”. Unlike Opposition Members, the Government are behind the north, not least by investing £13 billion in northern transport—more than any Government in history, including the Labour Government.

Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Jim McMahon Excerpts

2nd reading: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 23rd April 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Happy St George’s day to you and to the rest of the House, Madam Deputy Speaker.

I thank the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Richmond (Yorks) (Rishi Sunak), for meeting me last week to go through some of the Bill’s more technical aspects, which will save other Members the headache of hearing some of them today.

The Opposition broadly welcome both of the changes in the Bill. Clause 1 seeks to address the Supreme Court’s decision on the staircase tax, relating to how unconnected units occupied by the same business are treated. The measure will put businesses in no worse position than they would have been before the court ruling. Clause 2 will give local authorities the power to increase council tax on homes that are deemed to be long-term empty.

While the Opposition support clauses 1 and 2, we need assurances from the Government that they will not cause detriment to local authority finances. That is particularly the case with clause 1, which will reinstate features of business rates valuation practice that applied prior to the Supreme Court case. The Housing, Communities and Local Government Committee has been clear that the effects of the provision on individual local authorities ought to be quantified and supported. The Government have not been clear about how individual local authorities will be affected or about those that will be picking up the tab as a result of the reforms. It has therefore been difficult to give the measures adequate scrutiny at this stage, so we hope to explore some of them in Committee.

Some wider issues also need consideration. The Federation of Small Businesses has illustrated the problems facing smaller firms that necessarily operate in large premises but do not qualify for small business rate relief. For example, childcare providers require space by the nature of their activity, but that takes them above the small business rate relief threshold. Far more also needs to be done to protect the high street, and town and city centres. Business rates are a significant cost and can be the difference between surviving or failing. We recognise that a taxation system cannot sit in isolation and must support the Government’s broader policy objectives, and we have seen some of the largest corporations get away without paying their fair share of tax while premises—the property-based businesses that are the lifeblood or foundation of many of our communities and are essential for town centres to thrive—are taxed through business rates before they earn a single penny.

Turning to clause 2, we welcome the move to bring long-term empty properties back into use by incentivising the owners of such homes to act, but we are also keen to tackle the shortage of available housing in some areas. It has been Labour policy for some time now—the Government’s policy falls short of this—to see 300% council tax charged under the measures that are being put forward today. There are currently 200,000 empty properties in England, and we have seen homelessness increase steadily over the past eight years. As we speak, 120,000 children have nowhere to call home. They are staying with friends and family, and many of them do not have a bedroom of their own. Meanwhile, the evidence of rough sleeping and homelessness is plain to see in towns and cities up and down the land. Councils, particularly in London, which has the highest concentration of empty properties, are battling to meet their statutory obligations and housing duties due to increasing demand, rising unaffordability and the effects of eight years of Government cuts to local authority revenues. It is absolutely right that owners of empty properties pay a premium if their property is suitable to let but they fail to do so. However, any move must form part of a wider strategy to bring empty homes back into use, including positive, proactive support to get homes back on the market.

We welcome the Government’s acknowledgement of some of the faults in the system and their move towards adopting Labour’s policy on empty homes, but they could of course have gone further. Housing is one of the most pressing issues facing this country, and eight in 10 people think the Government ought to do more to address the housing crisis. We know that, which is why my right hon. Friend the Member for Wentworth and Dearne (John Healey) has launched a Green Paper on affordable housing—a framework to change the country’s approach to affordable housing—as part of a new national mission to solve the country’s housing crisis. From planning to funding right through to delivery, we need a comprehensive, joined-up strategy to tackle the housing crisis.

The Conservative-chaired Local Government Association —I declare an interest as one of its vice-presidents—agrees that there is more to be done. It would like the Government to go further and give councils greater power to borrow, to build and to deliver the homes that we need—not on a case-by-case basis, but by trusting local authorities to understand their areas and to get homes built quickly.

[Mr Jim Cunningham (Coventry South) (Lab)]

Like me, my hon. Friend has experience of local government, and he will know that if the Government are serious about dealing with this country’s housing crisis, they would free local government to build social housing on a major scale. That would determine the Government’s level of commitment. So far, however, they have not shown that commitment. There are families in my constituency in Coventry who cannot get accommodation, which is a terrible situation for people to find themselves in.

[Jim McMahon]

Absolutely. In some areas, the housing crisis was a significant factor in why people voted to leave the European Union. People do not feel confident about this country’s future, and housing is a vital part of that. If people do not have the security of a home or a secure tenure, they will rightly be nervous about what the future may bring, so the Government need to do much, much more. However, the idea that they can command and control from Whitehall and expect every community to benefit has been disproven time after time. As my hon. Friend pointed out, we should empower local government to get on. Councils know their areas. They have the local partnerships and know the sites. They have planning departments that need greater support. If they were given the resources, they could do far more, but this must be about giving them independence and freedom, not making them wait for the Government to offer crumbs from the table, which is how many councils feel.

[Justin Tomlinson]

I agree with much of that principle, but that is what local plans are for, and we have cross-party support in my patch of Swindon. This Government are empowering local communities to shape future development if they choose to engage with the opportunities.

[Jim McMahon]

I accept that point, but we also need to accept that local plans are limited in that, by and large—of course they do more than this—they are about land supply to support the number of housing units that will be built. They do not discuss the mixture of tenure or go into detail about the funding plan that will support the proposals. A local authority could identify, based on its population and demographics, that it needs a certain proportion of affordable or social housing, for example, but there will be no funding plan to deliver on that. A local plan could sit on a shelf for 10 years, but if the council’s ability to borrow is curtailed, it cannot lay the bricks to build social housing. Like the hon. Gentleman, I know my local area and the council knows the area too, but it is constantly under the cosh of funding cuts. It does not have the capacity and it needs it to be freed up.

[Mr Jim Cunningham]

My hon. Friend is generous in allowing me to intervene again. If the Government really believe in local democracy and want to encourage a property-owning democracy, they should do what used to be done. Local authorities used to give out mortgages and build houses for sale, and they used to build social housing. That is how to do it if the Government really mean to tackle the problem, and that is what they are not doing.

--- Later in debate ---

[Jim McMahon]

That is a fair point and, bringing it back to the Bill, we will see the rigour that local authorities apply to understanding what clause 1 means for their base funding requirements and what clause 2 means for how much money can be generated to support bringing more rental homes back into use. We know local government will deliver because, time after time, it has really stepped up and done what is asked of it.

Finally, the Bill feeds into the wider debate about the viability of local government finance. Issues such as the staircase tax have raised important points, but we need to move away from the uncertainty and the reliance on favourable Government decisions to fund local services. Any new responsibilities must be backed up with the resources to guarantee that councils can meet their statutory duties.

By the end of the decade, local government will be facing a funding gap of £5 billion which, time after time, the Chancellor seems to be wilfully ignoring. I understand that Ministers have been trying to get an audience with him, but they have failed. The consequence is that our councils often face financial uncertainty.

As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), my boss, says, you cannot empower local government if you impoverish it.

Local Government Funding

Jim McMahon Excerpts

Wednesday 28th March 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I thank all Members who have participated in this debate. It is fair to say that local government finance is not always the thing that enthuses people, but what we have learned today is that finance is there for a purpose: to deliver essential public services—or, in the words of the Secretary of State, “vital services on which we all depend.” To be fair though, that is probably where the Secretary of State’s understanding ends. He gets the principle, but not the true impact of austerity.

The best preparation for this debate would have been completely wasted because it would have missed the gift that keeps on giving, which is that the Secretary of State’s testbed for local government seems to be the sinking of the Titanic—a vessel that went out 106 years ago not fit for the journey ahead, without enough life rafts for the people on it and completely misunderstanding that there was an iceberg ahead and the damage that it would cause. Now, Northamptonshire might be the tip of the iceberg in local government terms, but the truth is that many councils are really struggling beneath the surface.

We have heard from my hon. Friends the Members for Garston and Halewood (Maria Eagle), for Bradford West (Naz Shah), for Reading East (Matt Rodda), for Stockton North (Alex Cunningham), for Dulwich and West Norwood (Helen Hayes), for Bedford (Mohammad Yasin), for Glasgow North East (Mr Sweeney) and for Leeds North West (Alex Sobel). The thing that ran through all those contributions was the human and community cost of taking money from public services. We hear that 64% of the Government grant has been taken away in Liverpool. That is not just a number on a balance sheet. It was money for essential services that existed to support a community that needed support to grow, develop and prosper. But that rug has been completely pulled from under the people of Liverpool.

We heard from my hon. Friend the Member for Reading East that local councils have very little clarity about what is heading towards them beyond 2020. It is true that many came forward as part of the multi-year settlement, but it is also true that the fair funding settlement is sending shivers down the spine of many local councils because they know exactly what it means. We saw it with the deletion of the area-based grant in 2010, when money directed at areas of high deprivation was completely taken away. Over recent years, the introduction of the transition grant and the rural services delivery grant have targeted mainly Tory shires. We know what fair funding really means to the Government.

[Maria Caulfield]

I have to disagree. As I said in my speech, rural areas have had 45% less funding per head of population for decades. The rural services delivery grant goes some way, although not all the way, to redressing that balance.

[Jim McMahon]

Well, actually, it does not. I will give the hon. Lady an example. If a county area that had a strong council tax base was given £1 in central Government funding and 90p of that £1 was taken away, the area was treated favourably in the transition grant and the rural services delivery grant. If a metropolitan area had £100 and £50 was taken away, far more money that was delivering public services in that area has been taken away—£50 versus the 90p taken from the rural area—because the starting point is very different.

We cannot compare an area with a strong council tax base of high-value properties due to the way in which that area has developed historically—nothing to do with the local authority—with a post-industrial town where the council tax base is predicated on low house values. In my area, 87% of properties are in band A and band B, so there is a very low starting point. That is why far more is needed in council tax from those areas to generate the same amount of money.

[Maria Caulfield]

The hon. Gentleman is being extremely generous in giving way. Perhaps he should come to see the areas of deprivation in Newhaven in my constituency. There are no high-cost properties there. Perhaps he needs to look at rural areas in the round.

[Jim McMahon]

This ought not to be a fight between areas of high deprivation in our urban core and recognising that some services cost more to deliver in rural areas. Labour is calling for a genuinely fair funding settlement that would take into account deprivation, differential service delivery costs and the very particular circumstances of our coastal communities, which feel very much left behind. But we have no faith at all that that is where the Government are going. The Government are trying to redistribute a diminishing resource; we are seeing the redistribution of poverty under this Tory Government. The money just does not exist to fund public services where the demand is growing, which is in adult social care and children’s safeguarding.

We heard earlier that Basingstoke and Deane is a paradise of local government where residents have seen no impact of cuts whatever. That is unless, of course, they remember the 46% reduction of net expenditure on pest control, the 45% reduction on environmental protection, the 33% reduction on food safety, the 66% reduction on recreation and sport, the 27% reduction on open spaces or the 17% reduction on street cleaning.

[Mr Jayawardena]

The hon. Gentleman clearly loves my former council very much. Would he agree, then, that actually only 6% of the budget comes from council tax, while the rest comes through well-managed finances and excellent use of our resources? We have created thousands of jobs whereas his party in that council has backed the wrong policies, turned down the economy and chosen to back vested interests in the unions.

--- Later in debate ---

[Jim McMahon]

It is true that this district council has increased spending in some areas, but unfortunately that is because of homelessness. One of the few budget lines that has increased is homelessness spending, which has gone up by 21%. As a result, the neighbourhood services that most people in the community would believe they pay council tax for have seen huge reductions. That council, which has no responsibility for adult social care or children’s services because those are delivered by the county council, has had to take money away from neighbourhood services. Yet this is meant to be the council that we hold up as a paradise of public services under the new settlement.

[Mr Jayawardena]

I am not sure that the hon. Gentleman understands the difference between a county council, a district council and a county area. Would he then welcome the fact that Hampshire is now getting more money as its core spending power than it had in the past? Will he reflect on why the Labour party voted against that?

[Jim McMahon]

Most people who understand local government finance recognise that the budget lines in total net expenditure include huge sums of money that the local authority has almost no control over in its everyday spend. For instance, education services are included in controllable spend, but the local authority has no freedom or flexibility at all to direct where that money goes. Since the disbanding of primary care trusts, the public health transferred spend has been included as part of core spending power for local government, but there are new pressures and responsibilities that councils are expected to deliver on. The Government have tried to offset cuts to basic neighbourhood services and the lack of funding in children’s services and adult social care through the smoke and mirrors in their calculations.

Let us see what this means in practice. Across England, since 2010, there has been a 54% cash reduction—not even a real-terms reduction—in spend on support for public transport routes. These are the neighbourhood services that our communities rely on. Tory MPs who will not support this Opposition day motion should think about the community bus services in rural areas that have been cut because the money simply is not in the system to provide those routes. Recreation and sport, essential for a healthy and thriving population, have had a 44% cash reduction; open spaces have had a 23% reduction; and trading standards, which provide essential community security, have had a 34% reduction.

In the last reshuffle, the Tories were like rats fleeing the sinking ship, but who would guess that rats are being protected because pest control has been cut by 49%? Only rats are safe under a Tory Government, it seems—that is, if they are not in one of the areas that has had to hike up the charges. In areas of deprivation, low-income families who cannot afford to pay the charges to keep away vermin are absolutely excluded from living in a safe and clean environment.

[Mr Jayawardena]

rose—

[Jim McMahon]

I give way to the hon. Gentleman; he is very keen.

[Mr Jayawardena]

The hon. Gentleman is very generous. I have two points. First, pest control still supports those on income support who need help, and indeed some of the older people in our community. Secondly, does he welcome the fact that Basingstoke and Deane Borough Council spends over £600,000 on community transport and public transport schemes?

[Jim McMahon]

What I know is that in Greater Manchester we have lost 1.2 million miles of public transport routes because of central Government cuts to vital subsidised routes. That is the real impact. There is not a single Conservative Member, whatever they say, who can put their hand on their heart and say that the cuts have had no consequences for community life in their areas, because they absolutely have.

Earlier today, we had a debate on the review of the Manchester arena attack. For those of us who were affected by that within our communities, it was a very difficult moment. I ask the Government what assessment has been made of cuts to emergency planning budgets, because £21 million has been taken from those budgets since 2010—a 36% reduction.

Later, we will have a debate on the money that has been taken from our frontline policing. Councils also provide essential infrastructure to make sure that people can live in decent, safe and thriving communities. We have seen a 40% reduction in crime reduction spend by local authorities and a 66% reduction in community safety services—that is the people who go round parks and cemeteries to make sure they are safe and the CCTV operators who can capture evidence and hold criminals to account. That is where the money is being taken from. When we have the policing debate, we will hear about the absolute frontline impact of the cuts, but we also need to think about the council services that have been snatched away through austerity, because that has been the real impact.

[Mr Jayawardena]

Will the hon. Gentleman give way?

[Jim McMahon]

I cannot give way again. I will happily share a drink with the hon. Gentleman in the bar later and compare Basingstoke and Deane with Oldham, but that is as far as we need to go today.

If the Tory Government are determined to see Britain through Brexit, it has to be based on strong foundations. Essential to that are strong, high-performing public services. In many of our areas, not only have our economies been left behind but our public services have been completely fragmented and fractured as a result of Tory austerity.

What we say today is: enough is enough. Local government has taken the brunt of austerity, but it cannot carry on. We know the deficit, which has been identified by the LGA and the National Audit Office. All we ask for is that we see from this Secretary of State the same energy that the Defence Secretary showed when he went out and publicly demanded money for his Department and that the Health Secretary showed when he demanded money for the NHS.

Draft Non-Domestic Rating (Rates Retention and Levy and Safety Net) (Amendment) Regulations 2018

Jim McMahon Excerpts

Tuesday 20th March 2018 General Committees

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Hosie. In line with the Local Government Association— the cross-party organisation representing local government —we are keen to see more progress being made on giving local authorities more sustainable forms of income. Where they play an active role in growing their local economic base, they should see the value in doing that. We have not yet seen a real assessment made of the implications of the 100% retention scheme through the initial pilots with the first wave of local authorities. We know that the Government hold limited data on what that means, and we know that there are significant capacity issues within the Department itself. Between 2011 and 2017, there has been a 39% reduction in full-time equivalent staff working on the 100% retention scheme, so we are not convinced that the Department has the proper capacity to see this through and to monitor, evaluate and importantly to ensure that any risks are mitigated in then allowing a new wave of applications to come forward.

Local authorities are also concerned that London was given the option of no detriment but the same offer was not made available to new authorities applying to the scheme. Authorities outside London will quite rightly ask why we have one rule in place for London, while authorities outside London are being asked to apply to a different scheme with different rules and safety nets in place. I would be grateful for clarification on that.

As to the scheme’s risks, we know that local authorities have had to prepare for the eventuality of ratings appeals. Businesses that do not agree with their ratings position make the appeal in the right way, but under this scheme the risk of that falls partly to the local authorities. In cash terms £2.8 billion has been put aside by local authorities as part of a first tranche of rate retention to prepare for the eventuality that those appeals might be successful. That is £2.8 billion that could be used for public services at a time when local government services are under significant pressure.

We have not yet seen evidence that the Government have had a thorough piece of research done to understand what this would mean if it were rolled out for the whole of England. We know that the Government have approached local authorities who would be in a net position, so they have taken away the equivalent grant that the local authorities are getting in cash terms for the rates that they are able to retain. However, we are unable to say what that means for the country. Cherry-picking a local authority that has no cash difference to the Treasury is okay, but some local authorities will always require more in grant funding than they can generate in business rates in the local authority area. We have not seen what the Government’s approach would be for that.

We have also not understood why we have pilots running on the one hand with a number of local authorities, while on the other hand we have the promise of a fair funding review to be carried out, but we have not had much detail on how the two will talk to each other. The Government need to be clearer on this. What lessons will be learned from the pilots that have been undertaken so far? What mechanisms will be put in place to ensure lessons are learned from the next wave of local authorities? How will that be hard-wired into the fair funding review to ensure the total amount of money that is available to local government to deliver local public services is sustainable in a 100% retention model? If the Government provide that information, we would be happy to sit down and scrutinise it.

What assessment have the Government made of the benefits and risks of the growth and decline of business rate bases at a local level? At the moment, the business rate bases that local authorities are in receipt of are generally historical. They have developed over many years—50 years, 100 years, and for some towns and cities many hundreds of years. The Government have provided very little evidence of how individual local authorities have by their own actions fundamentally changed the business rate bases in their areas. The Government are saying to local authorities, “If you are responsible for a geographical area and an economy that has done well historically, you will be able to capture that growth,” without any evidence that the local authority has actively contributed to the growth. The local authority of another town or city may be working hard to try to grow the local economy, but due to its historically low tax base and its weak economy at a local level, it may struggle to make ends meet and keep afloat. Some towns and cities have to work twice as hard to stay still, while others have accelerated growth just because of their local circumstances. It would be good to hear what the Government’s approach is to ensuring that a genuine rebalancing takes place across England as part of that strategy.

Draft Greater Manchester Combined Authority (Amendment) Order 2018

Jim McMahon Excerpts

Monday 19th March 2018 General Committees

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Davies.

I attended an event in Manchester on Friday, where the Minister was on a panel debate with the Mayor of Greater Manchester and a number of other Members, and we talked about the impact of High Speed 2 and investment in transport in Greater Manchester. During that debate, I noticed that the balance of power in the relationship between Greater Manchester and Government has changed. On the face of it, perhaps that change is subtle, but it is important.

I think back to when we were negotiating the first devolution deal and the establishment of a combined authority, and the relationship was one of subservience where Greater Manchester would ask Government for powers. It was anyone’s guess as to how certain powers and areas of investment were arrived at, but, by and large, the councils in Greater Manchester waited for Government to tell them what Government were willing to do. On Friday—I give credit where it is due—I noticed that the relationship is one of mutual respect—and also mutual challenge, which is important if devolution is to develop as our great cities need. It is important to recognise how things have moved on.

I found it interesting how different the remuneration discussions were for when the Mayor was brought in, compared to those for councillors. Most people recognise that Mayor of Greater Manchester is a significant role—in my view, it is on par with being a Minister in terms of power, responsibility and accountability to the electorate—and in that context there was a big discussion about how much that person should be paid, which was slightly odd to me, because at that time I was a council leader and Eric Pickles was telling us we were volunteers and boy scouts. The Government need to go back and look at the role of councillors in the new devolved settlement, because, just as Parliament can be disconnected from our towns and cities, I see that within a combined authority the Mayors or the chairs can become very much disconnected from the ward councillors representing their communities at a local level.

There is also an issue about retention and how we attract decent talent to local government to serve as local councillors. The decision to take away councillors’ pensions was a backward step—I acknowledge that the Minister was not in government at that point. That change was very popular with the public as they like taking pensions away from councillors because they are not always quite sure what councillors do.

My view is that councillors play a very important role. Many make sacrifices in respect of their careers and their families, and many give up promotions at work to spend additional time supporting the work of their local authority. Within this new devolved settlement, the requirement on those councillors will increase even further: they will have to contribute to the combined authority and to its sub-groups. Government ought to be proactive and look again at what we view the role of councillors to be in this new settlement. Are they volunteers? Are they there to be appreciated but not really taken too seriously? That was the tone when Sir Eric Pickles was in charge. Is it different now, because we recognise that power is being distributed further down? Will this new settlement reflect that?

On the housing investment fund, clearly any investment in housing is important, but the investment in that fund came at the same time that the housing market renewal scheme was cancelled in Greater Manchester. For those who do not know, the housing market renewal scheme was a programme of demolition, clearance and rebuilding of new, good-quality homes to replace substandard terraced housing that was built during the industrial revolution. In 2010, the housing market renewal scheme was cancelled completely. That meant that money that was due to go into that new housing stock was taken away overnight.

The money going in through the housing investment fund is a shadow of that for the housing market renewal scheme. I mention that in particular because although the housing investment fund has its role to play, we need to reflect the fact that it is about commercially viable sites for developers that are creditworthy and that are charged at a commercial interest rate. If the site is commercially viable, the developer is creditworthy and it will be a commercial interest rate, why does the developer not just go to a bank and borrow the money on the open market in the way that would be expected?

What is the role of Government in this new mix? It ought to be about addressing those sites where there is a commercial viability gap. For towns such as Oldham and many areas and communities in Greater Manchester, there is pressure to build on the green belt, through the Greater Manchester spatial framework, because we need units to be built, but the community wants the brownfield, old industrial sites that do not have value to local communities to be redeveloped. The cost of remediation and taking away contaminated material is so high that for developers it just does not stack up. I urge the Government to look at how they can do more to make sure that funding is provided for bridging the viability gap in those types of scheme.

Draft Non-Domestic Rating (Alteration of Lists and Appeals) (England)(Amendment) (Regulations) 2018

Jim McMahon Excerpts

Tuesday 13th March 2018 General Committees

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate the Minister on his 10-minute speech on what is, essentially, narrow legislation. Nevertheless, it is important that we make progress and resolve the business rates issue.

Rather than give a set speech, I want to try to probe some areas where the Government have not been clear about what capacity and resources have been provided to make sure that the appeal system can work effectively.

We know that the SI is about the financial penalty and that it is a split payment of £200 or £500 depending on the size of the applicant. First, what consideration was given to a different schedule for levying penalty fees? For instance, for a large business rate occupier such as a big supermarket, whose rating could be £1 million a year, will probably be paying £500 a day for their consultant to lodge the application. If that consultant is giving false or misleading information on their behalf , it seems slightly out of kilter for the penalty to be what is effectively their day rate. Compare that to a small business, which would pay the £200 penalty, and is trying to navigate the system alone. It could make a very genuine mistake but be found by the office to be perhaps misleading, and that would be a significant and disproportionate penalty.

The question is less about the principle of bringing in penalties, which is now very commonplace across Government Departments. However, an explanation of the rationale behind the split payment would be welcome. By that, I mean that we should move beyond referring back to the Enterprise Act 2016 as a reference point and make the case for why £500 is appropriate.

The second point refers to capacity in the valuation office. We know that there have been IT problems and gremlins in the system, but we cannot get away from the fact that the office has had significant staffing reduction since 2010. In terms of head count, the number of people working for the valuation office now is 546 lower than in 2010, when they are expected to implement a brand new system. We all know that the introduction of a new system requires a double run—existing creaky old systems need to be run, and the capacity is also needed to bring in a new system and implement it. I am not sure that the Government have provided the adequate resource to do that when 500 fewer people are working for the valuation office today than in 2010.

I also wonder whether the Government have reflected on other Government Departments making appeals against their rating valuation. For instance, up to 100 NHS hospital trusts are appealing their ratings liability to their local authorities. At the moment, they are being supported by a company called Bilfinger GVA, which is being paid a percentage fee of whatever is saved in that potential successful appeal. At the moment, councils have had to put £1.6 billion to one side in the likelihood that those appeals are successful, and face an ongoing pressure of £250 million a year. So, £1.6 billion a year is potentially needed for back-dated payments over six years and £250 million every year going forward if they are successful. On the back of that, a company that will be taking a percentage fee from the potential saving.

We know that Government money is Government money. Wherever it is placed within different Departments, it is still public money that will be used for public good. When the Treasury give the NHS money to pay its business rate bills and it is transferred to the local authority, that is still Treasury money that is being funnelled through to fund public services at a local level. If a private company is taking a percentage fee of 5%, 10% or even 20%, that is a net reduction in the money that is available to fund public services in an area, whether it is at local government level or within the NHS.

Have the Government given any thought to having a different approach for Government Departments that make ratings appeals to the valuations office? How can it be right that we are having a net reduction in the money that will be available for public services because money is going out to consultants? Surely a better way of doing that would be either to have a restriction on the ability to use external consultants charging a percentage fee on any potential savings, or to have some kind of mediation service within Government to resolve these issues between different Departments. That would, for me, feel like a potential way forward.

Have the Government considered that? When I first raised the question in November 2016, although I had a holding reply quite soon after that, it took six months for the Government to come back with their substantive reply, which said only that they were looking into it. I am still no clearer about what action they are taking, and whether they consider this to be a significant issue, both in terms of the principle behind it and the particular issue of NHS trusts making appeals. If the Government believe that it is an issue, will they support the Local Government Association and its campaign to make sure that the issue is addressed? I should declare an interest as vice-president of the LGA.

Finally, we know that the gremlins in the system are still there. I respect the Minister for acknowledging some of the technical issues that have occurred, but I come back to the capacity issue. If the Government really want this to work, they need to present an invest-to-save model. If they are going to put a new system in place, which they believe will be fundamentally more efficient and deliver a better service, they ought to be able to provide the upfront capacity to deliver that on the ground, and ensure that it comes in in a smooth and managed way. At the moment, the evidence does not support that.

--- Later in debate ---

[Rishi Sunak]

I would be delighted to write to you, Mr Rosindell, and to other members of the Committee on that point. Before I confirm that, however, in the short term, I urge hon. Members to ensure that riding stables in their constituencies appeal to their local authorities for discretionary relief, as I have encouraged my auction marts and riding stables to do. The Chancellor announced a £325 million fund to deal with cases that were not captured by the other reliefs put in place around the time of the revaluation.

[Jim McMahon]

On the unintended consequences of the revaluation, the Association of Convenience Stores has raised the matter of the introduction of cash machines in convenience stores. When high street banks close in a precinct, village or town centre, so there is no cash machine, and a convenience store steps up to provide one, the turnover of that cash machine goes towards its rateable value. Will the Government look at that as part of their review?

[Rishi Sunak]

I do not have the full details on that issue, but I would be happy to look into it. As the hon. Gentleman will know, the VOA makes decisions independently of Government, according to its guidelines, so it would be inappropriate for a Minister to interfere on an individual case. On his broader point, however, if the system is not picking something up properly, I would be happy to look at that.

My hon. Friend the Member for Amber Valley talked about the appeals process and how exactly it will work. In the old system, everything automatically turned into an appeal. In the new system, there will be two stages before an appeal—check and challenge—which anybody can avail themselves of. First, the appellant will ensure that the basic details of their business rates valuation are correct. Secondly, they will engage with the VOA to discuss that. Those two stages will hopefully mean that there is less reason to go to a formal appeal—although the appellant will still have the right to do that—which should reduce the incidence of spurious appeals.

I hope that I have covered all the points made by hon. Members and that I have assured the Committee that the Government are providing appropriate safeguards to ensure the fair operation of penalties, particularly through the right of appeal. It is clearly in everyone’s interest to ensure that the appeals system is underpinned by accurate information. I commend the regulations to the Committee.

Question put and agreed to.

Draft Non-Domestic Rating (Alteration of Lists and Appeals) (England)(Amendment) Regulations 2018

Jim McMahon Excerpts

Tuesday 13th March 2018 General Committees

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate the Minister on his 10-minute speech on what is, essentially, narrow legislation. Nevertheless, it is important that we make progress and resolve the business rates issue.

Rather than give a set speech, I want to try to probe some areas where the Government have not been clear about what capacity and resources have been provided to make sure that the appeal system can work effectively.

We know that the statutory instrument is about the financial penalty and that it is a split payment of £200 or £500 depending on the size of the applicant. First, what consideration was given to a different schedule for levying penalty fees? For instance, a large business rate occupier such as a big supermarket, whose rating could be £1 million a year, will probably be paying £500 a day for their consultant to lodge the application. If that consultant is giving false or misleading information on their behalf, it seems slightly out of kilter for the penalty to be what is effectively their day rate. Compare that to a small business, which would pay the £200 penalty, and is trying to navigate the system alone. It could make a very genuine mistake but be found by the office to be perhaps misleading, and that would be a significant and disproportionate penalty.

The question is less about the principle of bringing in penalties, which is now very commonplace across Departments. However, an explanation of the rationale behind the split payment would be welcome. By that, I mean that we should move beyond referring back to the Enterprise Act 2016 as a reference point and make the case for why £500 is appropriate.

The second point refers to capacity in the valuation office. We know that there have been IT problems and gremlins in the system, but we cannot get away from the fact that the office has had significant staffing reduction since 2010. In terms of head count, the number of people working for the valuation office now is 546 lower than in 2010, when they are expected to implement a brand new system. We all know that the introduction of a new system requires a double run—existing creaky old systems need to be run, and the capacity is also needed to bring in a new system and implement it. I am not sure that the Government have provided the adequate resource to do that when 500 fewer people are working for the valuation office today than in 2010.

I also wonder whether the Government have reflected on other Departments making appeals against their rating valuation. For instance, up to 100 NHS hospital trusts are appealing their ratings liability to their local authorities. At the moment, they are being supported by a company called Bilfinger GVA, which is being paid a percentage fee of whatever is saved in that potential successful appeal. Councils have had to put £1.6 billion to one side in the likelihood that those appeals are successful, and face an ongoing pressure of £250 million a year. So, £1.6 billion a year is potentially needed for back-dated payments over six years and £250 million every year going forward if they are successful. On the back of that, a company will be taking a percentage fee from the potential saving.

We know that Government money is Government money. Wherever it is placed within different Departments, it is still public money that will be used for public good. When the Treasury gives the NHS money to pay its business rate bills and it is transferred to the local authority, that is still Treasury money that is being funnelled through to fund public services at a local level. If a private company is taking a percentage fee of 5%, 10% or even 20%, that is a net reduction in the money that is available to fund public services in an area, whether it is at local government level or within the NHS.

Have the Government given any thought to having a different approach for Departments that make ratings appeals to the valuations office? How can it be right that we are having a net reduction in the money that will be available for public services because money is going out to consultants? Surely a better way of doing that would be either to have a restriction on the ability to use external consultants charging a percentage fee on any potential savings, or to have some kind of mediation service within Government to resolve these issues between different Departments. That would, for me, feel like a potential way forward.

Have the Government considered that? When I first raised the question in November 2016, although I had a holding reply quite soon after that, it took six months for the Government to come back with their substantive reply, which said only that they were looking into it. I am still no clearer about what action they are taking, and whether they consider this to be a significant issue, both in terms of the principle behind it and the particular issue of NHS trusts making appeals. If the Government believe that it is an issue, will they support the Local Government Association campaign to make sure that the issue is addressed? I should declare an interest as vice-president of the LGA.

Finally, we know that the gremlins in the system are still there. I respect the Minister for acknowledging some of the technical issues that have occurred, but I come back to the capacity issue. If the Government really want this to work, they need to present an invest-to-save model. If they are going to put a new system in place, which they believe will be fundamentally more efficient and deliver a better service, they ought to be able to provide the up-front capacity to deliver that on the ground, and ensure that it comes in in a smooth and managed way. At the moment, the evidence does not support that.

--- Later in debate ---

[Rishi Sunak]

I would be delighted to write to you, Mr Rosindell, and to other members of the Committee on that point. Before I confirm that, however, in the short term, I urge hon. Members to ensure that riding stables in their constituencies appeal to their local authorities for discretionary relief, as I have encouraged my auction marts and riding stables to do. The Chancellor announced a £325 million fund to deal with cases that were not captured by the other reliefs put in place around the time of the revaluation.

[Jim McMahon]

On the unintended consequences of the revaluation, the Association of Convenience Stores has raised the matter of the introduction of cash machines in convenience stores. When high street banks close in a precinct, village or town centre, so there is no cash machine, and a convenience store steps up to provide one, the turnover of that cash machine goes towards its rateable value. Will the Government look at that as part of their review?

[Rishi Sunak]

I do not have the full details on that issue, but I would be happy to look into it. As the hon. Gentleman will know, the VOA makes decisions independently of Government, according to its guidelines, so it would be inappropriate for a Minister to interfere on an individual case. On his broader point, however, if the system is not picking something up properly, I would be happy to look at that.

My hon. Friend the Member for Amber Valley talked about the appeals process and how exactly it will work. In the old system, everything automatically turned into an appeal. In the new system, there will be two stages before an appeal—check and challenge—which anybody can avail themselves of. First, the appellant will ensure that the basic details of their business rates valuation are correct. Secondly, they will engage with the VOA to discuss that. Those two stages will hopefully mean that there is less reason to go to a formal appeal—although the appellant will still have the right to do that—which should reduce the incidence of spurious appeals.

I hope that I have covered all the points made by hon. Members and that I have assured the Committee that the Government are providing appropriate safeguards to ensure the fair operation of penalties, particularly through the right of appeal. It is clearly in everyone’s interest to ensure that the appeals system is underpinned by accurate information. I commend the regulations to the Committee.

Question put and agreed to.

Oral Answers to Questions

Jim McMahon Excerpts

Monday 12th March 2018 Commons Chamber

[Rishi Sunak]

The hon. Lady is absolutely right to highlight the important work that prevention plays. Nobody wants to see a child in need in those circumstances, which is why this Government have committed almost £1 billion to the troubled families programme over this period in the spending review. As recent results have shown, that is reducing the number of children in need after heavy intervention from their key workers in the programme.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Last week, the respected National Audit Office published its report on the financial sustainability of local authorities. It made clear the significant challenges faced by councils and the vital services that they deliver. Can the Secretary of State prove that he is on the side of local councils and place in the House of Commons Library any submissions that he has made to the Chancellor ahead of the spring statement?

[Rishi Sunak]

I also read the National Audit Office report with interest. I was pleased to see that it made very positive comments about the Department’s work in getting to grips with the challenges across local government and making sure that the sector is properly resourced and looks forward to the reviews that are being put in place to improve funding and business rates retention.

Local Government Finance

Jim McMahon Excerpts

Wednesday 7th February 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Thank you, Madam Deputy Speaker. Well, what on earth was all that about? We have been waiting since December to get this detail. We were told that discussions were taking place and that there were journeys over to No. 11 to make sure that we secured money for housing and public services such as adult social care. To see just crumbs off the table being provided is depressing.

On my way here, I often walk past the Department for Business, Energy and Industrial Strategy. I imagine the Secretary of State, when he was in that Department, being fulfilled, happy, contented and enthusiastic about his brief. What a contrast with now! He clearly does not have the energy for this brief and does not understand the detail, to the extent that incorrect information was presented to the House during the December debate.

Probably more telling is how little attention the Secretary of State got from the Chancellor. The social care crisis ought to have been addressed in the autumn statement, but because it was not, he now has to work within the departmental budget.

[Mr Dunne]

The hon. Gentleman seems to have completely ignored the £2 billion given to adult social care in the March 2017 Budget. What is his response to that?

[Jim McMahon]

I am pleased the hon. Gentleman asks that question. At that time, there was already an in-built deficit in the Budget because of the increase in the national living wage and employers’ national insurance contributions, so even within the £2 billion allocated there was a £1.3 billion in-year deficit, because of the need to make sure that the provider market could be sustained. That is my response. It is just not enough money. Everybody in the House and our communities knows that. It is just a shame that the Secretary of State does not carry the weight in the Treasury to get the money into the Department and out to councils and into our communities.

[Mr Betts]

The Local Government Association has calculated that there will be a £2.3 billion gap in social care funding by 2020, having taken account of the 2017 Budget increases, and there are similar figures from the King’s Fund. The National Audit Office did a report for the Communities and Local Government Committee looking at these figures and basically confirmed their accuracy. There is a real problem here that cannot be disguised and that will not go away without extra funding being delivered.

[Jim McMahon]

Those figures are absolutely right. The analysis from Age UK shows that 1.2 million people who would have been entitled to social care in 2010 are no longer receiving social care because of cuts to the eligibility criteria by councils.

[Mr Jim Cunningham]

Coventry City Council has probably lost about £90 million over the past few years. The Government are playing a very clever game: they are shifting the cost of local government on to the local taxpayer, so that they can boast of keeping taxes low. It is really just a double-edged sword.

[Jim McMahon]

I agree with that. We are here debating work carried out by people outside this place—local councillors and local government workers—and it is right in this place to thank them for their hard work, their dedication and their grit and determination to make sure that services are provided in the face of severe austerity.

[Several hon. Members rose—]

[Jim McMahon]

I want to make some progress, because I am conscious of the number of people down to speak.

We need to ask a number of questions when faced with the settlement. First, does it step up to meet the scale of the challenges facing local public services in England today? Does it meet the challenge of 1.2 million older people who would have been entitled to social care in 2010 who no longer get the care they need? Does it meet the challenge of huge increases in the number of child protection and looked-after children cases reported by the LGA? After nearly a decade of Tory-dominated Government, does it begin to rebuild the essential community infrastructure that was taken away after the financial crash?

My view is that it fails on every one of those counts. The funding settlement today is little more than an insult. I want to put this into context—after all, we can have a party political debate about it and attribute blame, but that makes no difference to the day-to-day experiences of local councils.

[Simon Hoare (North Dorset) (Con)]

Will the hon. Gentleman give way?

[Jim McMahon]

I want to lay out the case, and then there will be a long time for debate—but only if I rush through this to allow time for people to speak.

Central Government funding of local services has reduced by 40%—less money when demand is increasing—and we all know that it has not been distributed evenly. The overall reduction has hit local authorities with lower tax bases hardest because they are more dependent on central Government grant. The UK Government’s total spending on local government, as a share of the economy, has fallen sharply. In 2010, it accounted for 8.4% of the economy; by 2022, the figure will be down to 5.7%, which constitutes a 60-year low. Yet councils in England still have 1,200 statutory obligations. They have less money, but the same is required of them. That has had an impact on people, in that 811 fewer people now work in local government. The local government workforce today is the lowest since comparable records began, when the central Government workforce is the highest that it has been since comparable records began. Moreover, the figures are not fairly distributed across government, let alone geographically.

If austerity had not kicked in and affected our local council base, councils today would have £14 billion more than they have. That would be sufficient to deal with the crisis in social care and the crisis in children’s services.

[Charlie Elphicke (Dover) (Ind)]

I have listened carefully to what the hon. Gentleman has been saying, and it seems to me that his answer to every question is, “Send more money.” My question to him is: where is the money going to come from?

--- Later in debate ---

[Jim McMahon]

I will come to that a little later. [Interruption.] There is absolutely no such thing as “no cost effect” when it comes to not providing vital services for people. We know that because older people are not being looked after the way that they need to be looked after. We know because social care is not being provided in the home. More than 3 million delayed-discharge days have been attributed to a lack of social care. More than 120,000 hospital beds have been blocked, so there is a cost involved.

Most people who understand public services would say that it is far better to have joined-up public services that are unified at local level, so that money is spent to best effect and spending is tailored to the circumstances of the individuals who are using the services, than for people to have to navigate the ridiculous silos in which money is held. However, we must also accept that people are living longer, which has health and social care consequences that carry a cost.

As a society, we must make up our minds about the type of country in which we want to live. Are we the country that ignores older people who need care because we can ignore them? They are not visible in the same way as ambulances queuing up at A&E. The truth is that 1.2 million people who are in their homes are being ignored by central Government, and by the Treasury in particular. I think that they deserve better.

[Mr Peter Bone (Wellingborough) (Con)]

The hon. Gentleman is making a serious point about adult social care. Would the Labour party work with other parties to bring about a bipartisan approach? Everyone knows that there is a problem, but we should all work together to find a solution.

[Jim McMahon]

The problem with health and social care is that so many reports have been commissioned, but by the time a commission has met, considered the evidence put before it and reached a conclusion that can be accepted across partisan divides, the world has moved on and the challenges have changed. Some of this is not difficult, but any idea that it does not come down to pounds and pence is nonsense. Of course we can be more efficient with the money that we have, and we ought to ensure that that happens. We can work better across Departments, and we should do that as well. Ultimately, however, there has to be enough money in the system to meet the demand.

[Rachel Maclean (Redditch) (Con)]

Will the hon. Gentleman give way?

[Jim McMahon]

I will give way once more, but then I must move on.

[Rachel Maclean]

The hon. Gentleman is talking about a very important challenge that we face as a nation. Will he confirm that the Labour party would double council tax to deal with this crisis, as other members of it have suggested? Our voters would need to know that.

[Jim McMahon]

Council tax has an important role to play, as have business rates, but it also has significant limitations. I shall explain why a little later.

Any idea that the social care and safeguarding crisis—we should talk about safeguarding as much as we talk about social care and the NHS, because it is all-important—that can be addressed through council tax, through a property-based system that is now 27 years out of date, completely misses the scale of the challenge that faces public services.

[Wera Hobhouse (Bath) (LD)]

rose—

[Jim McMahon]

I need to make progress.

I want to touch on what the 1% additional council tax means. When we seek to raise money through council tax—through a property-based tax—that takes account of the property values in an area, but it bears no relation at all to local needs or the cost of delivering services in that area. Therefore, the more pressure that gets added to councils to provide that from council tax, the more inequality we are going to see through council tax.

In Richmond, 1% for social care would raise £36 per person over the age of 65, but in Rochdale it raises just £18, because the tax base just is not there to support an equal increase in cash being taken. So if all we do every year is come back and say that we are going to allow another 1% and another 1%—and perhaps, if things get even worse, allow another 2%—that will just take even more from people who can afford it even less, because although council tax is important, it is regressive; it takes far more from lower income families than any other form of direct taxation in this country. So as much as it is important, we ought to always have an eye on the impact on those who actually pay the bill. After all, as we often hear from Government Members, there is no such thing as Government money; it is all the public’s money. That is right, but we are quicker to take the money from some people than from others it seems. We should focus on that, too.

We know that social care and children’s services are in crisis, and we know the complexities of social care will mean there is greater demand on the public purse. The difficulty is that the Government’s approach has been completely underwhelming and has completely missed the opportunity to set the record straight. Aside from the massive increase in looked-after children and children in receipt of reviews, we also know the way that has been funded is completely unsustainable.

The transition grant and the rural service delivery grant were introduced on the basis of two concepts. First, those who were hit hardest by the reduction in revenue support grant would get greater support to help them in a temporary period of two years to adjust their baseline budgets and organise efficiencies to eventually deliver a balanced budget. Secondly, there was a recognition through the second grant that it costs more to deliver services in rural areas than in urban areas because of sparsity. I am afraid the evidence base for both of those does not hold water and has not even passed the test the Government have set. So the transition grant that was meant to be there for two years has now been extended, and the rural service delivery grant has been completely undermined by a report the Government themselves commissioned by LG Futures in 2014 to assess the additional costs of delivering services in rural as opposed to urban areas.

The report said there were differences in the cost of delivering some services in rural as opposed to urban areas but the net cost in terms of the impact on councils’ overall budgets was felt harder by urban areas as the costs in those areas were far higher. [Interruption.] That is not my report; it is a Government report published on their website that supports the revenue support grant. Given that the evidence base has been decried by the Government’s research, I am staggered that they are putting even more money into a system where the evidence base is completely contrary to the position the Government seem to be taking.

The report found that 11 service areas were affected in rural areas and that accounted for about 15% of the council spend in those areas, but when it looked at the 15 service areas that were not affected, it found that they accounted for 31% of urban local authority budgets, so there was a 15% additional cost because of sparsity in rural areas versus 31% of additional cost in urban areas for service delivery. Therefore, if there was going to be a grant designed to help councils deal with the additional cost of delivering public services, on an evidence base the Government have commissioned, accepted and published on their website, that ought to be directed to urban authorities where the costs have been demonstrated to be much higher. Yet we continue with this farce.

I find it interesting that the Secretary of State does not have the Chancellor’s ear. When he knocks on the door of No. 11 and asks for more money, the Chancellor is not particularly interested in banking that support for the future as much as the Secretary of State is determined to bank the support of Conservative Back Benchers for whatever reason. Perhaps it is to face off a rebellion today or to buy off Conservative shires—a purpose that has not yet been declared. He should be honest about why the money has been allocated.

I do not resent the argument being made by areas with service delivery costs relating to sparsity that that ought to be reflected in their settlement. I do not disagree with that at all, and I commend the MPs who have made that case and have managed to secure progress from the Secretary of State, who on most measures does not seem to understand his brief. However, he certainly understands the need to appeal to Back Benchers and to bank their support for the future.

I resent the view, however, that some councils in some areas can be funded in a fairer way—although still not fair—while others have to sink or swim depending on their council tax base 27 years ago. That is not a fair or sustainable way to fund council services. I have no confidence that the fair funding review will deliver what most reasonable people would consider to be a reasonable and fair funding formula, which would be one based on need that would take into account urban deprivation, rural sparsity, demographics and demographic change, and the difference in unit costs for delivering public services. A fair formula would take all that into account and arrive at a number, but that is not what is on the table today.

The Conservatives who will go through the Lobby later to support the motions should bear this in mind: there is no new money. Money has been moved around from departmental budgets that were set before Christmas. The money in the transition fund and the rural service delivery grant is a one-off that has been taken from the business rate safety net—the Government will not say how that will be funded in future—and from other departmental reserves. How will councils be funded between now and 2022? Do Conservative Back Benchers really want this charade at this point in the calendar every year? We know that there is not enough money to fund public services, but they hold their nose because they have been bought off with a couple of pounds. They absolutely understand, in the way that all Opposition Members do, that the cuts have gone too far and that our communities deserve better.

[Several hon. Members rose—]

--- Later in debate ---

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I commend the hon. Member for Wellingborough (Mr Bone) for his speech. The simple answer in his case is that the Conservative councillors on Northamptonshire County Council could find the fortitude simply to no-confidence the existing leader, rather than trying to get the Lords Commissioners to do the dirty work for them, but it seems that they would rather abdicate responsibility in that sense as well.

While I am on my feet, I wish to draw attention to the comments made earlier by the new Secretary of State for Housing, Communities, Local Government and other subjects—the list seems to be growing every day.

[Jim McMahon]

Don’t forget bins.

[Gareth Snell]

Yes, obviously he is the Minister for Bins.

The Secretary of State said that Stoke-on-Trent City Council would see an increase in its funding abilities. I have just double-checked the figures published by the Conservative portfolio holder for finance on Stoke-on-Trent City Council, and they say that £32 million needs to be cut over the next two years. Either the Conservative Minister in this place was misinformed or the Conservative deputy leader of Stoke-on-Trent City Council is providing misinformation to the public. Those two statements cannot be reconciled without someone saying they are wrong. That is the nub of today’s debate. Conservative Members are quite happy to throw around terminology and certain figures simply to prove a point that they are not cutting local government, but anybody in this place who has been involved in local government knows that they are.

I apologise, Mr Speaker. I should have drawn attention at the beginning of my speech to my declaration in the Register of Members’ Financial Interests: I am a serving district councillor in a shire county, so I understand the points made by the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) about the deprivation that exists in shire counties. However, I represent Stoke-on-Trent, and what he fails to understand is that this is not necessarily about the absolute level of deprivation, but the number of people for whom those services are needed—the number of children in care and the number of older people requiring complex social care. That simply cannot be compared in a city and a county as though it is apples and apples, because it is not; it is apples and pears at best.

As my hon. Friend the Member for Nottingham North (Alex Norris) made clear, the cuts being inflicted on local government are causing councils to make very short-term decisions year on year to balance budgets, because they cannot make illegal budgets—they are not able to deliver any budget that is not balanced. In the case of Stoke-on-Trent, £1 million will be taken out of the homelessness budget. That will not end homelessness, but drive more people towards A&E services and peripheral services funded by the clinical commissioning group, the police and crime commissioner or other funders that will then be asked by their departments to make their own savings. We have a circular system of cuts that do not help the individuals on which they are focused. Again, Stoke-on-Trent City Council is looking to cut £751,000 from its drug and alcohol support service by 2019-20. If, as the Secretary of State says, there is more money coming into Stoke-on-Trent, I do not understand why such political choices are being made.

It is not only Labour councillors and Labour Members who are saying this; Lord Porter, the chair of the Local Government Association, has said:

“Years of unprecedented central government funding cuts have left many councils beyond the point where council tax income can be expected to plug the…gaps”

alone. If Conservative Members will not listen to Labour Members, perhaps they will listen to their own peers who are experts in this field. Quite frankly, if Lord Porter is saying that there is a problem with local government funding, we should all sit up and listen because he knows what he is talking about.

I want to touch briefly not on the funding arrangements in Stoke-on-Trent, but, although the Secretary of State is no longer in his place, on the issues in Bromsgrove. It is one thing for the Secretary of State to tell me that my council has no problems, but another for his own council in Bromsgrove to predict a £1 million shortfall over the next three years and to have to put up council tax by 3% and for the county council to predict a £32 million deficit over the next year and to have to put up council tax by 4.94%. The leader of the county council said in a cabinet report:

“The current…financial year has faced significant financial challenges”.

This is not scaremongering by Labour councils or Labour Members. Tory councils with Tory MPs are making it quite clear that Tory Government cuts are affecting the provision of local government in their own communities.

I am not entirely convinced that the report, for all its fancy words and funny fudging of figures, will actually deliver anything to give the necessary help and support to councils that need it. I will now finish to leave some time for others, but my hon. Friend the Member for Nottingham North said that he is from Robin Hood country. The motion does not give us the redistributive polities of Robin Hood; it is more about robbing the cities and robbing the poor.

The report is about taking money out of areas of deprivation to make sure that rebellious Back Benchers do not decide to sit on their hands and cause the Government a problem this evening. I welcome the fact that the hon. Member for Shrewsbury and Atcham, who is not in his place, has been able to succeed in getting additional funding for his council on a one-off basis, but that is not a long-term solution for the problems faced by local government. As more and more services are pushed by this Government towards local government, it is incumbent on us all to make sure that local government is funded properly and fairly.

Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Jim McMahon Excerpts

Ping Pong: House of Commons
Tuesday 23rd January 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I congratulate the new Minister on his promotion. I look forward to working with him on matters of common interest such as local government finance, which is a niche subject that does not always attract wide attention, but it is important, and it is important that we see reform. I made that offer to his predecessor, and most of the issues are not partisan at all. They are technocratic but essential, and if there is room for us to work together, we should seek to do so.

I am pleased to see the Bill return having been amended in the Lords, and I am pleased that the Government have received the amendments in the way they have. As we have seen in our debates, this is not necessarily a subject that gets Members excited or that results in mass attendance, but the people who do attend understand how important it is. This financial relief is intended to ensure that as many parts of England and Wales as possible benefit from high-speed fibre broadband. A financial incentive is an important mechanism for achieving some of that.

We were very probing in Committee and, unsurprisingly, we will be looking to see how the Bill works in practice. In particular, can we ensure that this is not just a tax relief for the big providers and that it gets to the smaller providers, too? Can we ensure it has a net effect on the extension of fibre broadband, or will it basically provide a subsidy for installations that would have happened regardless? Have we been able to reach a position where the providers themselves are satisfied that the Bill goes some way towards balancing the revaluation that they met with a degree of concern? I read recently in the Financial Times that BT and Virgin had hinted at the possibility of considering legal action against the revaluation, and I am interested to know the outcome.

Fundamentally, the Bill does two things. First, it rescues an element of the Finance Bill that fell when the election was called. The Bill contained many important reforms that were not contentious or party political but would have allowed local government finance to catch up with the changing times. I encourage the Minister to look at other provisions in the Bill to see what else could be brought forward to benefit local government.

Secondly, the measure proves that the Government can look at financial incentives for business growth, but business rates, of course, cover a wide range of business activity. It has been a long-standing criticism that we have not yet managed to address the impact of the treatment of plant and machinery, for instance, on business investment in new technologies and in new plant and machinery in those premises.

That has also been a concern on our high streets. When banks and building societies close, they are often the only provider of a cash machine in town. When a local convenience store agrees to take on the cash machine, it generally finds itself in a worse position at the end, despite providing a community service, because the turnover at the cashpoint will count towards its rateable value.

I raise those two points because I think there is a demand in industry and the community to ensure that business rates add value to our communities, rather than detract from them. As we embark on Brexit, we need to ensure that our country is in the most robust position possible to attract investment and ensure that we have strong infrastructure.

Finally, I pay tribute to Members in the other place, particularly Lord Kennedy, who spent a great deal of time on the issue and was involved in amendment 2. Let us see whether it makes a difference on the ground, because we pass legislation here not for the sake of it, but to make a material difference to public policy and the community. I will be waiting with interest to see whether this has a net effect on infrastructure investment.

[Rishi Sunak]

I thank the hon. Member for Oldham West and Royton (Jim McMahon) for his kind words of welcome. He has a long and distinguished track record in local government, and I very much look forward to working with him in the constructive manner he outlined. He made a couple of points that I would like to address briefly. The first point was about who is eligible for the relief. As he knows, it is available for any company deploying new fibre. One of the expectations and hopes for the relief is that it will bring more alternative and smaller providers into the market. We will be watching that closely, as I know he will, because we would all welcome a broader diversity of suppliers.

The hon. Gentleman made a good point about the relief being gamed, and ensuring that it is targeted specifically at new fibre deployments. That was raised in the Commons stages by my right hon. Friend the Member for Wantage (Mr Vaizey), and indeed in the other place by Baroness Harding of Winscombe. I am pleased to tell the hon. Gentleman that, following those exchanges, my Department worked extensively with Gamma Telecom and Ofcom to conduct a detailed study of the potential for the relief to be gamed. The results of that analysis clearly support the conclusion that, based on the evidence available to date, neither the Government nor Ofcom expect the rate relief for new fibre to give rise to gaming in the system. Without going into the details, simply the cost of deploying new fibre, withdrawing dark fibre, opening up the ducts and then reconnecting everything would in almost all cases be more expensive that the saving from business rates.

The hon. Gentleman mentioned other measures in the Local Government Finance Bill and the importance of ensuring that we have a business rates system that supports economic growth. I wholeheartedly agree with him and am keen to use the opportunity for the business rates reset, the revaluation and the fair funding formula to ensure that our financial system does indeed support local authorities in their aspirations to grow their local economies.

I put on record my thanks to Members in the other place and, of course, the officials who brought me up to speed on the legislation incredibly quickly. I also thank my predecessor in this role, my hon. Friend the Member for Nuneaton (Mr Jones), who did so much to get the Bill to the point at which we are in a position to approve it. As I have said, demands on broadband are doubling every couple of years. It is vital that we stay ahead of that need and move quickly to implement the relief scheme that has been promised. I am delighted that we are making good progress on the draft regulations, which will be implemented swiftly. I am grateful to Members in this House and in the other place for the swift progress we have made. This is only one small part of the Government’s strategy, but it is an important one called for by all stakeholders.

Lords amendment 1 agreed to, with Commons financial privilege waived.

Lords amendments 2 to 13 agreed to, with Commons financial privilege waived.